Why Macquarie Group Ltd Shares Dropped Today
What Happened to the Macquarie Group Share Price?
Shares of Macquarie Group Ltd [ASX:MQG] fell more than 1.5% today as the company announced lower profits from two of its key divisions — capital markets and annuities.
Why is the MQG Share Price dropping?
Macquarie’s warning about lower-than-expected profits from these groups follows a report yesterday from National Australia Bank Ltd [ASX:NAB] that its first-quarter earnings would be lower too.
The ongoing era of low interest rates is making it harder for banks to make big margins on money it lends to businesses and consumers. Plus, the fears of an Australian recession, following the third-quarter economic contraction last year, means that some businesses are being more cautious with their spending and investment plans.
What now for Macquarie Group Ltd?
Bank shares had a good run in 2016, and Macquarie Group was one of them. From mid-February 2016 through to today, the Macquarie share price is up over 38%.
The issue for investors is whether this can continue. With talk of the Reserve Bank of Australia potentially cutting rates further this year, it’s possible that the good run for banks may be over as further margin pressure is applied.