Credit Suisse Posts Loss Despite Boost from Investment Bank
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Credit Suisse Group AG said hefty legal charges pushed it to a fourth-quarter loss, even as a rebound in investment banking lifted other parts of the bank's operations. On Thursday, the Swiss bank reported a loss of 353 million Swiss francs, or nearly $393 million, for the fourth quarter. Analysts expected a loss of about 566 million Swiss francs. Even in a difficult year, Credit Suisse fared better than many European rivals because its lending in Switzerland and to the global rich held up in the pandemic. Along with Wall Street competitors, its investment bank booked bumper fees from clients trading in last year's gyrating markets and from companies raising capital or needing deal advice. On Thursday, it said its investment banking arm made a $318 million pretax profit in the fourth quarter, with the biggest revenue contribution coming from stock and bond deals. Fourth-quarter pretax profit also rose in Credit Suisse's Asia-Pacific division, by 18% to 237 million Swiss francs, while revenue and pretax profit fell at its Swiss bank and international wealth management unit. It was a tumultuous year for Switzerland's second-largest bank by assets, after rival UBS Group AG.
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The SMI fell Wednesday for the second day in a row, closing down 0.9 percent on 10,809 points. As coronavirus pandemic fears abate on vaccine campaigns and lower case numbers, inflation fear has surfaced. Higher inflation would make central banks’ loose monetary policy difficult and drive yields, which would be bad for stocks. Nestle rose 0.1 percent on news of the sale of Nestle Waters North America for USD 4.3 billion. Roche slid 1.2 percent after analysts downgraded it from “buy” to “neutral”, saying revenue from Avastin, Herceptin and Rituxan had abruptly eroded after contributing 40 percent of 2019 pharma sales, and biosimilars were still in rough waters in 2021. Richemont fell 1.6 percent though analysts gave a positive comment and slightly hiked their price target, saying its jewellery business and online fashion platform YNAP were buoyant. Swatch slid 0.8 percent. Schindler slumped 2.3 percent on news that turnover and profits had fallen sharply in 2020 due to the pandemic.
European stocks close in the red as a rise in government bond yields offsets optimism about economic stimulus and an eventual easing of lockdown restrictions. The Stoxx Europe 600 drops 0.7%, the FTSE 100 falls 0.6%, the CAC-40 is off 0.4% and the DAX retreats 1.1%. Kering shares dropped sharply Wednesday after sales at key brand Gucci clouded the company's 2020 earnings report. Gucci, by far the French luxury-goods conglomerate's biggest brand, posted a 10% sales decline in the final quarter of 2020 to take it to a 23% drop for the full year, lagging behind stable mates such as Balenciaga and Bottega Veneta that increased their sales over the year. The figures represent a gap of some 30 percentage points in the quarter against rival soft-luxury brands at LVMH Moet Hennessy Louis Vuitton, Bernstein analyst Luca Solca noted. Shares in Rio Tinto , which are up more than 17% in the year to date, rose 3.59% higher in early morning London trading on Wednesday.
U.S. stocks finished mixed as investors retreated from shares of many of the technology companies that have powered markets higher this year. The Nasdaq Composite tumbled 0.6%, dragged down by technology heavy hitters including Apple and Netflix. The S&P 500 ended little changed. The Dow Jones Industrial Average, meanwhile, gained 0.3% to post its ninth record close of this year. The U.S. stock market's recent rally has shown signs of cooling this week, even as investors point to reasons for optimism ahead. Federal Reserve officials agreed at their most recent policy meeting that they would need to hold interest rates very low and continue central bank bond purchases to help spur the economy's recovery from the effects of the coronavirus pandemic. Most of them thought that the $900 billion federal stimulus package approved in December, the likelihood of more fiscal support and continued distribution of Covid-19 vaccines "would lead to a sizable boost in economic activity" this year, according to minutes of the Fed's Jan. 26-27 meeting. Energy Transfer LP (ET) announced Wednesday an agreement to buy Enable Midstream Partners LP (ENBL) in a stock deal valued at $7.2 billion. Under terms of the deal, Enable shareholders will receive 0.8595 Energy Transfer shares for each Enable share they own. "Fortnite" game developer Epic Games Inc. has filed an antitrust complaint against Apple Inc. in the European Union, broadening its continuing legal battle after filing similar lawsuits in the U.S., Australia and the U.K.
The stock markets in East Asia continue to fall. However, the new losses on Thursday were mostly moderate. One exception is Shanghai, where trading resumed after a week-long break following the New Year's celebrations and the leading index rose by 0.9 per cent. Here, pent-up demand had built up because the bottom line on the region's neighbouring stock exchanges was up significantly during this period.
U.S. government bonds made further gains in Asian trade, with the yield on the benchmark 10-year Treasury note easing back from Wednesday's settlement level. Yields reached as high as 1.331% early Wednesday right after the release of better-than-expected U.S. retail sales data. But they then quickly dropped, suggesting traders were expecting a strong report and were relieved to have it behind them.
UBS rises the DSM target to 165 (160) EUR – Buy
UBS lowers the Dt. Börse to Neutral (Buy) – Target 145 EUR
UBS lowers Roche to Neutral (Buy) – Target 330 (355) CHF
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