Similar to the first half of the year, coronavirus-related concerns continued give rise to market volatility during third-quarter 2020. Thus, driven by a spike in volatility and higher client activities, JPMorgan’s JPM trading business is likely to have received a substantial boost. Markets revenues, which constitute approximately 20% of total revenues, are likely to reflect positively on its upcoming results, slated to release on Oct 13, before market open.
The coronavirus pandemic and resultant economic slowdown weighed on investor sentiments, while support from government’s stimulus package and the Federal Reserve’s efforts to support the economy were on the positive side. Thus, equity markets witnessed a solid performance during the quarter. Likewise, fixed income markets saw a robust performance.
Therefore, JPMorgan’s equity and fixed income markets revenues are expected to have improved in the to-be-reported quarter.
At an investor conference in mid-September, management provided outlook related to markets revenues. The bank expects markets revenues to be up 20% year over year.
The Zacks Consensus Estimate for equity markets revenues of $1.86 billion suggests a rise of 22.7% from the prior-year reported number. The consensus estimate for fixed income trading revenues of $4.3 billion indicates an increase of 20.8%.
Other Major Factors at Play
Investment Banking (IB) Fees: Deal making rebounded in third-quarter 2020 as economic and business activities gradually resumed. During the quarter, dealmakers revisited transactions that were on hold as coronavirus wreaked havoc across the world. Hence, JPMorgan’s advisory fees are likely to have been favorably impacted.
Likewise, IPO activities rebounded, with the third quarter being one of the busiest since 2000. Further, as companies continued to build liquidity to tide over the pandemic-induced crisis, there was a rise in follow-up equity issuances.
Also, amid near-zero interest rates and the Federal Reserve’s bond purchase program that commenced on Mar