Trading revenue surged at JPMorgan Chase, the largest U.S. lender, amid first-quarter market volatility spurred by concern that President Trump will wage a trade war against China.
The results raise the odds of gains at the rest of the major Wall Street firms, where trading units saw revenue slide last year as slow, steady growth replaced the fluctuations spurred by Britain’s surprise decision to leave the European Union in 2016 and Trump’s victory in the U.S. presidential election.
Bond-trading revenue at New York-based JPMorgan climbed 8 percent to $4.6 billion, while stock-trading gained 26 percent to $2 billion as investors shifted positions to insulate their wealth from U.S. plans to impose levies on Chinese imports and Beijing’s retaliation.
“We continued to see and experience higher volatility through the quarter,” Chief Financial Officer Marianne Lake said on a call with reporters. “It is a lot to do with the trade-and-tariffs narrative, a little bit of tech and valuation uncertainty. As that plays out, we can see that reduced, or continue at these somewhat more elevated levels, which are generally constructive.”
Combined with lending growth, higher credit card sales and increases in merger-advisory services, the trading gains drove total revenue up 10 percent to $28.5 billion, the lender said in a statement. Net income climbed 35 percent to $8.7 billion, or $2.37 a share.
In consumer banking, JPMorgan’s largest unit, revenue rose 15 percent to $12.6 billion amid growth in credit card and auto lending
“2018 is off to a good start with our businesses performing well across the board,” CEO Jamie Dimon said in a statement. “The global economy continues to do well, and we remain optimistic about the positive impact of tax reform in the U.S. as business sentiment remains upbeat, and consumers benefit from job and wage growth.”
In the corporate and investment bank, revenue climbed 9 percent to $10.5 billion as merger and advisory service fees increased and combined trading businesses topped a projection of 7.8 percent growth from Brian Kleinhanzl of brokerage Keefe, Bruyette & Woods.
“Volatility across asset classes came and went throughout the first quarter,” Kleinhanzl said in a note to clients before the earnings report.
Dimon, who also chairs the Business Roundtable, an organization representing 200 of the largest U.S. companies, has warned previously that a trade war could erase the economic benefits of a GOP-led tax overhaul that cut the top corporate rate to 21 percent from 35 percent and turned on a spigot of business spending for wages and factories.
Stock markets began gyrating in early March after President 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.
JPMorgan fell 2.8 percent to $110.25 in New York trading on Friday amid a decline in broader markets that dragged all three major U.S. indexes lower.
