Wall Street banks enjoy a £100bn bonanza from Iran war turmoil as volatile stock markets spark a trading frenzy
Wall Street’s biggest banks raked in more than £100billion in revenues in a record-breaking start to the year as a trading bonanza triggered by the Iran war boosted business.
While the International Monetary Fund warned of the devastating impact of the conflict on the global economy, Morgan Stanley and Bank of America became the latest to report bumper results.
The updates echoed upbeat figures this week from Goldman Sachs, JP Morgan Chase and Citigroup, with revenues at the ‘big five’ topping £105billion in the first quarter, while profits reached £31.1billion.
The huge earnings were driven by a frenzy on Wall Street trading desks as investors navigated turmoil on markets, with banks that handle the trades cashing in along the way.
‘The volatility may not be good news for investors’ blood pressure or portfolios, but for the trading divisions of the big US banks it has proved a boon,’ said Danni Hewson, financial analyst at AJ Bell.
Stock markets fell sharply after the outbreak of war in the Middle East sent energy prices soaring.
Volatility: Stock markets fell sharply after the outbreak of war in the Middle East sent energy prices soaring. But they have bounced back on hopes the conflict will be short-lived
But they have bounced back on hopes the conflict will be short-lived, with the S&P 500 hitting a record high last night.
Wall Street bosses expressed caution, however, as the war and geopolitical tensions elsewhere combine with concerns about weak growth, rising government debt and vulnerabilities across the financial system including in the private credit market.
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‘We remain watchful of evolving risks,’ said Bank of America chief executive Brian Moynihan. Jane Fraser, the British boss of Citi and the most powerful female banker on Earth, added: ‘The first quarter is always the strongest and we have an unclear macro environment ahead.’
The latest figures came a day after the boss of JP Morgan, Jamie Dimon (pictured), warned: ‘There is an increasingly complex set of risks, such as geopolitical tensions and wars, energy price volatility, trade uncertainty, large global fiscal deficits and elevated asset prices.’
Wall Street trading desks have been on a hot streak since Donald Trump returned to the White House – with his tariffs and foreign policies triggering ferocious volatility.
This year has been particularly profitable for investment banks as US military operations in Venezuela and then Iran rattled stock, bond, commodity, and currency markets.
Concerns over the impact of artificial intelligence (AI) have also triggered sell-offs in industries such as software – adding to market volatility.
At the same time, a surge in merger and acquisition activity and a growing pipeline of mega-listings of AI and space companies – including Elon Musk’s SpaceX – have boosted investment banking fees.
Yesterday, Bank of America posted a 16 per cent surge in first-quarter profits to £6.3billion after revenues jumped 17 per cent to £22.3billion, while Morgan Stanley earnings rose 30 per cent to £4.1billion following a 16 per cent rise in revenues to £15.2billion.
On Tuesday, JP Morgan revenues jumped 10 per cent to £37.2billion, pushing profits up 13 per cent to £12.2billion, its second-biggest quarterly haul ever.
But Axel Rudolph, an analyst at IG, said: ‘The growing list of geopolitical and macro risks means the outlook’s far from straightforward.’
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