UPDATE 2-Morgan Stanley profit beats on strength in equity trading, underwriting

Equity trading revenue rose 7 per cent in a quarter marked by uncertainties in global financial markets stemming from an ongoing tariff war between the United States and China.

Morgan Stanley reported a better-than-expected quarterly profit on Tuesday, driven by higher revenue in its stock trading and equity underwriting businesses.

Equity trading revenue rose 7 per cent in a quarter marked by uncertainties in global financial markets stemming from an ongoing tariff war between the United States and China.

Morgan Stanley's bond trading revenue rose 1 per cent, outperforming traditional competitor Goldman Sachs Group Inc, which reported a 10 per cent fall in revenue at the business.

The bond trading at Wall Street's top bank - JPMorgan - declined 10 per cent in the third quarter.

Morgan Stanley's overall revenue rose a better-than-expected 7.3 per cent, also helped by a 62 per cent jump in equity underwriting revenue.

Chief Executive Officer James Gorman has restored Morgan Stanley to health since taking over in 2010 when the bank was still reeling from the financial crisis.

His tenure has been defined by reducing risk, exiting problematic businesses and focusing on steadier ones that can generate reliable revenue.

However, some analysts now question the bank's future growth strategy. Its shares have fallen 17 per cent this year, underperforming the S&P Financial index, with lacklustre trading also weighing on the stock. The shares were up 2.4 per cent before the opening bell.

The bank's sales and trading revenue, its biggest contributor to total revenue, rose 7.5 per cent and came in better than that of JPMorgan Chase & Co and Citigroup Inc.

Net income attributable to Morgan Stanley rose to $2.11 billion, or $1.17 per share, in the third quarter ended Sept. 30, from $1.78 billion, or 93 cents per share, a year ago.

Analysts were expecting $1.01 per share, according to I/B/E/S data from Refinitiv.