Major US banks, First quarter good performance...Still wary of tariff risk
Although performance increased amid tariff effects, uncertainty risk remains on Wall Street (Source: Reuters)
Large American financial institutions are attracting attention with record-breaking performances in the first quarter of this year, despite increased market volatility due to President Trump’s high tariff policy. However, concerns are also growing about the negative impact on the overall market if such uncertainty prolongs.
According to Bloomberg and Financial Times on the 14th, Goldman Sachs hit an all-time high by raising $4.19 billion in stock trading revenue in the first quarter, a 27% increase compared to the same period last year. Total profit increased by 15% to $4.74 billion, and total revenue reached $15.06 billion, recording the highest quarter performance.
JP Morgan also broke a record in four years with stock trading revenue soaring 48% to $3.81 billion during the same period, and Morgan Stanley also hit an all-time high with trading revenue increasing 45% to $4.13 billion.
The strong performance of large banks is analyzed as investors actively engaged in trading to readjust positions amid increased volatility. After President Trump announced high tariffs of 145% on Chinese imports early this month, the stock market showed rapid movement and foreign exchange and emerging market trading volumes also increased by more than 75% according to Bank of America standards.
However, concerns exist behind the market’s rapid movements. JP Morgan CEO Jamie Dimon drew attention by selling approximately 130,000 shares worth about $31.5 million. Reuters interpreted this as an internal warning signal about the side effects of the trade war, along with plans for a future CEO system.
Goldman Sachs CEO David Solomon explained in this quarter’s performance announcement that "despite increased market uncertainty, customers are quickly changing investment positions, so the trading sector continues to see a positive flow." He also mentioned the possibility of a U.S. economic recession and hoped the government would fully recognize the impact of the trade war.
In the market, unusual simultaneous weakness in U.S. stocks, the dollar, and treasury bonds is gaining attention. Various aftershocks are expected due to rising interest rates and concerns over corporate bankruptcies, such as increased provisions for credit losses, contraction of M&A, and a freeze in the junk bond market. Indeed, U.S. corporate bankruptcies in the first quarter hit the highest level in 15 years, and some large banks suspended fundraising plans related to junk bonds.
Citi Group CFO Mark Mason emphasized that "the current uncertainty must be resolved swiftly for managers to make core decisions," and that clear policy direction would be the key to market recovery. Wall Street’s performance is certainly impressive, but lurking behind it are unpredictable risks.