The earnings reporting week of US banks is creating significant pressure on Wall Street amidst a turbulent economic and political backdrop.
US financial giants are simultaneously announcing their earnings while trade tensions, tariff policies, and global political instability are making investors anxious about economic growth prospects.
MAIN CONTENT
US banks face profit pressure due to rising costs from tariffs and stagnant consumer demand.
The European banking sector unexpectedly saw strong growth thanks to investment banking and M&A activities.
Global political instability, especially at the G20 and trade disputes, poses high risks to financial markets.
What pressures are affecting the profits of US banks in the reporting week?
Analysts, such as Goldman Sachs, state that profits of US banks have significantly decreased due to high tariff costs but limited ability to raise selling prices, resulting in squeezed profit margins.
Goldman Sachs forecasts that earnings growth per share of the S&P 500 will only reach 4% this quarter, a sharp decrease from 12% in the first quarter. In reality, companies are struggling to balance selling prices with rising costs, negatively impacting profits.
"US businesses are experiencing rising costs due to tariffs but are only making slight price adjustments, which is squeezing their profit margins."
Goldman Sachs analysis, 2024
Why are European banks performing better?
Unlike the US, European banks achieved impressive results with the best half-year profits since 1997, thanks to strong growth in investment banking and vibrant M&A activities.
In July, many European banks took advantage of a more stable political and economic environment, allowing them to capitalize on cash flows from large financial transactions and meet capital market demand.
What is the impact of global political instability on the US financial and economic markets?
The US did not attend the G20 Finance Ministers and Central Bank Governors meeting in Durban, South Africa, leaving a significant gap in international cooperation. At the same time, trade tensions with South Africa and European countries are increasing risks for the market.
The increase in tariffs with Mexico and the EU, along with economic data such as the Consumer Price Index, Producer Price Index, and retail sales released this week, will clarify the impact and direction of economic policy in the near future.
"The absence of the US at the G20 and ongoing trade tensions have led to a decline in market confidence, creating significant pressure for global economic stability."
Reuters, G20 Report, August 2024
What key economic data will impact the financial markets this week?
This week, several key indicators will be released including: the Consumer Price Index (CPI) for June, the Producer Price Index (PPI), retail sales data, and the University of Michigan's consumer sentiment index. 12 speeches by Federal Reserve officials will also be closely monitored for insights on monetary policy.
How will businesses respond to the risk of rising costs and a myriad of economic challenges?
Investors expect answers from CEOs in earnings report press conferences to provide clearer direction on how businesses are responding to tariff pressures, inflation, declining consumer demand, and global market developments.
Frequently Asked Questions
1. Why did US bank profits decline in this reporting period? Rising costs due to tariffs are the main reason, while only slight price increases are putting pressure on profit margins. 2. How did European banks achieve impressive profit growth? Thanks to a boom in investment banking and M&A activity in the first half of the year, the operating performance of European banks has significantly improved. 3. What is the impact of the US not attending the G20? This undermines trust and international cooperation, increasing the risk of trade tensions, negatively affecting global market stability. 4. What economic indicators are most important this week? CPI, PPI, retail sales, and consumer sentiment index are key indicators reflecting the economic health of June and market outlook. 5. What should investors pay attention to in US bank earnings calls? The ability to adapt to the current economic environment and forecasts regarding inflation and tariffs will determine the next market trend.
Source: https://tintucbitcoin.com/wall-street-cang-thang-vi-giao-dich-g20/
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