Morgan Stanley's quarterly profits surge on trading gains

Morgan Stanley's quarterly profits surge on trading gains

Morgan Stanley's quarterly profits surge on trading gains

Investment banking giant Morgan Stanley (MS - Free Report) reported its first-quarter results before the market opened on Wednesday, marking one of the final earnings releases from the major financial players this season.

Through Tuesday's close, Morgan Stanley's shares had risen about 20 percent since the presidential election in November, compared with an 18-percent rise in KBW Bank index. Bond sales and trading revenues were $1.7 billion versus $873 million a year earlier. Hong Kong's Hang Seng index fell 0.4 percent to 23,825.88 while the Shanghai Composite Index lost 0.8 percent to 3,170.69. Stock traders acquired 1,925 call options on the stock.

The economic calendar in the USA on Wednesday includes Oil Inventories for the week ended April 14, at 10:30 a.m. EDT, and the Federal Reserve's "Beige Book" at 2 p.m. As wages rise and people spend more money, he thinks the economy will keep growing.

Momentum in markets at the start of the year related to the USA election may be showing signs of slowing, Pruzan said, citing "political uncertainty in the USA around policy initiatives, as well as geopolitical risks like what we saw in Syria and North Korea" and the French elections. "When they get wage increases, they're more likely to spend those in the future than to save them".

CMC Markets analyst Colin Cieszynski said: "Action in USA stocks moving deeper into earnings season indicates that traders appear to be more in punishing those who fail to meet inflated expectations and taking profits against positive news, than in adding to positions".

The gains began to fade around noon as oil prices and energy companies sagged. Benchmark U.S. crude lost $1.48, or 2.8 percent, to $50.93 a barrel in NY. Brent crude, used to price global oils, fell 28 cents to $54.61 per barrel in London. Chevron $1.45, or 1.4 percent, to $104.23 and Marathon Oil sank 68 cents, or 4.3 percent, to $15.06.

IBM slumped 4.9 percent after reporting sales that missed estimates.

Net profits at the USA bank surged 70pc to $1.9bn during the first three months of the year after it enjoyed a near doubling in revenues from its fixed income trading division to $1.7bn from $873m in the same period in 2016. IBM stock fell $8.76, or 5.2 percent, to $161.29.

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Bond prices fell, reversing most of their gains from a day earlier. That helped banks but hurt high-dividend payers including utilities and household goods companies.

SHIFT INTO DRIVE: Retailers of cars, auto parts, tires and rental cars climbed after a strong quarter from Genuine Parts.

Genuine Parts raised its profit forecast for the year, although it acknowledged its USA business has been weak. Its equities traders held up better than Goldman's, registering a 2 percent decline year-over-year compared with its rival's almost 7 percent. Of the unit's $2.2 trillion in client assets, about 42% reside in fee-based accounts, up from 40% a year earlier.

Revenues and pretax income were all higher than in the same period past year: institutional securities revenues rose 39% to $5.15 billion and pretax profits were up 91%; wealth management revenues rose 11% to $4.06 billion and pretax profits rose 24%; and investment management revenues rose 28% to $609 million while pretax profits were up 134%. That continued what's mostly been a strong first quarter for banks and financial companies.

The bank's results stood in sharp contrast to those Goldman Sachs, the only lender among the big Wall Street banks to have reported a drop in trading revenue.

The share price of the company (NYSE:MS) was down -0.67%, with a high of 41.55 during the day and the volume of Morgan Stanley shares traded was 13916209.

Morgan Stanley MS.N surprised Wall Street on Wednesday by producing a 74 percent jump in quarterly profit on the strength of a business that analysts and investors had for years written off as dead. The company said shipments of its da Vinci device and surgeries performed with it both jumped.

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