Heightened M&A activity in a friendlier regulatory environment and extreme volatility in stock markets triggered by the recent software selloff and the Iran war have bolstered investment banking and trading businesses at big Wall Street banks.
Morgan Stanley’s investment banking revenue soared 36% to US$2.12 billion, boosted by a rise in advisory fees. Revenue from its equities trading business also jumped 25% to a record US$5.15 billion, while that from fixed income surged 29% to US$3.36 billion.
Peers Goldman Sachs, JPMorgan and Citigroup also reported a surge in investment banking and trading revenue in the latest quarter.
Deal volumes globally have already hit US$1.38 trillion in the latest first quarter, according to data compiled by Dealogic, after a near record-breaking 2025 in which global M&A surpassed US$4.81 trillion.
Among the notable deals in the first quarter, Morgan Stanley was one of the advisers to Unilever on the proposed merger of its food business with McCormick that will create a US$65 billion global food behemoth.
Shares of the Wall Street giant rose 2.5% in premarket trading.
Equities trading rakes in record revenue
Global markets have swung sharply in recent weeks as the Iran war drove up oil prices and fueled worries that inflation could stay elevated for longer.
The volatility across asset classes has prompted investors to rebalance portfolios and increase hedging against potential losses, a trend that typically boosts activity at trading desks.
Meanwhile, heightened tensions in the Middle East have unsettled equity markets and dampened risk appetite, weighing on the IPO market, though some companies, particularly in the industrial and defense sectors, have continued to pursue listings.
Morgan Stanley is among the bookrunners leading the deal on SpaceX’s bumper IPO, where the Elon Musk-led firm could raise US$75 billion at a potential valuation of US$1.75 trillion.
Top bosses at investment banks have cautioned that the market for new listings has become more selective as a result of the economic uncertainty, but expect a rebound once conditions stabilise.
Total quarterly revenue at Morgan Stanley rose to US$20.6 billion in the first quarter from US$17.7 billion a year earlier.
The Wall Street investment bank’s profit came in at US$3.43 per share, surpassing the US$3 per share expected by analysts, according to data compiled by LSEG.