Q1 Results Beat
After gapping lower at the open yesterday, Morgan Stanley shares surged higher by around 5% on the session as traders reacted to a solid set of Q1 results. On the back of weak results from State Street and mixed results from Goldman, there was a little trepidation in the market. However, in terms of headline numbers, MS reported Q1 EPS of $1.70 vs $1.68 expected on revenues of $14.517 billion vs $13.966 billion expected.
Fixed Income Trading Gains
The bank attributed its success in Q1 to the stellar performance of its wealth management business which rose 11% year-on-year, delivering $111 billion in new assets. Bond trading revenues in particular were a major bullish contributor for MS in Q1. Fixed income trading revenues came in at $2.58 billion, above the $2.33 billion Wall Street was looking for. Equities trading was also seen making gains on Q1 coming in at $2.73 billion vs $2.65 billion expected.
Results Down YoY
While the results were strong, its worth noting that overall earnings were down 19% compared with a year earlier with revenues down 2%. The main driver behind this was a surge in expenses. MS noted that compensation costs had ballooned leading overall expenses to come in around $430 million above Wall Street forecasts.
Looking ahead, MS CEO James Gorman struck an optimistic note saying that he didn’t feel the US was in a banking crisis, though some individual banks may be in crisis. Additionally, Gorman signalled the bank’s intention to expand its wealth management business going forward to capitalise on gains.
Technical Views
Morgan Stanley
Shares are currently sitting around the middle of the bull channel after bouncing off support at the 84.23 level. With momentum studies bullish and price sitting a little higher pre-market, the focus is on a continued push higher with a break of 92.21 to open the way for a move up to the 100.71 level.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.