Credit Suisse Issues 4Q Profit Warning
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Credit Suisse Group AG on Tuesday issued a profit warning for its fourth quarter and said its CET1 ratio should beat its ambitions. The Swiss bank said that fourth-quarter pretax income should be around break-even with litigation provisions of roughly 500 million Swiss francs ($547 million) that will weigh on it, though gains from real-estate sales of CHF225 million will offset it, in part. The expected break-even is “before deduction of the already announced approximately CHF1.6 billion goodwill impairment for the group, of which approximately CHF1.5 billion in the Investment Bank division and approximately CHF0.1 billion in the Asia Pacific division,” it said. The bank’s CET1 ratio at the end of last year should come above 14%, exceeding its ambitions, it said. Its Tier 1 leverage ratio is expected to be above 6%. A full update on fourth-quarter and full-year results will be published on Feb. 10, it said.
The Swiss stock market was also unable to escape the global sell-off on the stock exchanges on Monday. The SMI fell by 3.8 per cent to 11,881 points. This puts the index more than 8 per cent below its record high set only at the beginning of the month. All 20 SMI stocks closed in the red. 68.62 (previously: 50.95) million shares were traded. Observers pointed to the Ukraine crisis and uncertainty ahead of the US Federal Reserve meeting on Wednesday. Moreover, the accounting season is getting underway. In Switzerland, Logitech (-5.9%), Givaudan (-3.2%), Lonza (-4.7%) and SGS (-4.2%) will present figures from the SMI this week. Additional pressure came from the currency side. The Swiss franc, popular as a refuge currency in times of crisis, continued to appreciate, which weighed on shares of export-dependent companies in particular. This situation gave investors enough reasons to take money off the table as a precaution. Selling took place across all sectors. Swiss Re (-0.3%), which had been upgraded to Outperform by Credit Suisse analysts, also held up comparatively well. Swisscom (-0.5%), which is considered defensive, also got off lightly.
European stock indices closed sharply lower on Monday, weighed down by escalating tensions between Western countries and Russia over Ukraine and fears that the US Federal Reserve (Fed) will be tighter than expected after its monetary policy meeting on Wednesday. The Stoxx Europe 600 index fell 3.8% to 456.4 points. In Paris, the CAC 40 index fell 4% to 6,787.8 points, dropping back below the 7,000-point mark. The SBF 120 was also down 4%. Shares in Unilever PLC rose 6% on Monday amid hopes that activist investor Nelson Peltz’s investment in the consumer goods giant could spur action to accelerate growth at the owner of Ben & Jerry’s ice cream. The Wall Street Journal and others reported over the weekend that Mr. Peltz’s Trian Fund Management LP had acquired a stake in Unilever, increasing pressure on the company in the wake of its failed $68-billion bid for GlaxoSmithKline PLC’s consumer-healthcare business. Even before the Glaxo foray - a move criticized by investors and analysts for its price and strategic fit - Unilever Chief Executive Alan Jope had been under pressure to boost growth. Royal Philips NV said Monday that sales and net profit for the last quarter of the year fell as it continued to experience challenges related to the supply chain and Covid-19. The Dutch health-technology company said group sales for the fourth quarter of 2021 were 4.9 billion euros ($5.56 billion) compared with EUR6.00 billion a year earlier. Net profit was EUR157 million compared with EUR603 million for the same period the year before.
The Dow industrials, S&P 500 and Nasdaq Composite all finished the day higher after falling sharply in morning trading, a wild close to a volatile day in U.S. stocks. By the end of the day, the Dow Jones Industrial Average had added 0.3% after being down more than 1000 points in the morning. The S&P 500 also added 0.3%. Popular technology stocks were among the hardest hit early on, but they too rallied. The tech-heavy Nasdaq Composite closed about 0.6% higher after trading more than 4% lower earlier in the session. Investors are bracing for a Federal Reserve meeting this week in which the central bank is expected to shed more light on its plans to combat surging inflation. The market has also been spooked by mounting tensions between the West and Russia over the military buildup on the border with Ukraine. At its lowest point, the broad S&P index was in correction territory, defined as a 10% drop from a recent high. It ended the day around 8% from its record three weeks ago. Kohl’s Corp. shares soared 30% Monday morning after the department-store chain confirmed multiple suitors are circling it. Kohl’s confirmed that it received letters expressing interest in acquiring the company and said its board would review them. Kohl’s shares jumped nearly $15 to $61.47 in early trading. The Wall Street Journal previously reported that a group backed by Starboard Value LP had offered $9 billion, or $64 a share, for the company. Ford Motor Co. is taking the unusual step of cutting off customer orders for the Maverick, a more-affordable pickup that it rolled out last fall, saying it has maxed out on what it can build. The move is a sign that American shoppers are hungry for more-affordable options as prices for new cars and trucks hit new records and availability remains constrained on dealership lots. Ford told dealers Monday that it is suspending customer orders for the Maverick pickup truck because it is already straining to fill a backlog.
The stock markets in East Asia and Australia are in the doldrums: On Tuesday, the indices fell sharply across the board, despite a spectacular recovery on Wall Street during the course of the day and the US indices even closing with gains. After initially holding their ground, the sellers clearly gained the upper hand and caused losses of up to 3 per cent in Seoul. The fact that GDP in South Korea grew a tad more in the fourth quarter of 2021 and at the same time as strongly as it last did eleven years ago is lost. In Tokyo, the Nikkei index loses 2.2 per cent to 26,978 points.
The yield on the benchmark 10-year U.S. Treasury note rose was fell 0.01 percentage point to 1.76%.
UBS lowers Zur Rose target to CHF 169 (250) – Sell
UBS lowers Arcelormittal target to EUR 33 (35) – Buy
JP Morgan lowers Adidas target to EUR 340 (350) – Neutral
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