The last quarter was a turbulent one for global financial markets. President Trump’s ‘Liberation Day’ and the tariff wave that followed rattled markets. Some sectors bounced back, while others are still wobbling.
Now, as Q2 earnings season gets underway, it’s not just about profits, but also what the numbers say about the road ahead and how these sectors are navigating messy times.
This week, quarterly reports for the period April-June 2025 from major global banks, including JPMorgan, Morgan Stanley and Goldman Sachs have trickled in, marking the unofficial start of the second quarter earnings season.
Kate Leaman, chief market analyst at AvaTrade, offers the following comments on the results and trends across the big banks’ quarterly earnings, while also providing a look ahead.
Kate said, “The big banks’ Q2 earnings results offer the first real pulse check for investors: are people borrowing? How’s credit holding up? With rates and inflation still in play, their outlooks matter more than ever.
“The reports released so far reveal a financial sector increasingly moving along divergent paths. Wells Fargo’s decision to lower its full-year net interest income guidance underscores that the era of easy gains from higher interest rates is beginning to fade, particularly for banks still working through legacy challenges or facing softer loan growth. Meanwhile, despite turning in a solid quarter, Bank of America hinted at the reality facing traditional lenders: the tailwind from higher interest rates is beginning to wane, and revenue dipped slightly from the first quarter, underscoring the margin pressures that could intensify if loan growth cools further.
“In contrast, Goldman Sachs delivered a standout performance, driven by record stock trading revenue and robust activity in fixed income and commodities. Its net revenue climbed sharply, showcasing how volatility, geopolitical events and renewed market activity are reviving trading floors after a quieter stretch. JPMorgan Chase and Citigroup also delivered solid results, buoyed by strength in trading and a rebound in investment banking, which is helping to offset any pressure on lending margins.
“These results reinforce a clear narrative taking shape across Wall Street: banks with powerful trading and wealth management engines are well-positioned to capitalise on shifting markets and renewed client activity. In contrast, lenders more heavily reliant on interest income face a more challenging landscape as the rate environment stabilises and competition intensifies.
“Looking ahead, the critical question is whether the resurgence in capital markets activity is sustainable or merely a temporary spike amid lingering geopolitical and economic uncertainty. For the strongest banks, diversified revenue streams remain their greatest asset, allowing them to navigate the crosscurrents of a complex macro backdrop. But this quarter has underscored one thing above all: the gap is widening between those simply weathering the environment and those actively capitalising on it.
“Ultimately for banks, this earnings season isn’t just about who beats expectations. It’s about which companies can clearly explain how they’re navigating disruption – and which ones can turn uncertainty into opportunity.”
