Goldman Sachs and Morgan Stanley delivered strong first-half earnings last week. The results prompted analysts to raise earnings estimates and upgrade recommendations.
Wall Street’s recent success may extend to European financial giants, according to research analysts. They now point to several large European banks as potential beneficiaries.
The strong performance from the two U.S. investment banks reflects a surge in dealmaking and trading activity. Revenue from investment banking and trading divisions drove the quarter’s results.
Analysts predict European banks with similar business models could see comparable gains. Firms like Deutsche Bank, Barclays, and UBS are among those being highlighted.
These European institutions have focused on expanding their investment banking divisions. They are also benefiting from increased market volatility and higher interest rates.
The positive sentiment follows a period of cautious outlooks for global investment banks. A rebound in mergers and acquisitions and equity capital markets activity has shifted the narrative.
Investors are now watching for upcoming earnings reports from European banks. The next few weeks will reveal if the momentum crosses the Atlantic.
