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Morgan Stanley’s shares spike after strong earnings

Thursday, October 17, 2024

Today’s headlines

What’s happening: Shares of Morgan Stanley gained on Wednesday, after the company released results for its third quarter.

What happened: The US bank reported better-than-expected earnings for the latest quarter.

A revival in M&As and IPOs in the quarter provided a boost to the performance of US banks.

How were the results: The New York-based bank reported low double-digit growth in sales for the third quarter.

  • Sales climbed 15.9% year-over-year to $15.38 billion, topping consensus estimates of $14.41 billion.
  • Adjusted earnings rose to $1.88 per share, from $1.38 per share in the year-ago quarter, surpassing Wall Street expectations of $1.58 per share.

Why it matters: Morgan Stanley became the latest bank to surpass market expectations in the third quarter, recording year-over-year gains in both top- and-bottom-line figures.

The bank’s performance outpaced that of rival Goldman Sachs, with a revival in M&A (merger and acquisition) activity and corporate debt issuance.

Morgan Stanley’s net interest income rose to $2.2 billion, from $1.98 billion in the year-ago quarter.

Net revenue at Institutional Securities climbed to $6.8 billion, from $5.7 billion in the year-ago quarter, driven by the upbeat performance of Equity and Fixed Income. Investment Banking revenues jumped 56% year-over-year to $1.46 billion.

Equity net revenue gained 21% to $3.05 billion, while Wealth Management’s revenues surged to $7.27 billion, from $6.40 billion in the year-earlier quarter.

“We are seeing a rise in equity capital markets activity led by financial sponsors, not only for IPOs in the U.S., but also in Europe,” CFO Sharon Yeshaya said.

The company said its provision for credit losses had contracted to $79 million. A decline in provisions in the commercial real estate sector was slightly offset by an increase in the corporate loan portfolio.

How shares responded: Morgan Stanley’s shares gained 6.5% to close at $119.51 on Wednesday, following the release of quarterly results. The stock has added around 27% year to date.

What to watch: Investors will continue monitoring the Fed’s monetary policy easing, which is expected to significantly impact Morgan Stanley’s overall results ahead. M&A activity will also remain in focus.

The markets today

The euro in focus today ahead of the European Central Bank’s interest rate decision

Context: The EUR/USD forex pair traded almost flat this morning, as investors monitored the ECB’s monetary policy outlook.

Details: European Central Bank’s policymakers indicated that the central bank is on track to announcing a third cut in interest rates this year, with inflation concerns easing faster than projected.

The ECB had lowered interest rates by 25 basis points (bps) at its June meeting, followed by another rate cut in September. The central bank’s key rate has been lowered from a record high of 4% to 3.5%.

Investors widely expect the ECB to announce another rate cut of 25 bps after its meeting today. Markets also expect central bank policymakers to announce another rate cut before the end of this year.

Weakness in the US dollar lent support to the EUR/USD forex pair this morning. The US dollar index, which measures the greenback’s performance versus a basket of major peers, slipped around 0.1% to 103.51 on Thursday.

The EUR/USD forex pair traded almost flat at 1.0862 this morning. The STOXX Europe 600 Index fell 0.19% to close at 519.60 on Wednesday.

What to watch: Investors await the European Central Bank’s interest rate decision today. Data on inflation rate and balance of trade from the Eurozone will also remain in focus.

Analysts expect the Eurozone’s annual inflation rate to decline to 1.8% in September, from 2.2% in August. The region’s trade surplus is projected to shrink to €17.8 billion in August, from €21.2 billion in the previous month.

Other Markets: US trading indices closed higher on Wednesday, with the Dow Jones index, S&P 500 and Nasdaq 100 up by 0.79%, 0.47% and 0.07%, respectively.

The news shaping the markets

Australia announced plans to send 49 superseded M1A1 tanks to Ukraine for its war with Russia. The news sent the RUB/USD pair lower in forex trading this morning.


The American Petroleum Institute said that US crude oil inventories fell by 1.58 million barrels during the week ending October 11, compared to a gain of 10.9 million barrels in the previous week, which sent WTI crude oil prices higher this morning.


Canada’s manufacturing sales contracted by 1.3% in August, compared to a 1.1% gain in July, which exerted pressure on the CAD/USD forex pair.


Japan posted a trade deficit of ¥294.24 billion in September, compared to a year-ago surplus of ¥60.56 billion. However, the JPY/USD pair rose in forex trading this morning.


Australia’s employment surged by 64,100 to a record high of 14.52 million in September. The figure surpassing market estimates of 25,000 job adds lent support to the AUD/USD forex pair.

What else to watch today

Italy’s balance of trade, Turkey’s gross foreign exchange reserves and Central Bank of Turkey interest rate decision, Canada’s foreign investment in securities, as well as US retail sales, initial jobless claims, Philadelphia Fed manufacturing index, continuing jobless claims, industrial production, capacity utilisation, manufacturing production, business inventories, NAHB/Wells Fargo housing market index, natural gas stocks change, crude oil inventories, gasoline stocks change, distillate stocks, government budget, net purchases of US treasury bonds and notes, net treasury international capital flows and central bank balance sheet.


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