Investment bank Morgan Stanley’s profit hit an all-time high at the start of 2018 as rising concerns about a trade war between the world’s two-largest economies fueled growth in its markets businesses.
Stock-trading revenue at the New York-based company rose 27 percent to $2.56 billion, while bond-trading climbed 9 percent to $1.88 billion. That mirrored gains at rivals from Bank of America to Goldman Sachs, some of which expanded even more dramatically.
“This was a strong trading quarter,” and Morgan Stanley was able to expand its share of the fixed-income trading business, said Brian Kleinhanzl, an analyst with brokerage Keefe, Bruyette & Woods. While equities trading was strong, too, that was expected, he said.
Firmwide, net income surged 40 percent to $2.58 billion, or $1 .45 a share, as total revenue climbed 14 percent to $11.1 billion.
“Morgan Stanley and its peers have recorded very significant improvements in overall results,” said Axel Pierron, managing director of capital markets management consultancy Opimas. “More importantly, Morgan Stanley seems well positioned to also weather turbulent market conditions.”
And turbulence is growing. Clients across Wall Street are trying to insulate their portfolios from loss as concerns about President Trump’s protectionist stance on international commerce combines with the possibility of accelerating interest-rate increases and regulatory scrutiny of technology firms to pull markets back from all-time highs fueled by corporate tax-rate cuts.
The blue-chip Dow Jones Industrial Average, which reached an all-time high of 26,616 in late January, has since given up 7.7 percent of its value as Trump followed up on stiff metals duties with tariffs on some $50 billion of China’s imports, then threatened levies on $100 billion more when Beijing retaliated.
“Our sales and trading businesses performed exceptionally well against a backdrop of heightened volatility,” CEO James Gorman said on an earnings call, attributing gains to the “dominance of equities and the breadth of fixed-income” operations.
Morgan Stanley climbed 1.8 percent to $54.20 before the start of regular trading in New York on Wednesday.
