The big six U.S banks’ investment banking revenues will decline by 35% in the first quarter.
The Kremlin announced this morning that its special military operation might end soon since it has served its purpose. The war has increased fears and worries among global investors and banks. Today, the E.U announced that it has frozen $32.6 billion worth of assets since conducting the sanction.
As part of an economic strategy to put pressure on Putin and the Kremlin, Western forces cut off and banded Russia economically. However, the sanctions were a two-edged sword due to the high increases and oil shortages that most countries suffer from.
However, despite the negative news, the Wall Street stock market ended its session today on a strong note. The U.S dollar rebounded and it’s nearing its 2020 high level. Oil prices declined after three days of increases, and gold has declined.
The S&P and Nasdaq led this week’s gains among the major 500 companies, yet their losses were a bit more dramatic.
For the tech companies, Apple and Twitter both rose significantly and boosted the tech index. No one can deny that Nasdaq has suffered from repeated losses in recent months.
However, due to a strong labor comeback and market performance, the tech companies managed to cover their losses in some sense.
The United States continues to hope and work to find an alternative solution for Russian oil and gas to combat rising prices. The Fed remains committed to its tightening policy, which includes increasing interest rates and decreasing purchased bond amounts.
According to experts, the first quarter will be difficult for all major industries, including U.S banks. Despite today’s positive news, Reuters published an alarming and terrifying report this Friday morning.
One of the consequences of the Russian special military operation is the future decline of the U.S banks’ earnings. Analysis from Refinitiv I/B/E/S found that the earnings of the big six banks in the U.S will decline by 35% in the first quarter compared to the same period last year.
According to the analysis, the war had a significant impact on investment banking revenues, causing a sharp decline.
Amid fears of rising costs of materials and goods, the market is more volatile. As a result, the banking industry’s investment earnings are declining.
On the bright side, the report added that this sharp decline will be only temporary. According to experts, the big six banks, including JPMorgan, will suffer short-term pain. Yet, the banks’ revenues will rebound and skyrocket in the long term.
By the end of the first quarter, the U.S banks’ revues will decline by 35%–36%, which will also be an 18% decline in banking trading.
Because of current events and variants, U.S banks will face some difficult challenges and decisions.
On one hand, the war is driving inflation to higher levels. On the other hand, investors are focusing on interest rate hikes and the prospect of the banks. Higher interest rates usually lead to a sharp decline in loan services and banking services as well.
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