UBS Group Q3 Profit Down on Weak Revenues
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UBS Group AG reported a 24% decline in third-quarter net profit as corporate deal making slowed and its wealthy clients pulled back on investments. Revenue was down 19% at UBS’s investment bank and by 4% in its wealth management arm, with some of the reduced activity offset by gains from selling two businesses. Net profit was $1.73 billion for the quarter, more than the $1.5 billion analysts had expected. In the wealth management arm, falling stock markets and gyrating currencies reduced customer balances, resulting in lower fees. Fees also dropped from fewer new transactions in the quarter. But wealth clients channeled $17.1 billion in net new fee generating assets to the bank, after almost no net inflows in the second quarter. UBS said it would continue a program to buy back shares for around $5.5 billion this year.
The Swiss stock market on Monday wrote a finish to the three-day losing streak in which it had stumbled more than 160 points or 1.5 percent. The SMI gained 1.7 per cent to 10,596 points. All 20 SMI stocks closed higher. 35.1 (previously: 38.02) million shares were traded. The strongest performer in the SMI was Sika (+4.4%), recovering from the setback suffered on Friday after the publication of disappointing nine-month figures. On Monday, however, several analysts reiterated their buy recommendations for Sika. Doubts about Chinese economic growth slowed Richemont (+0.2%) and Swatch (-3%), China being an important market for both companies. Credit Suisse advanced 2.5%. The bank agreed to a €230 million settlement in France related to former cross-border private banking services. On the day before the release of their respective quarterly results, Novartis rose 1.9 per cent, Logitech 2.3 per cent, UBS 2.9 per cent and Kuehne & Nagel 0.9 per cent. Novartis benefited from the announcement that its drug Iptacopan for the treatment of paroxysmal nocturnal haemoglobinuria had met both primary endpoints in a trial.
European stocks were higher on Monday following a slide in Chinese and Hong Kong shares and as investors prepared for a week of major U.S. tech company earnings. At the close, the Stoxx Europe 600 index gained 1.4% to 401.8 points. In Paris, the CAC 40 and the SBF 120 rose 1.6% each. The DAX 40 in Frankfurt added 1.6%, while the FTSE 100 in London gained 0.6%. Orpea, the retirement home operator, was suspended from trading on Monday morning at the request of the Autorité des marchés financiers (AMF), Euronext said in a statement. Imerys (+5%), a group specialising in mineral products for industries, announced on Monday that it had identified a mining site in France containing more than one million tonnes of lithium hydroxide reserves, an essential element in the production of batteries for electric vehicles. Belgian chemical company Solvay (+2.8%) on Monday raised its underlying gross operating profit (Ebitda) forecast for the 2022 financial year, after its results reached a level described as "record" in the third quarter. Digital services company Atos (+2.2%) reported on Monday that it had been approached by several players interested in a potential acquisition of its Tech Foundations division, which includes its outsourcing, professional services and digital workspace businesses. Dutch medical technology group Philips (-1.5% in Amsterdam) declared on Monday it would cut 4,000 jobs after announcing a larger-than-expected the third quarter loss.
U.S. stocks gained on Monday as investors focused on encouraging signs from corporate earnings and hopes that the Federal Reserve would slow the pace of interest-rate increases. The Dow Jones Industrial Average climbed 417.06 points, or 1.3%, to 31499.62, its highest closing level in six weeks. The S&P 500 advanced 44.59, or 1.2%, to 3797.34. The technology-heavy Nasdaq Composite rose 92.90, or 0.9%, to 10952.61, bouncing back after it started the day in the red. Investors are looking ahead to a busy week of earnings results. Quarterly reports are due this week from tech giants Apple, Amazon.com and Google parent Alphabet as well as blue-chip companies such as Coca-Cola and Boeing. U.S.-listed shares of Chinese tech giants Alibaba and Baidu both dropped 13%. The selloff wiped out around $52 billion of market capitalization from the five largest U.S.-listed Chinese companies. Casino operator Las Vegas Sands, which owns properties in Macau, slid $4.02 a share, or 10%, to close at $35.05, making it the worst performer in the S&P 500. Tesla shares fell $3.19, or 1.5%, to $211.25 after the company lowered prices for vehicles sold in China, the world’s biggest electric-vehicle market. The European Commission is expected to authorise Philip Morris (+0.8%) to buy Swedish Match (+1% in Stockhom) for more than 16 billion euros after the American tobacco company presented concessions, Reuters news agency reported, citing sources close to the case.
In Asia, major indexes broadly closed with gains. The Shanghai Composite rose by 0.7 per cent and the Hang Seng Index added 0.9 per cent. The index had posted its biggest one-day loss since November 2008 the previous day, falling 6.4 per cent. Technology stocks in Hong Kong recover slightly from the previous day's sharp losses. Tencent shares are up 2.2 per cent and Alibaba shares climb 4.6 per cent. In Tokyo, the Nikkei-225 improves by 1.2 per cent. Among individual stocks, HSBC Holdings shares are down 0.4 per cent after posting its third quarter results. In Seoul, Posco Holdings edges 3.6 per cent lower, equally following third quarter results.
The 10-year U.S. Treasury note added 3 basis points to 4.242% after falling as low as 4.127%. The 2-year rate also rose by 2 basis points to 4.509%.
Berenberg cuts Nestlé target to CHF 126 (130) - Buy
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Berenberg reduces Sika target to CHF 305 (330) - Buy
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