Jefferies Trading Drops 11% as Fearful Investors Dent Results

(Bloomberg) -- Jefferies Group posted an 11 percent slump in revenue from trading in the three months through November, a sign of the tough environment larger Wall Street banks faced heading into the year’s tumultuous final weeks.

Key Insights

• The investment bank is typically considered a trading bellwether for the industry, but this time the big unknown as investors await results from rivals next week is what happened to their desks in December, which isn’t included in Jefferies’s fiscal fourth quarter. Jefferies earned $251 million from sales and trading in the period, down from $282 million a year earlier.
• The firm blamed the malaise in its trading unit on diminished risk appetite in October and November. The drop in revenue was more pronounced in its smaller fixed-income business.
• There was an encouraging trend in the firm’s investment banking operations, which it has been aggressively trying to build out: Fees from businesses including advising on mergers and selling new securities increased over the previous quarter, advancing 16 percent to $522 million.

Market Reaction

* The stock is up 8.7 percent this year, outpacing firms such as Goldman Sachs Group Inc. and Morgan Stanley. Jefferies posted results after the close of trading on Thursday.

To contact the reporter on this story: Sridhar Natarajan in New York at snatarajan15@bloomberg.net

To contact the editors responsible for this story: Michael J. Moore at mmoore55@bloomberg.net, David Scheer, Dan Reichl

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