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27 January 2025

Market Round-Up

The fourth quarter has been exceptional for US banks, led by Goldman Sachs whose earnings per share (EPS) exceeded expectations by more than 45%. The bank reported an EPS of US$11.95, surpassing analysts’ predictions of US$8.21 per share. Goldman Sachs benefited significantly from a rise in investment banking fees driven by dealmaking activity. Many experts believe this trend will continue as President Donald Trump promises a pro-business environment to encourage investors. As a result, Goldman Sachs could be one of the primary gainers over the next four years under President Trump’s administration. The bank’s stock is up nearly 57% over the past 12 months and is expected to maintain its growth as it continues to outperform analyst forecasts.

JPMorgan Chase also delivered a strong earnings release. As the largest US bank by assets, it exceeded EPS expectations by 17.5%, reporting US$4.81 per share versus the forecasted US$4.09. JPMorgan’s stock has performed remarkably well, with shares up nearly 48% over the past 12 months. Citigroup and Wells Fargo have also followed the same path, with both banks surpassing earnings expectations, reflecting the broader trend set by Goldman Sachs and JPMorgan.

Overall, US banking activity has demonstrated more stability this year as declining interest rates and inflation have driven increased fees from mergers & acquisitions and initial public offerings (IPO) across many US banks. While banks are currently benefiting from rate cuts, recent US economic data suggests that the Federal Reserve may pause further cuts this year. Bank of America highlighted that the latest US labour market report showed 256,000 jobs added in December, signalling that further rate reductions are unlikely in the near term. 

UK-based fintech company Monzo is reportedly facing internal disagreements regarding the destination for its IPO. While TS Anil, the firm’s CEO, favours listing in the US, the board prefers London, where more than 10 million of Monzo’s customers reside. The UK currently ranks 20th on Bloomberg’s global IPO market list, with UK equity markets raising only US$1bn from IPOs last year, falling behind countries like Turkey, Spain, and Oman which all ranked higher.

Valued at US$5bn last year, Monzo is currently working towards executing an IPO but is unlikely to list before 2026. Competitors such as Revolut, Europe’s most valuable startup, and Starling Bank are also considering IPOs in the coming years. Nikolay Storonsky, Revolut’s CEO, like Monzo’s, has expressed a preference for a US listing over London.

Once considered a bright spot for UK equity markets, the fintech sector may be reassessed as leading companies increasingly favour the US over London for their IPOs. It remains to be seen whether this perception will change, given the global ambitions of companies like Monzo and Revolut.

Please note that this communication is for information only and does not constitute a recommendation to buy or sell the shares of the investments mentioned. Investments and income arising from them can fall as well as rise in value. Past performance and forecasts are not reliable indicators of future results and performance. The information and views were correct at time of publication but may have changed at point of reading.
Market Round-Up
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