The capital markets have their own version of Murphy’s Law: if things look like they are back on track, something is bound to go horribly wrong. And sure enough, just as an encouraging start to the year for investment banks had started to gather steam, the good news has ground firmly to a halt.

With the quarterly reporting season kicking off this week, the big questions for investment banks now are how much they can salvage from the second quarter, and what impact the sudden reversal in capital markets will have on their prospects for the rest of the year and beyond.