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Shares in Goldman Sachs are on the back foot today following heavy losses yesterday amidst a weaker-than-expected set of Q4 earnings. On the back of solid results from JPM and Citi last week, investors were hoping for a similar display from Goldman. However, with EPS coming in at $3.32 vs $5.56 expected on revenues of $10.59 billion vs $10.75 billion expected, shares were seen shedding 6% over the session and are back under pressure ahead of the open today.
 

Worst in Decade

The bank’s Q4 results transpired to be its worst quarterly performance in over a decade with profits seen falling by two-thirds on the prior year. Notably, expenses were seen higher by 11% which, along with the tumble in overall revenues, partially explains the dismal performance. Looking ahead, the recent layoffs at Goldman look likely to be repeated as the company seeks to trim back costs. More worrying still is the almost $1 billion bad-loans provision the company built up, compared with under $400 million last year. The bank cited “early signs of consumer credit deterioration” as the driver behind this move.

Looking at the breakdown of the bank’s businesses; investment banking saw revenues drop by a massive 48% while asset and wealth management revenues fell by 27%. Looking ahead, Goldman CEO David Solomon said the bank will focus on “realizing the benefits of our strategic realignment which will strengthen our core businesses, scale our growth platforms and improve efficiency.”
 

Technical Views

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The reversal from earlier highs in the week now risks creating a lower peak against the November 2022 highs. If the price breaks through the rising trend line and the recent 2023 lows, this will open the way for a deeper run down toward the 324.85 level next.

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