Goldman Sachs Profit, Revenue Jump
Topic of the day
Goldman Sachs Group Inc.’s profit shot higher in the second quarter, as accelerating economic growth and market gains lifted many of the Wall Street firm’s business lines. Goldman reported quarterly profit of $5.49 billion, or $15.02 a share, on revenue of $15.39 billion. Both measures were up significantly from a year ago and better than the expectations of analysts polled by FactSet, who forecast profit of $10.25 a share. This spring’s rapid U.S. economic recovery, helped by the rollout of Covid-19 vaccines and extensive business reopening and hiring, energized banks’ deal makers. Corporate chieftains and buyout firms put hundreds of billions of dollars to work in big-ticket acquisitions. Investors gobbled up billions of dollars of stock sold by startups in marquee initial public offerings and private fundraising rounds. Goldman’s investment bankers brought in $3.61 billion in fees in the second quarter, up 36% from last year’s second quarter. Fees from arranging initial public offerings and other stock sales rose 18% to $1.24 billion, while fees from advising on mergers increased 83% to $1.26 billion.
Little happened on the Zurich stock exchange on Tuesday after the friendly start to the week. After moving in a fairly narrow range throughout the day, the SMI ended the day just about holding its ground. The market barometer lost 0.1 per cent to 12,071 points. Among the 20 SMI stocks, there were 10 price losers and 8 price winners, Zurich Insurance and ABB closed unchanged. 27.46 (Monday: 28.31) million shares were traded. As on the previous day, Swatch was high on the gainers' side. However, a meagre gain of 0.9 per cent was enough. Thanks to strong sales in China, the USA and Russia, the watchmaker returned to profit in the first half of the year and expects business to remain good in view of further easing in many countries for tourism. Credit Suisse (-1.4%) was at the bottom, while UBS (-0.1%) was in the middle. UBS analysts expect a volatile share performance until the presentation of the business figures on 29 July and a rather cautious basic attitude of investors after Credit Suisse's billion-euro loss with hedge fund client Archegos Capital.
European equity indices ended Tuesday's session close to balance, after the announcement of a better than expected acceleration of inflation in the United States in June. The Stoxx Europe 600 index gained 0.03% to 461 points. In Paris, the CAC 40 and SBF 120 lost 0.01% and 0.05% respectively. In Frankfurt, the DAX 30 was down 0.01%, while in London, the FTSE 100 was also down 0.01%. Alstom lost 4.3%. Analysts at Goldman Sachs cut their recommendation on the stock to "neutral" from "buy" after the group warned last week that its cash generation would be significantly negative over the full 2021-2022 financial year. Natixis Investment Managers (Natixis) today announced that it is the Global Advisor and main sponsor of the Bloomberg Sustainable Business Summit, which will be held on July 13-14, 2021. The Bloomberg Sustainable Business Summit is a global series focused on bridging the gap between business leaders acting on their sustainability goals and investors incorporating Environmental, Social, and Governance (ESG) in their decision making process. This year's Summit will be held as a two-day virtual event, with sessions that cross time zones, bringing together global voices from business, finance and government, to focus on the risks and opportunities for corporate executives and forward-thinking investors in a 21st-century economy. Volkswagen AG on Tuesday raised its midterm profitability target, honing its ambitions to shift to battery-electric vehicles and tap future revenue streams from software and mobility services through the end of the decade.
U.S. stocks fell and bond yields rose Tuesday as investors recoiled from another hot inflation report and earnings out of some big banks. Trading turned volatile in the latter half of the session around the same time Treasury yields kicked higher. The S&P 500 and Nasdaq Composite both surrendered early gains, falling into the red alongside a Dow Jones Industrial Average that had already been hampered by falling Boeing shares and a muted reception to the first batch of quarterly profit reports. The S&P 500 fell 15.42 points, or 0.4%, to 4369.21, the Dow slid 107.39 points, or 0.3%, to 34888.79 and the Nasdaq declined 55.59 points, or 0.4%, to 14677.65. JPMorgan said second-quarter profit surged and customer spending is returning to pre-pandemic levels, evidence of a strong economic recovery that shows few signs of slowing. The nation’s biggest bank posted a profit of $11.95 billion, or $3.78 per share, compared with $4.69 billion or $1.38 per share a year ago. That beat the expectations of analysts, who had predicted $3.20 per share. Yet revenue fell 8% to $30.48 billion from $33.08 billion a year ago, the result of depressed lending margins and lower trading revenue. Analysts had expected $29.97 billion in revenue, according to FactSet. The divergence between profit and revenue is largely due to the extraordinary conditions of the second quarter of 2020, when the coronavirus pandemic appeared poised to decimate the economy. A new production problem has surfaced with Boeing Co.'s 787 Dreamliner, likely further delaying deliveries of the popular wide-body jets, people familiar with the matter said. Boeing expects the newly discovered defect to take at least three weeks to address, according to some of these people. That means its customers may not get new Dreamliners for much of the traditionally busy summer travel season.
High U.S. inflation caused midweek losses on the stock exchanges in East Asia. However, the losses on the Asian trading centers are manageable. The Nikkei-225 in Tokyo fell by 0.3 percent to 28,632 points. Here, especially the steel and chemical stocks show negative signs.
U.S. treasury yields rose in a day marked by higher-than-expected inflation and soft demand in a 30-year bonds auction. The 10-year yield climbed to 1.415% from 1.362% Monday, and the 30-year to 2.037% from 1.993%.
JP Morgan rises Covestro target to 55 (52) EUR – Underweight
UBS rises Wienerberger target to32,40 (29,50) EUR – Neutral
Credit Suisse lowers Orange target to 12 (13) EUR
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