In my blog post on September Forex Industry Metrics, I’ve shared with y’all how some brokers and a few exchanges hit a few road bumps in the past months. As it turns out, even the hotshot financial institutions in Wall Street had a rough time, too.
Thanks to the article on the U.S. earnings season by my buddy Forex Gump, I remembered to take a peek at the numbers from the likes of Morgan Stanley, Goldman Sachs, Citigroup, JPMorgan, and Bank of America. Now I’m not too well-versed in accounting jargon so I just decided to zoom in on the entries that may have had a thing or two to do with financial market fluctuations.
Morgan Stanley reported weaker than expected earnings data, mostly due to the 17% drop in trading revenue in Q3. According to CEO James Gorman, volatility in global markets during the third quarter led to a difficult environment, which was probably why most of its clients steered clear of investing in bonds, forex, and commodities. All in all, this contributed to the company’s 42% drop in profits.
Goldman Sachs also printed weaker than expected earnings figures, with investment banking revenue indicating a 23% drop from the previous quarter. Fixed income, commodities, and forex trading revenue landed at $1.46 billion, 33% lower from the same period last year. CEO Lloyd Blankfein also pointed out that the company witnessed lower activity and declining asset prices due to renewed concerns about global economic growth.
Meanwhile, JPMorgan failed to meet analysts’ expectations when it comes to earnings and revenues for Q3, after printing impressive back-to-back quarterly results. Had the company not been able to book tax benefits to the tune of $2.2 billion over the quarter, their performance metrics might’ve fared much worse. CEO Jamie Dimon also highlighted the challenging global environment during the period, which weighed on business and consumer activity.
Bank of America managed to beat market expectations in terms of earnings but still reported an 11% year-over-year decline in fixed income, forex, and commodities sales and trading revenue. For Citigroup, market securities and services revenue slumped to $4 billion, dragged down by a 16% annualized decline in fixed income markets revenue. The report indicated that this was most likely spurred by lower client activity levels and a less favorable trading environment.
In a nutshell, everyone and his momma had quite a bumpy ride in Q3 2015, as China’s slowdown brought dark clouds on the horizon while the Fed’s looming interest rate hike made matters more complicated. Of course some forex traders were able to thrive in the volatile environment, as more spikes and reversals probably meant more profit opportunities. What’s great about forex trading, after all, is that we can be able to catch pips with risk-off positions even when other markets are in a slump.
How did your trading activity fare in Q3? If you also had a rough time last quarter, don’t fret just yet! We’ve still got a few more months left in 2015 to turn things around. It’s the final stretch so let’s finish strong!