The information on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it and as such is considered to be a marketing communication.
Along with JP Morgan, Wells Fargo always starts off the reporting season for the big US banks, and so far 2014 has been very kind to shareholders. The bank covers a range of retirement planning and wealth management products along with both retail and corporate banking. This year, its shares have risen by 7.7%.
As with all global banks, Wells Fargo has had a number of issues to deal with since the financial crash, specifically tighter regulations over ratios covering deposits and lending. The recent announcement from the Federal Reserve granting banks a two-year extension to meet the Volcker rule standards is good news. That being said, the American Bankers Association had been lobbying on behalf of the banks for more sweeping changes to the current proposals, and will be only moderately happy with this amendment.
Following this announcement, we have seen shares in Wells Fargo stumble just as they broke through the $50 level for the first time. The last couple of weeks saw broad support just below the $48 level, much closer to the 50-day moving average. The US Bank is expecting to post Q1 earnings per share of 96 cents on the back of $20.64 billion in sales. Any weakness in the shares closer to the $48 level could be seen as a buying opportunity before the stock reverts to the upwards momentum it has enjoyed for so long.