Australia's Macquarie Group said on Tuesday it expected to continue to benefit from market volatility in the short term, as it disclosed third-quarter profit from its commodities trading and dealmaking units rose sharply, sending its shares up almost 8%.
The country's largest investment bank and asset manager said hedging and trading activity across commodities from November to January was strong due to high volatility in oil, gas and precious metals markets.
The Sydney-based firm, which derives close to 40% of its earnings from its Commodities and Global Markets unit, said that market dislocations had boosted trading and hedging activity by its growing client base, which it expected to continue.
"That played out across all of our sectors, so gold and precious metals, oil, gas and power in North America and Europe," Chief Executive Officer Shemara Wikramanayake told investors at a briefing.
"We expect the second half to continue to be more favourable than we previously anticipated, given the increased level of volatility that we experienced in this third quarter," she added.
That would mean earnings for the full year in the unit were now forecast to be slightly, not significantly, lower, she said. Overall, it expects full-year earnings for the group to be "slightly" lower than in fiscal 2020.
"We take this to mean flat to down 5%," Goldman Sachs analysts said. This contrasted with the U.S. broker's forecast of a 23% fall in earnings for fiscal 2021.
Macquarie shares jumped as much as 7.9% to A$144.9, their highest level in almost a year, while the broader market was slightly lower.
At Macquarie Capital, its dealmaking arm, the partial realisation of the company's interest in data analytics firm Nuix through an initial public offering in November, which valued the business at A$1.8 billion, helped offset lower fee revenue in debt capital markets.
The company said Macquarie Capital completed 100 transactions globally in the reported quarter, valued at A$58.4 billion.
Macquarie Infrastructure and Real Assets, which made a A$3.42 billion offer for fibre network owner Vocus Group on Monday, said it has A$25.7 billion in equity it wants to invest.
(Reporting by Paulina Duran in Sydney and Nikhil Kurian Nainan and Rashmi Ashok in Bengaluru; Editing by Ramakrishnan M. and Sonya Hepinstall)
