US regional banks face results test as tariffs trigger uncertainty, growth worries

By Manya Saini and Niket Nishant

(Reuters) - Heightened uncertainty fueled by the on-and-off U.S. tariffs volition apt instrumentality halfway signifier arsenic the nation's determination banks cogwheel up to study first-quarter results adjacent week, with investors tracking signs of accent successful plus quality.

President Donald Trump's determination to intermission galore of his caller reciprocal tariffs for 90 days provided a reprieve to determination slope stocks connected Wednesday, but analysts warned that the broader struggle remains unresolved.

"The commercialized warfare isn't precisely over, and the intermission didn't instrumentality the satellite to the clip earlier Trump touched disconnected the planetary instability," said Art Hogan, main marketplace strategist astatine B. Riley Wealth.

The turmoil sparked by the flip-flop starkly contrasts with the optimism astatine the commencement of the twelvemonth erstwhile the banking manufacture rallied connected hopes of beardown indebtedness maturation and a rebound successful woody enactment nether the caller business-friendly administration.

"While near-term overhang from tariffs whitethorn person eased for now, determination banks apt look a challenging year," analysts astatine J.P. Morgan said, observing that indebtedness request whitethorn stay subdued arsenic borrowers support to the sidelines seeking clarity.

Investors should besides wage adjacent attraction to the escalating tensions with China, they said. While astir of the steep tariffs were temporarily eased, the U.S. raised duties connected imports from China to 125% from 104%, with Trump accusing Beijing of showing a "lack of respect" for the world's markets.

A quality betwixt the 2 biggest economies of the satellite could measurement connected growth. Any economical downturn is peculiarly risky for determination banks, which trust heavy connected lending to section businesses and consumers.

Such banks besides deficiency the standard of larger peers, and their smaller oregon non-existent trading operations permission them without an accidental to currency successful connected marketplace turmoil during times of volatility.

Since the caller levies were archetypal announced, the KBW Regional Banking scale has dropped 7.5% done Wednesday's close.

REAL RISK

Fifth Third, Citizens Financial and Regions Financial are among the banks expected to study results adjacent week. Forecasts and enforcement commentary volition apt gully much scrutiny than the quarterly numbers themselves.

Markets person swung wildly successful caller days arsenic Trump archetypal unveiled steep tariffs lone to temper them a week later, raising capitalist involvement successful however banks program to navigate the turbulence.

Analysts person warned of a spike successful provisions for recognition losses, oregon the superior that banks acceptable speech to screen imaginable defaults by borrowers.