US Banks Will Be Allowed to Distribute More to Shareholders Again as of July
Topic of the day
The restrictions for most US banks on paying dividends and buying back their own shares are to fall after 30 June. This is to happen after the financial institutions have documented their resilience in a simulated economic downturn in a stress test, according to the Fed. The banking system remains a source of strength, and the return to the normal rulebook will maintain that strength, Fed representative Randal Quarles said. Banks have hardly been allowed to pay dividends or buy back shares since last summer. This was to ensure that they did not unnecessarily melt down their capital buffers during the pandemic. Buybacks have been possible again since the first quarter of 2021, but they are still restricted. Large US banks such as Bank of America and JPMorgan Chase & Co had already voluntarily renounced share buybacks before the Fed's prohibition.
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In a low-trend trading session, the Swiss benchmark index SMI closed with small gains and close to the day's high. The focus was on the franc, which took a rollercoaster ride after the interest rate meeting of the Swiss National Bank (SNB). The caution of the stock market participants was reflected in the strength of the defensive stocks Nestle (+0.4%), Novartis (+1.3%) and Roche (+0.3%), which kept the index slightly up. Meanwhile, Richemont shares fell by 1 per cent. Recently, the share had benefited from speculation about a merger with Kering. However, Citigroup showed in an analysis that the hurdles for this were considerable. The annual general meetings of ABB (-0.8%) and Givaudan (+0.6%) were unspectacular. The management proposals were all waved through. Outside the SMI, Kühne + Nagel lost 1.1 per cent. Bernstein analysis lowered the stock to Marketperform. Lindt is in the middle of the Gold Bunny season. From now on, the products are available in Austria in its own online shop. The share gained 1 per cent.
Europe's main stock market indices closed mixed on Thursday as EU leaders meet in Brussels to try to lift the brakes on vaccination campaigns. The Stoxx Europe 600 index fell 0.1% to 423.1 points. In Paris, the CAC 40 gained 0.1% while the SBF 120 finished close to balance. In Frankfurt, the DAX 30 gained 0.1%, while London's FTSE 100 gave up 0.6%. Publicis (+3.3%) spurned Vivendi (-0.5%) after the two groups traded in recent months, BFM Business reported. Klépierre (-2.1%) suffered from S&P Global Ratings' downgrade of its credit rating to "BBB+", with a "stable" outlook. Oil and gas stocks fell in the wake of oil prices. The biggest faller on the SBF 120, the manufacturer of membranes for the transport of natural gas GTT lost 3.6%, followed by Vallourec (-3.5%). TechnipFMC fell 3.1%. Dutch industrial conglomerate Philips (+2.5% in Amsterdam) announced on Thursday that it had reached an agreement to sell its Domestic Appliances business to investment firm Hillhouse Capital for €3.7bn.
The New York Stock Exchange ended higher on Thursday after another turbulent session as investors continue to readjust their positions in the face of an expected economic recovery. At the close, the Dow Jones Industrial Average (DJIA) gained 0.6 percent to 32,619.48 points and the broader S&P 500 index gained 0.5 percent to 3,909 points. The tech-heavy Nasdaq Composite rose 0.1% to 12,977 points. Nike (-3.4%), along with other apparel companies including H&M, came under fire in China after calling for a boycott of cotton from the Xinjiang region due to suspected forced labour among Uighurs. Coherent (-0.05%) announced on Thursday that it had accepted a purchase offer of around $7bn in cash and shares from electronic components group II-VI (-0.8%). As a result, Coherent will terminate its March agreement with Lumentum (+8.5%), to which it will pay a termination fee of $217.6m. The bosses of Facebook (-1.2%), Twitter (-1.4%) and Alphabet (-0.2%), Google's parent company, are being questioned by a House of Representatives committee on Thursday about the role played by social networks in the Capitol Hill riots last January and their decision to ban or suspend the accounts of former US president Donald Trump. Shares in the hygiene and cleaning products company Diversey were virtually unchanged (-0.1%) at $14.98 in its first listing on the Nasdaq. The IPO price was well below the amount initially offered in the offering. The company announced on Wednesday that it had sold 46.15 million shares at a price of $15 per share, compared with the indicative range of $18 to $21 per share. The IPO price was valued at $4.56 billion.
The stock markets in East Asia and Australia show gains across the board on Friday. In Hong Kong, the Hang Seng Index is up 1.5 per cent. In the Chinese heartland, the Shanghai Composite advanced by 1.4 per cent, supported by consumer and real estate stocks. On the Tokyo Stock Exchange, the Nikkei index gains 1.5 per cent. The Kospi in Seoul rises by around 1.0 per cent.
On the bond market, the yield of the American benchmark ten-year Treasury bond was almost stable at around 1.614%.
Citi lowers Zur Rose target to EUR 400 (445) - Neutral
Jefferies raises BNP Paribas to EUR 66 (64) - Buy
Berenberg raises Aegon target to EUR 5.00 (3.80) - Buy
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