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Payments Giant American Express reported mixed second-quarter results on Friday, amid concerns that the economic recovery is stalling after a resurgence in coronavirus cases.
American Express shares are down 22% from the beginning of the year, still down 30.02% from its 52 weeks high of $138.13 set on January 24. They are underperforming the S&P 500 which is up 0.15% from the start of the year.
Wall Street expected American Express earnings per share to plunge 94% to 13 cents, according to Zacks Investment Research. Revenue had been seen slipping 27% to $7.9 billion. Some consensus forecasts called for an outright loss.
The credit card giant said payment volumes improved in May and June, but the earnings release didn’t discuss activity in July so far. The American Express earnings report comes after airlines have warned that travel demand is heading back down again. Meanwhile, the number of weekly jobless claims has increased for the first time since March, when lockdowns first began shutting down the economy.
Credit card issuer American Express Co reported an 85% slump in quarterly profit on Friday after it set aside nearly $628 million to prepare for a flood of potential defaults caused by coronavirus-led layoffs.
The company’s net income fell to $257 million, or 29 cents per share, in the second quarter ended June 30, from $1.76 billion, or $2.07 per share, a year earlier. Total revenue, excluding interest expense, fell 29.2% to $7.67 billion.
American Express announced earnings per share of $0.29 on revenue of $7.68B. Analysts anticipated EPS of $-0.05 on revenue of $8.24B.
American Express’s report follows earnings beat by JPMorgan on July 14, who reported EPS of $1.38 on revenue of $33.82B, compared to forecasts EPS of $1.15 on revenue of $30.41B.
The health crisis has hammered economies worldwide and triggered mass layoffs, which in turn made more people default on their bills, hurting credit card issuers.
AmEx said its consolidated loss provisions stood at $1.6 billion, up from $861 million a year ago, with the increase driven primarily by new reserves created to account for the effects of the pandemic.
On the technical front, the RSI is at 51.87% and suggests that the market can move in an upward direction. The current price is trading above all the moving averages. The stochastic is forming an upside crossover.
Overall Bias is Positive and Short-term trades can be initiated with below mentioned Stop Loss and Profit targets.
Trade Suggestion—AMERICAN EXPRESS CO—BUY at 96.69 Take Profit at 105 Stop Loss at 90.00