HYCM Seasonal Insights: Keep Your Eye on Financials Into the Fed Meeting
If the Federal Reserve surprise markets next week and take a hawkish tilt by tapering more quickly than the market was expecting then financials can potentiality gain. The reason for this is that higher interest rates typically benefit lenders as the increase in interest rates increases their profit margins.
Over the last 10 years, JPMorgan Chase & Co has risen ten times between Sept 22 and Dec 31. The average rise has been 12.68% and the largest gain was last year with a 34.79% rise. The largest fall was in 2018 with a large -15.78% loss.
Major Trade Risks: Any major negative news for JP Morgan could invalidate this outlook. If the Fed are not hawkish next week the shares could still rise, so the risk is somewhat asymmetric in terms of the Fed’s policy.