LIVE MARKETS-Investment banks eye solid Q1 season, but caution creeps in

Welcome to the home for real-time coverage of markets brought to you by Reuters reporters. You can share your thoughts with us at markets.research@thomsonreuters.com

INVESTMENT BANKS EYE SOLID Q1 SEASON, BUT CAUTION CREEPS IN

Global investment banks head into the earnings season on broadly solid footing, though the mood is turning more cautious after a more uneven March, according to RBC Capital Markets.

RBC expects a decent first quarter for capital markets, helped by investment banking (IB) fee growth early on and a late boost from higher market volatility, following the outbreak of war in Iran.

"Q1 should be a good quarter for Capital Markets with strong IB fees in January and February and Global Markets being supported in March by higher market volatility," RBC analysts including Anke Reingen and Gerard Cassidy said.

Dealogic data show global investment banking fees rose around 15% in the quarter from last year, driven by equity and debt capital markets and M&A growth. Trading desks also benefited, with some of the highest volumes in years recorded in March as volatility spiked.

However, signs of weakness are emerging beneath the surface.

IPO and M&A pipelines cooled in March, particularly in software, while loan fees stayed under pressure, sharpening the focus on outlook comments as banks report against a backdrop of rising macro and geopolitical uncertainty.

RBC also notes that European investment banks are likely to underperform their Wall Street peers due to business mix and currency effects.

(Danilo Masoni)

EARLIER ON LIVE MARKETS:

EUROPEAN SHARES GIVE BACK SOME GAINS ON FRAGILE CEASEFIRE CLICK HERE

EUROPE BEFORE THE BELL: FUTURES MIXED AFTER HUGE JUMP ON IRAN TRUCE CLICK HERE

THERE'S A GULF BETWEEN MARKET HOPES AND REALITY CLICK HERE