“Morgan Stanley Traders Top Goldman’s for Second Straight Quarter”
For a second straight quarter, Morgan Stanley posted more fixed-income revenue than its bigger competitor in one of Wall Street’s most hotly contested arenas, reporting the smallest drop among top U.S. investment banks on Wednesday. Equities trading also outperformed Goldman Sachs, as did the firm’s return on equity.
Morgan Stanley shares rose 2.8 percent to $46.42 at 8:19 a.m. in New York.
The firm’s $1.24 billion in fixed-income revenue — a 4.5 percent drop — edged out the $1.16 billion that Goldman Sachs reported Tuesday and beat analysts’ estimates. Equities trading also exceeded expectations, producing $2.16 billion in revenue, a figure that was almost unchanged from a year earlier.
Morgan Stanley’s net income jumped 11 percent to $1.76 billion, or 87 cents a share, from $1.58 billion, or 75 cents, a year earlier. That compares with the 77-cent average estimate of 22 analysts surveyed by Bloomberg.
Wealth-management revenue advanced 9 percent to $4.15 billion as markets climbed, compared with the $4.12 billion prediction from Jason Goldberg of Barclays Plc. Investment-banking revenue rose 28 percent to $1.4 billion on higher volumes in equity and debt underwriting, compared with analysts’ $1.18 billion estimate.
“Strong gasoline demand lifts oil, but high OPEC supplies temper gains”
Oil rose on Wednesday, supported by strong demand for gasoline, but rising output from OPEC producers revived concerns about a persistent overhang of excess crude.
Brent crude futures LCOc1 were up 21 cents at $49.05 a barrel by 1204 GMT, while U.S. West Texas Intermediate crude futures CLc1 were up 14 cents at $46.50 a barrel.
While U.S. crude stocks rose by 1.6 million barrels to 497.2 million barrels in the week to July 14, gasoline stocks fell by a whopping 5.4 million barrels, the American Petroleum Institute said on Tuesday.
Refinery upsets on the U.S. East Coast pushed the U.S. gasoline crack spread RBc1-CLc1, or the profit from refining crude into the motor fuel, to a three-month high at over $20 a barrel.
But supplies from the Organization of the Petroleum Exporting Countries remain high, largely due to rising output from member states Nigeria and Libya, casting a shadow on efforts by the group to rebalance the market. Both countries are exempt from a deal between OPEC and other producers, including Russia, to cut production by around 1.8 million barrels per day between January this year and March 2018.
“Nasdaq, S&P hit record highs as tech, health stocks rise”
The Nasdaq and the S&P 500 opened at record highs on Wednesday, powered by technology and healthcare stocks, while the Dow was weighed down by a fall in IBM’s shares.
The tech-heavy Nasdaq closed at a record high on Tuesday, helped by a jump in Netflix (NFLX.O), with the index posting its longest streak of gains since February 2015.
The S&P tech sector has been the best performing sector this year despite concerns about stretched valuations as investors look for growth sectors immune to policy uncertainties.
Investors will continue to focus on quarterly earnings to see if high valuations are justified in the face of mixed economic data, tepid inflation and policy gridlock in Washington.
Analysts estimate an 8.5 percent rise in second-quarter earnings and a 4.7 percent increase in revenue for the S&P 500 companies from a year earlier, according to Thomson Reuters I/B/E/S.
“Investors fear European economy’s hot run may have peaked”
Europe’s economy has been surging ahead this year but investors are increasingly cautious, fearing that the growth spurt may have peaked and that asset values could take a tumble.
Optimism among fund managers has fallen back from recent highs in Bank of America Merrill Lynch’s monthly survey of the sector, indicating that investors believe the recent rallies may have run their course.
While risks in the bond market and other areas such as the Chinese debt market have been on investors’ radars for some time, fears of a central banking error have only emerged this month – no investors cited it as a potential hazard in June.
UK assets are being shorted more heavily than any other country or asset class in the survey, relative to historic levels of shorting identified by this survey, which has been carried out monthly since 2001.
By contrast banks and eurozone assets are unusually popular long positions, as investors are relatively keen on those by historical standards.