4 Jan 2012: Analysts predict 57% growth for banks

INDICES POINTS CHANGE
FTSE 100 5709 Up 16bp
S&P 500 1277 Up 155bp
NIFTY 50 India 4749 Down 33bp

Major Stories

  • Analysts predict 57% growth for major banks
    • Six largest lenders (incl. JP Morgan, Bank of America, Goldman Sachs) predicted to post an average growth of 57% this year
    • This growth is being attributed to better trading results, more I-banking deals, and lower credit costs
    • Banks have also targeted cost cutting- Bank of America targets $5bn and GS $1bn annually
  • US Fed to forecast rates for years ahead
    • The US federal reserve will publish forecasts of its own interest rates, in a move for ‘greater transparency’
    • These forecasts will give the markets a clearer indication of how Fed will change its policies
    • Recent reports suggest improvement in macro-economic conditions in the US, but they have kept their forecasts low to also take into account the effects from Eurozone crisis
  • China to increase minimum wage
    • Beijing and Shenzhen to increase the minimum wages despite slower economic growth
    • This will in particular affect owners of smaller businesses as they are receiving fewer orders from the Western countries
    • These wage increases are to accommodate for the sharp increases in living costs in China
    • This might turn out to be a negative move, as a lot of smaller to medium sized businesses might be forced to shut, thus increasing unemployment in China
  • Europe displays contrasting unemployment levels
    • Data shows contrasting unemployment levels in Europe: Germany has lowest unemployment in two decades while Spain’s has increased for fifth consecutive month
    • Spanish seasonally adjusted joblessness is at 23% of workforce, while Germany’s is at 6.8%
    • Countries to the north of Germany have experienced strong growth, while those to the South have had to stick to austerity measures to reduce their deficits
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