Commodities revenue at the 10 largest investment banks increased to the highest level in two years in the first half because of the performance of power and gas, according to Coalition Ltd.
Raw materials revenue at Goldman Sachs Group Inc., Morgan Stanley (MS) and a further eight companies expanded 21 percent to $3.3 billion from a year earlier, the analytics company said in a report today. It was the only asset class in the fixed income, currencies and commodities division to show an increase, according to data from the London-based company.
Income climbed as a cold winter boosted trading in U.S. power and gas and investors increased interest in commodities, Coalition said. Sales grew even as companies including JPMorgan Chase & Co., Barclays Plc and Credit Suisse Group AG shrink or exit trading of energy, industrial metals and agriculture after regulators tightened rules and required more capital.
“Despite a sequential decline in the second quarter, outperformance was driven by strong revenues in U.S. power and gas on the back of the cold winter, combined with a general improvement in investor appetite,” Coalition said.
Natural gas prices advanced in New York for three straight quarters through June. The 30-day historical volatility of the futures contract climbed in March to the highest since 2009. Investors added about $300 million in commodities assets in June, taking the total to $325 billion, Barclays estimates.