New York (Reuters) – While major American banks are preparing to unveil their quarterly accounts, investors should focus on the consequences of Donald Trump’s commercial policy on sector activity rather than profits.

Jpmorgan Chase, Citigroup, Wells Fargo and Morgan Stanley will open the ball on Friday, before Goldman Sachs on Monday and Bank of America next Tuesday.

According to Mike Mayo, analyst at Wells Fargo, the most important effect of customs duties in the coming quarters should increase the cost of the risk of the increased risk of recession, banks playing caution to cover potential failures.

“Banks are a reflection of the economy: if the economy deteriorates, their results will follow,” sums up Stephen Biggar, director of financial institutions at Argus Research, who also warns of a probable closure of bank credit tap in the coming months.

Banking leaders should also be questioned by analysts on the fall in financial markets which has not spared banking values. However, they had straightened at the start of the year, supported by the hope of a rebound in mergers and acquisitions (M&A).

The KBW banking index lost 15% between April 2, the date of the announcement of customs duties, and April 7, the highest drop in the regional banking crisis of 2023, while the S&P 500 lost 10.7% over the same period.

If the M&A rebound forecasts have well supported the prospects of financing and investment banking activities (BFI) at the start of the year, Trump administration policies have since reduced hopes.

“The commissions of investment banks should decrease, because the activity of the capital markets and the mergers-acquisitions are generally at downtime during periods of high volatility,” observes Jason Goldberg, analyst at Barclays.

The fall in equity markets should also weigh on asset management activities.

(written by Tatiana Bautzer with Basil Arasu Kannagi and Saeed Azhar; Bertrand de Meyer, edited by Blandine Hénault)

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