JPM announces quarterly earnings pre-market tonight (Bloomberg suggests this could be 9pm AEST) and the market is looking for good numbers to arrest the heavy selling we saw overnight. Valuation is not overly stretched, with the financial giant trading on 9.9x 2014 adjusted earnings. Consensus is for Q1 EPS of $1.46 (range of $1.37 to $1.53), on revenue of $24.5 billion. Trading revenue is expected to increase 28% on the month to $5.2 billion.
The US equity markets were smashed last night, with the NASDAQ fairing the worst of the three major bourses; falling the most since 2011. The index just managed to avoid closing below the April 7 low of 3482; however the bears will now clearly be eyeing the February 5 low of 3418. 3418 is also key because if we see the index close below the February low, it will print a bearish reversal at the trend high and on the monthly chart this can be very powerful indeed. With the five-day moving average accelerating below the 10-day moving average it certainly suggests staying cautious here.
Still holding the February 4 uptrend, and despite trading through the support, looks as though it will close just above. A break of 101.50 could see the 200-day moving average come into play at 100.81.
The Chinese markets rallied with strength yesterday after an agreement was reached between the Chinese and Hong Kong regulators to allow greater freedom between investors. Under the scheme, Chinese mainland investors will now be able to trade up to $1.7 billion a day in Hong Kong equities, while investors with a Hong Kong broker account will be able to trade in the CSI 300. Expect the Hang Seng and H-shares index to do nicely out of this deal, especially as the turnover and liquidity should improve significantly. Once again, China is highlighting it is committed to accelerating the pace of capital account liberalisation and the 3% level of foreign ownership in its domestic market should increase significantly over the next five years or so. At 11:30 we get Chinese CPI (expected to increase 2.4%) and PPI, although I would be surprised if either cause too much of a reaction.