Morgan Stanley is set to report its second-quarter 2020 earnings before the market open on Thursday, July 16, 2020, at approximately 7:15 am (ET). A conference call to discuss the results will be held on July 16, 2020, at 8:00 am (ET). It is attracting a lot of interest from investors as they will get an early look at how the global coronavirus pandemic has impacted investment banking performance. Morgan Stanley is a leading global financial services firm providing investment banking, securities, wealth management and investment management services. The coronavirus pandemic clearly impacted the Morgan Stanley profit in the first quarter. The virus spread created chaos in financial markets that impacted the value of loans, investments and trading assets, and significantly reduced interest income and investment banking fees. In April, Morgan Stanley posted first-quarter profit that missed analysts’ expectations.
However, Morgan Stanley’s second-quarter 2020 results are likely to get support from the rise in market volatility, along with higher client activities, caused by the continuous ambiguity related to the coronavirus pandemic and economic activities even though Banks are affected with problems of low interest rates and the risk of rising loan losses. Uncertainty in the market also provides the opportunity to the larger universal banks to benefit from increased trading and underwriting activity. Analysts expect the company trading income, which is the major revenue component for the company, to have improved in the quarter, thus supporting overall performance to some extent. JPMorgan Chase on Tuesday reported second-quarter profit that beat analysts’ expectations on record trading revenue, bolstering market expectation that Morgan Stanley will also report a similar result.
Morgan Stanley will report its quarter earnings on Thursday before the market open. The big bank giant is expected to report earnings per share of $1.12, slightly lower from $1.23 in the prior year quarter. Revenue is projected at $10.31 billion with the growth estimate for the current quarter at 0.60%.
Technical Analysis
It has been an interesting year for US company shares. Morgan Stanley hit a yearly high of $57.73 in January before slumping to its lowest price in 4 years at $27.17 (18th March) before bouncing back near 78.6% Fibonacci retracement to the highest price post lockdown at $51.83 on June 5th. Currently it trades slightly lower at $50.49 (Tuesday market close). Zacks.com rated the Morgan Stanley as hold call while some analysts upgrade it to buy call.
From the technical perspective, the trend is currently bullish. The price is positioned higher than the 200 Day Moving Averages and 50 Days Moving Averages and the possibility of an MA Golden Cross is high. The share currently trades at $50.49, slightly lower than the June high $51.38 which also acts as immediate resistance. The subsequent resistance is at $57.53 (2020 high). The immediate support for the share is at $45.97 (61.8 fib retracement) which is also near the confluence area of 200 Daily MA and 50 Daily MA. It is followed by the next support at $44.50.
The share price is on course for the best performing quarter in Morgan Stanley’s history. The 14-day RSI indicator is currently above the 50 neutral line at 60.68, which signifies the bullish momentum is still there.
Tunku Ishak Al-Irsyad
Market Analyst
HF Educational Office – Malaysia
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