UBS Group AG Chief Executive Officer Sergio Ermotti joined a growing chorus of Wall Street executives warning the market environment remains shaky, even after improving from a first quarter which he has called one of the worst in recent history
Discussions around Brexit, a “total reversal” in expectations for interest rates and the clash between the European Union and Italy over fiscal policy are “clearly not helping bring back confidence,” Ermotti said Thursday at a conference. He spoke hours before the European Central Bank signaled it will keep interest rates at record lows for longer and may even take further measures to stimulate the weakening European economy.
Banks have been warning of a second-quarter slump as a host of risks — from the burgeoning trade war to Brexit and escalating tension between the U.S. and Iran — weigh on investor sentiment. Citigroup Inc. said last month that
trading revenue has declined so far this quarter, while Bank of America Corp. indicated it’s on pace for a 10% drop and JPMorgan Chase & Co. also reported a downturn.
Ermotti said while business has improved from the start of the year, that’s “from a very low base.”
“The situation is better, but it’s far from being clear and solid,” Ermotti said at the conference, which was organized by Goldman Sachs Group Inc. Clients show “a willingness to step into the market, but it’s very fragile.”
ECB President Mario Draghi on Thursday also highlighted a “prolonged persistence of uncertainties” and the “rising threat of protectionism” as he signaled the central bank won’t shy away from action to support the euro-area economy. The ECB extended its pledge to keep interest rates at record lows and announced details on a program for infusing banks with more cheap cash.