Middle East volatility boosts profits at Goldman Sachs

Goldman Sachs is celebrating its best quarter for five years as its equity traders cash in on market volatility from the war with Iran.

In a bumper set of results, the US investment bank posted a 19 per cent rise in first quarter profits to £4.2billion, its biggest haul since 2021. 

Revenues jumped 14 per cent to £12.8billion with its equities trading arm delivering a 27 per cent increase to £3.9billion as it benefited from wild market swings triggered by the conflict in the Middle East.

That topped the record £3.2billion its equity traders raked in during the final three months of last year.

However, other Goldman traders missed out on the bonanza, with revenues from its fixed income, currency and commodities teams falling 10 per cent.

Investment banking fees jumped 48 per cent as the firm advised consumer goods giant Unilever on its planned merger with McCormick and worked on the proposed listing of Kraken Technologies, which is being spun out of Octopus Energy. Goldman’s wealth management arm also saw revenues rise.

Chief executive David Solomon said: ‘The geopolitical landscape remains very complex – so disciplined risk management must remain core to how we operate.’

Goldman has secured a spot as one of the lead banks managing the blockbuster listing of SpaceX.

Elon Musk’s rocket firm is expected to raise £55bn when it joins the stock market through a so-called initial public offering (IPO), possibly in June, in a deal that will value it at £1.3 trillion.

The listing is expected to set the stage for a flurry of bumper offerings this year, including the potential IPOs of OpenAI and Anthropic, despite uncertainty fuelled by geopolitical tensions. 

But Goldman shares fell almost 2 per cent on Wall Street as investors fretted about the fall in fixed income revenues and the outlook.

Axel Rudolph, an analyst at trading platform IG, said: ‘Goldman Sachs has delivered a solid set of numbers, but in this environment solid isn’t quite enough to keep investors interested.

‘After such a strong run in the share price, investors were clearly looking for something exceptional, not just good.’

He added: ‘The bigger issue is that Goldman’s results feel like a snapshot of a world that may already be fading.

‘With oil prices surging, inflation fears building and recession risks creeping back in, the outlook for dealmaking and capital markets activity becomes far less certain.

‘In that context, today’s numbers risk being seen as close to peak earnings, and it’s little surprise that investors have opted to take some money off the table.’