Bank Stock Roundup: Trading Rebound, Lesser Regulations & Wells Fargo
Zacks Investment Research | Mar 09, 2018 03:10AM ET
Over the last five trading days, performance of banking stocks remained optimistic. Rebound in trading activities (after dismal 2017 performance) is perhaps the primary reason for this bullish price performance.
Banks like Citigroup (NYSE:C) and JPMorgan (NYSE:JPM) expect trading revenues to improve in first-quarter 2018. This is likely to be driven by solid revenues in foreign exchange, emerging markets and equities trading. Specifically, Citigroup expects “low-to-mid” single digit year-over-year increase in trading revenues and JPMorgan projects market revenues to rise in mid-to-high single-digit rate from the prior-year quarter.
Additionally, progress in rolling back parts of the Dodd Frank Act cheered investors. The Senate is working on a bipartisan banking bill expected to lower stringent banking regulations. This will likely reduce regulatory compliance cost for several banks.
On the other hand, mortgage rates continued to rise, with 30-year mortgages averaging 4.46% (marking the ninth consecutive weekly increase). The rise seems to be attributable to chances of rate hike later this month and impending trade war following the imposition of tariffs. This steady rise in mortgage rates will limit refinancing activity, thereby hurting banks mortgage banking revenues to some extent.
Coming to company-specific news related to banks, business misconducts continued to dominate headlines for Wells Fargo (NYSE:WFC) .
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