📉 Financial sector under pressure!
While the beginning of the year suggested that US banks might finally experience a calmer period, recent developments on the geopolitical front have brought a sharp reversal. Donald Trump's administration's sweeping tariff offensive immediately shook the market. The result was the biggest sell-off in bank stocks in months.

Since last week:
Citigroup $C -20 %
Bank of America $BAC -15 %
Morgan Stanley $MS -16 %
Goldman Sachs $GS -17 %
Wells Fargo $WFC -14 %
JPMorgan Chase $JPM -13 %
Regional Banks $KBWB -10 % - Largest daily decline since March 2023

Banks are by nature extremely sensitive to economic cycles. A slowdown in consumer spending, a reduction in investment, a decline in loan demand or a rise in unemployment will always have an impact on credit risk, profitability and outlook.

In addition, uncertainty is causing acquisitions and large transactions to be postponed, dampening investment banking - a sector that until recently was one of the engines of growth.

Add to this concerns about higher household costs due to more expensive imports, which further constrains consumption, and suddenly we have an ideal environment for a correction in the entire financial sector.

📉 Fintech is also taking a hit:
Affirm $AFRM -25 %, now rising by more than 5 %
SoFi $SOFI -22 %, also appreciating today by more than 3 %

📊 Bank results
Banks like JPMorgan, Morgan Stanley and Wells Fargo have had a strong Q1. Most reports should be positive according to analysts. But the market is now more interested in the future outlook.

These three companies will announce their results this Friday before the markets open!

🧭 What to watch out for!
The banking sector remains firmly tied to the macro economy. If a recession comes, so will pressure on the loan book and margins.

Earnings season will be key. Banks will need to convince the market that they have the tools to adapt and that they can handle the risks from tariff wars without major losses.

💡Challenges in the banking sector
U.S. banks have gone through a number of different crises in recent years. First the Covid-19pandemic followed by the collapse of regional players. And now they face a challenge again: global trade uncertainty, tariff barriers and the threat of recession.

How do you view the stocks of banking houses and fintechs? Can the results change the mood of the markets, or will the mixed outlook unleash more selling?