04:00 PM EDT, 07/09/2024 (MT Newswires) -- Capital markets activity in the second quarter showed signs of a gradual recovery even as the pace of global merger and acquisition announcements moderated, UBS Securities said in a note e-mailed Tuesday.

In the June quarter, global equity capital market volumes for brokers in UBS' coverage jumped 21% sequentially and 41% annually, with Goldman Sachs ( GS ) and Morgan Stanley ( MS ) seeing annual gains of 48% and 51%, respectively. Broker debt capital market volumes fell 31% from the previous quarter but rose 12% from a year earlier, according to the note.

Following a strong start to 2024, global M&A announcements fell 8% sequentially but rose 5% annually in the second quarter, as deal markets gradually recover from a "challenging" last year, UBS analysts, including Brennan Hawken, said. Financial sponsors represented 31% of the announcements during the three-month period, up from 20% in the previous quarter. Announcements are focused on large-scale deals, with the average deal size up 30% year over year during the quarter, according to the note.

Year-to-date US initial public offering volumes surged more than 55% from a year earlier while leveraged loans issuance are up roughly 60%, according to the note.

The firm said it prefers Goldman over Morgan Stanley ( MS ) because of its "greater leverage" to a resurgence in capital markets activity and recent record of wallet share gains across its trading businesses. Goldman's trading operations can outperform in a higher-for-longer rate environment.

In the second quarter, completed public volumes for M&A boutiques were generally up, with Lazard ( LAZ ) and Moelis ( MC ) seeing sequential drops, while PJT Partners ( PJT ) , Houlihan Lokey ( HLI ) and Evercore ( EVR ) registered gains, according to UBS.

M&A boutiques have seen a "steady replenishment" in their public pipelines so far this year, the brokerage said. "That said, with financing options certainly available to deal participants and potential rate cuts on the horizon, we expect sponsor announcements to continue to gain momentum through (the second half of 2024), benefitting the M&A boutiques, especially those who are more exposed to that cohort."

Among wealth managers, UBS said it prefers Charles Schwab ( SCHW ) and Interactive Brokers Group ( IBKR ) .

Trust banks are "asset-sensitive" headed into a rate-cutting cycle, as indicated by their regulatory filings, according to UBS. The brokerage said it continues to prefer Bank of New York Mellon ( BK ) , citing its multiyear targets and management's strategic plan. Recent updates have raised concerns about Northern Trust's ( NTRS ) ability to achieve its expense outlook, while State Street (STT) faces pressure on non-interest bearing deposits and offsetting fee revenue headwinds, according to the note.

Price: 473.63, Change: +8.81, Percent Change: +1.90