US big banks top Q1 earnings estimates

Today’s headlines

What’s happening: US big banks kicked off the earnings season on Friday, amid concerns related to the economy.

What happened: JPMorgan, Wells Fargo, and Morgan Stanley were among the largest US banks to release their financial results for the first quarter.

While reporting upbeat earnings, the banks warned about President Donald Trump’s tariffs announcements causing economic turbulence and impact economic growth.

How were the results: US big banks reported healthy profitability for the first quarter.

• JPMorgan Chase reported quarterly sales of $46.014 billion, exceeded Wall Street expectations of $44.111 billion. Earnings came in at $5.07 per share, topping consensus estimates of $4.62 per share.
• Morgan Stanley’s revenues grew by 17% year-over-year to $17.74 billion, topping expectations of $16.57 billion. It reported earnings of $2.60 per share, exceeding estimates of $2.21 per share.
• Wells Fargo’s revenues declined 3% year-over-year to $20.15 billion, missing market expectations of $20.75 billion. Despite this, its earnings of $1.39 surpassed consensus estimates of $1.34.

Why it matters: US President Donald Trump has imposed 145% tariffs for China and 10% for most of its trading partners, resulting in significant volatility in the financial markets and fuelling concerns around economic growth.

The US banks are concerned that this uncertainty could result in individuals and businesses taking a more cautious approach.

Equity traders at JPMorgan and Morgan Stanley brought in record revenues amid the surge in markets earlier during the year. Meanwhile, investment banking fees at Wells Fargo rose by 24% due to increased activity in the debt capital markets.

Banks also increased their provisions for credit losses, with JPMorgan keeping aside $973 million for future credit losses. The bank raised its provisions in its institutional securities segment to $91 million during quarter, from $2 million in the previous year. Morgan Stanley increased its provision for credit losses to $135 million.

What to watch: Investors will continue monitoring tariff-related announcements from the US.

The markets today

The British pound in focus today ahead of Tuesday’s jobs data

Context: The GBP/USD forex pair moved higher this morning amid weakness in the US dollar.

Details: US President Donald Trump announced a 90-day pause on tariffs for most countries and exempted tariffs on key electronic products. However, concerns around US economic growth due to the Trump administration’s aggressive trade policies and an escalating trade war with China has lowered the appeal for the greenback.

Weakness in the US dollar lent support to the GBP/USD pair this morning. The US dollar index, which measures the greenback’s performance versus a basket of major peers, fell around 0.6% to 99.48 this morning.

Strong economic data released on Friday also provided a boost to the sterling. The UK’s economy expanded by 0.5% in February, accelerating from a flat reading in the previous month and topping market estimates of 0.1%.

Industrial production grew by 1.5% in February, topping market projections of a flat reading. Manufacturing production climbing by 2.2% in February, following a 1% decline in January.

The GBP/USD forex pair gained around 0.2% to reach 1.3108 this morning.

What to watch: With no major economic report scheduled for today, investors await data on unemployment rate (1000 UAE Time), employment change (1000 UAE Time) and average earnings (1000 UAE Time) on Tuesday.

The UK’s unemployment rate, which came in unchanged at 4.4% from November to January, is expected to remain steady in February. Analysts expect the number of employed people in the UK to rise by 95,000 in February, from the 144,000 surge in the three months to January. Average weekly earnings, including bonuses, which rose by 5.8% year-over-year to £711 per week during the three months leading to January, are expected to increase by 5.7% year-over-year in February.

Other Markets: US trading indices closed higher on Friday, with the Dow Jones index, S&P 500 and Nasdaq 100 up by 1.56%, 1.81% and 1.89%, respectively.

The news shaping the markets

Top diplomats of Russia and Ukraine accused each other of violating the US-brokered agreement to halt strikes on energy infrastructure. The news sent the US dollar index lower in forex trading this morning.

Italy’s credit rating was raised by S&P Global Ratings from “BBB” to “BBB+,” lending support to the EUR/USD forex pair.

Russia’s annual inflation rate accelerated to 10.3% in March. The figure rising to a 10-year high sent the RUB/USD pair lower in forex trading this morning.

Brazil’s Industrial Entrepreneur Confidence Index fell to 48 in April. This being the weakest reading since July 2020 exerted pressure on the BRL/USD forex pair.

New Zealand’s visitor arrivals declined by 2.3% year-over-year to 354,408 in February. However, the NZD/USD pair rose in forex trading this morning.

What else to watch today

Canada’s new motor vehicle sales (1630 UAE Time) and wholesale sales (1630 UAE Time), as well as US consumer inflation expectations (1900 UAE Time), 3-month bill auction (1930 UAE Time), 6-month bill auction (1930 UAE Time), Fed’s Barkin speech (2000 UAE Time) and Fed’s Waller speech (2100 UAE Time).