On February 6, 2024, London, England, JP Morgan Chase headquarters is located in the center of the Canary Wharf financial district.
Mike Camp | In Pictures | Getty Images
This report comes from today’s CNBC Daily Open, our international markets newsletter. CNBC Daily Open keeps investors updated on everything they need to know, no matter where they are. Like what you see? You can subscribe here.
What you need to know today
market instability
U.S. markets mixed Tuesday. this S&P 500 Index and Nasdaq Index rose, be inspired Oracle shares soar 10%while the Dow fell. Asia-Pacific stocks fell Wednesday. Japanese Nikkei 225 Index It fell about 1.4%, extending its seven-day losing streak. this yen It rose to 141.17 against the dollar, its highest level so far this year.
Harris and Trump first debate
In their first face-to-face meeting, Vice President Kamala Harris met with former President Donald Trump for the first — and perhaps only — time. presidential debate. On the economic front, the two candidates are on tariffs, fracking and China policy. After the debate, Taylor Swift supports Harris On Instagram, she signed her post “cat lady without kids.”
The tough environment facing European businesses
China’s business environment is so difficult European businesses become discouraged According to the European Chamber of Commerce, the company operates in the country. If European companies are to further invest in China, Beijing must deliver on its pledge to improve business conditions, the chamber’s document reads.
big price report
The U.S. consumer price index for August will be released later today, while the producer price index, which measures wholesale prices, will be released a day later. they are Recent major economic data The Fed will receive information before next week’s meeting that will influence its decision to cut the size of the economy.
(PRO) Global stocks listed in the United States
With the U.S. economic outlook uncertain, investors can turn their attention to multinational companies. In the meantime, investors may want to stick to the safety of U.S. stocks. CNBC Pro looks for companies based overseas but listed in the U.S., and May experience over 100% upsideAccording to analysts.
bottom line
Everyone loves lower interest rates.
As interest rates fall, borrowing becomes cheaper. For consumers, this is most evident in areas such as housing. For businesses, it tends to increase expansion and investment spending.
These actions trigger a virtuous cycle of spending that boosts consumption and growth, which in turn increases employment. The economy also likes lower interest rates and will expand.
However, there is one industry that generally enjoys higher interest rates: banking.
One way banks make money is through net interest income. This is the difference between the interest rate they charge on loans and the interest rate they offer on savings. As interest rates rise, banks can increase the former (which is a revenue source) while keeping the latter (a cost) low.
However, with interest rate cuts looming, the rich era for big banks is coming to an end.
JPMorgan Chase This poured cold water on the market’s expectations of NII of approximately US$90 billion in 2025.
If the largest U.S. banks think they can’t maintain high lending rates, it’s hard to imagine smaller banks being able to maintain the high NIIs of previous years.
Investors are unimpressed with JPMorgan’s cautious approach. Its shares fell about 5%, dragging down Dow Jones Industrial Averagedown 0.23%.
on the other hand, S&P 500 Index up 0.45%, Nasdaq Index Add 0.84%.
Banks’ NII revenue is likely to decline as interest rate cuts loom, but many banks are likely to see revenue and sentiment rise.
– CNBC’s Jeff Cox, Pia Singh and Brian Evans contributed to this article.
