Goldman Sachs Group, Inc. (NYSE: GS) recent quarterly results present a tale of contrasting threads, weaving a narrative of financial prowess amidst challenges. While overall profit surged 51% to just over $2 billion and revenue exceeded expectations at $11.3 billion, sending shares modestly higher, the mixed results across its business segments suggest the narrative within the banking giant is decidedly bifurcated.
The key driver of the strong performance was the asset and wealth management division, where revenue soared 23% to $4.39 billion. This segment benefited from rising stock prices and increased wealth among high-income families and institutions. Equity trading revenue also shone, jumping 26% to $2.61 billion on the back of a buoyant stock market.
However, Goldman’s traditional powerhouse businesses, investment banking and trading, delivered lacklustre results. Investment banking fees dipped 12% to $1.65 billion, reflecting a slowdown in deal activity due to rising interest rates. Fixed-income trading revenue plunged 24% to $2.03 billion, mainly due to struggles in the rates and currency areas.
Despite the mixed results, Goldman CEO David Solomon expressed optimism for 2024. He highlighted the bank’s “clear and simplified strategy” and a “stronger platform” built on the back of its 2023 achievements. He also pointed to the potential for a resurgence in M&A activity and rate cuts in the first half of the year as positive catalysts.
Technical
The 4-hour shows that the price is holding steady at $380.45, residing within a horizontal trading range. The prevailing market sentiment is reflected in the price action, which is comfortably above the 50-SMA (blue line), 100-SMA (orange line), and 200-SMA (red line).
The recent crossover of the 50-SMA above the 100-SMA and 200-SMA indicates a favourable shift in short-term momentum. Despite the flat RSI at 58.42, signifying a balanced market, the stock is poised within a horizontal consolidation, presenting short-term trading opportunities.
With the price action confined within a horizontal consolidation zone, short-term trading opportunities could exist as the price action oscillates between the $389.51 resistance level and the $374.12 support level.
A break above the $389.51 resistance level would leave the $401.51 resistance level within the bulls’ reach in the short term. However, a sustained push and a break below the $374.12 support level could offer trading opportunities towards the support level at $366.02 and $351.37 support levels lower.
Summary
Goldman Sachs’ Q4 earnings present a mixed picture, with solid performance in asset and wealth management offset by weakness in investment banking and trading. Technically, the stock is consolidating after the initial post-earnings rally, with the near-term outlook uncertain.
A break above $389.51 could signal further upside towards $401.51, while a sustained push below $374.12 could lead to a test of $366.02 and potentially $351.37 lower.
Sources: TradingView, Trading Economics, Reuters, Goldman Sachs Group, Financial Times, Dow Jones Newswire.
Piece written by Mfanafuthi Mhlongo, Trive Financial Market Analyst
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