Research Market strategy
By Swissquote Analysts
Published on 19.03.2021
Morning news

Credit Suisse Names Asset-Management Head in Post-Greensill Reshuffle

Topic of the day

Credit Suisse Group AG recruited former UBS Group AG executive Ulrich Koerner to be its new head of asset management and said it would make it a separate division, removing one of its most senior executives from the role as it seeks to recoup money for investors in its troubled supply-chain finance funds. It made the announcement while warning in its annual report that it has been informed some of the underlying investments in the funds won’t be paid back when they are supposed to be. The bank also indicated it may need to add additional capital as a result of the funds’ problems. It said it has agreed with Swiss regulator Finma to add an extra capital buffer to cover risks that may be underestimated or aren’t covered by other capital requirements, without giving details on the amount or timing.

Swiss stocks

The SMI closed up 0.5 percent on 10,974 points Thursday. Late Wednesday, the US Federal Reserve had hiked its 2021 US growth forecast but said it plans no measures to curb the rise in inflation and won’t raise interest rates before 2024, even as US bond market rates climbed to 14-month highs. EU medicines regulator EMA stated the AstraZeneca vaccine was safe to use. UBS surged 4 percent. Credit Suisse (CS) rose 2.5 percent on releasing its annual report. Nestle gained 0.2 percent on news of a CHF 117 million investment in its Avenches facility. Richemont rose 2.6 percent on good China data. Roche fell 1.5 percent but was trading ex-dividend. Online chemist Zur Rose crashed 12.6 percent on issuing a very conservative outlook for 2021, which some analysts said implied a loss.

International markets

Europe

European stocks rise after the Bank of England followed the US Federal Reserve in keeping policy unchanged and staying cautious about the outlook. The Stoxx Europe 600 gains 0.4%, the FTSE 100 is up 0.2%, the CAC-40 rises 0.1% and the DAX advances 1.2%. U.K. health authorities warned on Wednesday that the country would face a severe shortage of COVID-19 vaccines in April, as the European Commission threatened to trigger emergency controls on the production, distribution and exports of the shots. The outlook: The U.K. delay shows that AstraZeneca's production problems aren't limited to the EU. But they threaten to escalate the London-Brussels dispute to a new, serious level of nastiness. The EU finds itself in the situation of complaining about the lack of AstraZeneca vaccines even as most of its member states have suspended its use – until, that is, the EMA's report expected later on Thursday. And the U.K. criticizes Brussels' threat of an export ban, while benefiting from imports of the same vaccine from the rest of Europe as it de facto prevents exports of the shots manufactured in Britain. International Consolidated Airlines Group SA said Thursday that it plans to issue a two-part 1 billion-euro ($1.2 billion) bond that will strengthen its balance sheet and increase overall liquidity, enabling the airline to withstand a prolonged downturn in air travel. The British Airways and Vueling owner said the funds will provide it with the flexibility to take advantage in a recovery in air travel demand that has been hurt by world-wide restrictions and lockdowns due to the coronavirus pandemic.

United States

U.S. stocks fell as shares of technology companies and other high-growth stocks succumbed to another selloff in the government bond market. Investors appeared to be taking a closer look at comments and projections made a day earlier by the Federal Reserve and its chairman, Jerome Powell. Besides reiterating the central bank's commitment to supporting financial markets until the economy fully recovers-something investors cheered on Wednesday-the Fed also increased its median projections for growth and inflation based on the latest round of stimulus doled out by Congress. Shares of big tech companies were among the stocks that faced the greatest pressure. That pulled the Nasdaq Composite down 3% and knocked the S&P 500 off 1.5%, a day after clinching a fresh record. The Dow Jones Industrial Average, meanwhile, gave up an earlier gain to close 0.5% lower. Shares of Coherent Inc. (COHR) rallied 5.1% in premarket trading Thursday, after the laser technology company received yet another higher buyout bid from II-VI Inc. (IIVI), which Coherent determined is "superior" to the agreed upon bid from Lumentum Holdings Inc. (LITE). Under terms of the new II-VI bid, Coherent shareholders would receive $220 in cash and 0.91 II-VI shares for each Coherent share they own. On Wednesday, Lumentum had increased its bid to the equivalent of $275 a share in a deal valued at $6.9 billion. Federal air-safety regulators have stripped Boeing Co.'s authority to inspect and sign off on several newly produced 787 Dreamliners, part of heightened scrutiny of production problems that have halted deliveries of the popular wide-body jets. The Federal Aviation Administration said its inspectors, rather than the plane maker's, would perform routine pre-delivery safety checks of four Dreamliners that Boeing has been unable for months to hand over to its airline customers while it grapples with various quality lapses.

Asia

The East Asian stock exchanges are being dragged down on Friday by meagre Wall Street data. The focus is also on the meeting of the Japanese central bank (BoJ), which widened its yield target range - as expected by some participants the day before. This is seen as a possible entry into an interest rate hike. At the same time, however, the bank announced that it would undertake extensive ETF purchases if the markets destabilised.

Bonds

Treasury yields remained above 1.7% on Friday as uncertainty over the pace of economic expansion continued to unsettle financial markets.

Analysis

JPM rises the Volkswagen Vz. Target to 255 (215) EUR – Overw.
HSBC rises the Nestle target to 125 (123) CHF – Buy
Citi rises the Hugo Boss target to 37 (26) EUR – Neutral

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