Wall street
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Despite recent market turmoil, Wall Street’s revenues from capital markets activity — trading and investment banking — are expected to be relatively flat for the first quarter, says Moody’s Ratings.

The large U.S. investment banks — Bank of America Corp, Citigroup Inc., Goldman Sachs Group Inc., JP Morgan Chase & Co., Morgan Stanley, and Wells Fargo & Co. — are slated to begin reporting their first quarter results later this week, starting April 11.

In a new report, Moody’s said it expects that these results will show that Wall Street’s market-driven revenues will be “roughly flat” with the same period last year.

While trading was strong in the first quarter, investment banking activity (debt and equity underwriting and merger and acquisition volumes) were “mixed,” it noted. 

“In trading, high volumes, market volatility spikes and higher bid/ask spreads point to profitable opportunities… that should roughly match the very strong results from a year-ago,” the report said.

In particular, trading volumes and volatility, “were elevated across broad fixed income, currencies and commodities (FICC) and equity markets, pointing to strong trading revenue,” it said.

At the same time, the mixed results in major investment banking categories — with weaker equity underwriting activity, mixed debt markets, and stronger completed M&A activity — point to similar revenue levels overall, compared with the previous year, Moody’s said. 

For instance, initial public offerings (IPOs) were up slightly from last year, but remain weak on a historical basis, it said, and secondary equity offerings were down year-over-year.

In debt markets, issuance volumes were mixed, it said, with high-yield bond and investment-grade loan volume down year-over-year, but leveraged loan and investment-grade bond volume, “matching the very strong levels reported a year ago,” it said. 

The number of completed M&A deals was flat on a quarter-over-quarter basis, but rose year-over-year, it noted.