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Factors that Could Impact State Street’s Earnings in Q2 2018

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Expected EPS

In the second quarter, State Street Corporation (STT) is expected to be negatively impacted by the rising trade war threat between the United States and China. The markets are expected to witness volatility, leading to reduced allocations toward equities. The company plans to release its second-quarter earnings on July 20. Its expected second-quarter earnings per share of $2.01 represent a YoY (year-over-year) increase of 20.35%.

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The markets saw a significant downtrend in the first quarter. This trend has impacted asset managers (XLF), as their AUM (assets under management) tend to fall as part of that scenario. Equity markets are impacted by global issues such as interest rates and employment numbers. However, some recovery in equities was visible in the second quarter.

STT’s revenues

State Street’s expected second-quarter revenues of $3.06 billion reflect a YoY increase of 3.9%. The company’s trading services revenues are expected to be impacted in the second quarter, as volatility declined sequentially. In February, the CBOE Volatility Index (VIX) was 37.32. In the second quarter, the VIX’s highest level was 23.62.

In the second quarter, T. Rowe Price Group (TROW) is expected to witness positive sequential impacts from the recovery in the markets. Among the traditional asset managers, Invesco Limited’s (IVZ) AUM fell on June 30 to $963.3 billion compared to $977.3 billion at the end of May. At the end of June, Franklin Resources (BEN) posted AUM of $724.1 billion.

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