Sector movers: Banks pace gains

(Sharecast News) - Bank shares paced gains at the end of the week amid a raft of well-received sector earnings on the other side of the Atlantic and due to the possibility of further rate hikes in both the US and UK. Nonetheless, while J.P.Morgan and Citigroup shares in particular caught a strong bid following their latest quarterly results, Wells Fargo was up only slightly, as was the case of the KBW Bank sector index.

Another reason potential trigger behind the gains, both in the US and UK, was the University of Michigan's survey data for mid-April which revealed a sharp one percentage point jump in 12-month inflation expectations back to 4.6%.

Together with the latest reading for retail sales, which saw the so-called control group that feeds in GDP calculations fall by a less than expected 0.5% month-on-month (consensus: -0.3%), Fed funds futures moved to price in a further 25bp rate hike by the Fed at its 2-3 May meeting.

Shares of Barclays did well on Friday, as did Asia-focused names HSBC and StanChart.

For the latter two banking groups, it should be perhaps be noted that Chinese authorities moved overnight to deny reports that they had set up a no-fly zone north of Taiwan, in what some market commentary had previously described as a highly unusual move.

In the background, in a research note sent to clients, BofA Securities strategists led by Michael Hartnett estimated that if headline US CPI rose at an average month-on-month clip of 0.4% then inflation would fall to somewhat above 3.0% year-on-year by June before bouncing back to 4.2% by October.

At half that rate on the other hand, headline CPI would slow to around 2.5% by June and be at 2.7% in October, while if gains came in at 0.1% on the month then CPI would be back at the 2.0% target on both time frames.

Another team of BofA economists meanwhile forecast that UK CPI inflation was set to slide to 3.8% by October, although they were careful to note that rate cuts were not imminent.

Indeed, they noted that a further 25bp hike by the Bank of England in May remained a close call.

Top performing sectors so far today

Banks 3,559.68 +2.57%

Automobiles & Parts 1,773.28 +2.53%

Household Goods & Home Construction 11,644.84 +2.01%

Personal Goods 35,832.92 +1.87%

Electronic & Electrical Equipment 9,809.49 +1.86%

Bottom performing sectors so far today

Non-life Insurance 3,110.23 -2.34%

Gas, Water & Multiutilities 6,307.99 -1.77%

Precious Metals and Mining 11,960.31 -1.77%

Electricity 11,113.62 -1.13%

Investment Banking and Brokerage Services 12,710.33 -0.62%