Credit Suisse Expects Significant 1Q Hit After Loss Tied to U.S. Hedge Fund
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Credit Suisse Group AG said Monday that it could see a "highly significant" impact on its first-quarter results after a U.S.-based hedge fund defaulted on margin calls made by the Swiss bank. Credit Suisse and other banks are in the process of exiting the positions in question, the bank said. While it didn't quantify the size of the resulting loss, it said it could be significant and material to first-quarter results, notwithstanding the positive trends set out in a business-performance update earlier in March. Credit Suisse didn't mention the source of the expected impact. The announcement comes after a major selloff in the U.S. at the end of last week in shares of companies, especially in the media sector, in which positions were held by Archegos Capital Management, a hedge fund run by former Tiger Asia manager Bill Hwang. The bank said it will provide an update on the matter in due course.
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The SMI closed up 0.2 percent on 11,117 points Friday as two of its three heavyweights kept its upward advance in check. Proximity to the index’s all-time high also curbed impetus. Strong leads came from Wall Street, where indices had recovered strongly late Thursday afternoon and continued to rise Friday, as did neighbouring European markets. ABB rose 1.7 percent to lead the SMI on a new USD 4.3 billion share buyback programme and a firm dollar. Rising bond yields saw financial stocks surge. UBS rose 0.9 percent, Credit Suisse 1.2 percent. Insurers Zurich and Swiss Re also saw gains. Sika rose 1 percent on news it is acquiring Dritac’s floor-covering adhesive division in the US. As investors rediscovered their risk appetite, defensive stocks Nestle fell 0.3 percent and Roche 0.6 percent. Only Novartis was in demand, up 0.3 percent. Dental technology company Straumann closed unchanged despite news of expansion in China with its first production, training and innovation centre there.
European stocks gain as global economic recovery hopes outstrip worries about another eurozone coronavirus wave and a container ship blocking the Suez Canal. The Stoxx Europe 600 and the DAX rise 0.9%, the FTSE 100 climbs 1% and the CAC-40 adds 0.6%. Mining and energy shares advance on higher copper and oil prices. Smiths Group jumps 6.9% after the engineer's 1H profit beat forecasts. Banco Santander SA plans to make a cash offer to buy out its Mexican subsidiary Banco Santander (Mexico) SA Institucion de Banca Multiple Grupo Financiero Santander Mexico for a total consideration of around 550 million euros ($647 million). The Spanish bank said Friday that the offer would target about 8.3% of its Mexican subsidiary's share capital, with the transaction expected to be completed in the second or third quarter. Santander already owns 91.7% of Santander Mexico, which it plans to delist from the Mexican Stock Exchange in a move that would require support from at least 95% of Santander Mexico shareholders in an extraordinary shareholders' meeting. The bank expects to pay 24 Mexican pesos ($1.16) for every share of Santander Mexico, a 24.3% premium to the March 25 closing market price. Aviva PLC said Friday that it has agreed to sell its entire shareholding in Aviva Poland to Allianz SE for 2.5 billion euros ($2.94 billion) in cash, in a deal that concludes the refocus of the U.K. insurer’s portfolio.
A rally that included shares of banks and energy companies helped push the S&P 500 higher, giving the index weekly gain to end a volatile stretch. The S&P 500 rose 1.7% as of the 4 p.m. ET close of trading, with much of the gains coming in the final hour of the session. The Dow Jones Industrial Average added around 1.4%, while the tech-heavy Nasdaq Composite gained about 1.2%. The Nikkei Stock Average closed broadly higher as the yen weakened and concerns eased about higher borrowing costs. The Nikkei Stock Average rose 1.6% as electronics and transportation stocks led gains. Microsoft Corp. is in advanced talks to acquire messaging platform Discord Inc. for $10 billion or more, according to people familiar with the matter, as the software giant seeks to deepen its consumer offerings. Microsoft and Discord are in exclusive talks and could complete a deal next month, assuming the negotiations don't fall apart, the people said. Originally favored by gamers, San Francisco-based Discord offers voice, text and video chatting. The platform's popularity has surged since the pandemic took hold as people stay home and connect online -- as has that of other chat services like Facebook Inc.'s WhatsApp and Signal Messenger LLC. Discord has been considering an IPO. WeWork has agreed to merge with a special-purpose acquisition company in a deal to take the shared-office provider public nearly two years after its high-profile failure to launch a traditional IPO. The planned merger with the BowX Acquisition Corp. SPAC values WeWork at $9 billion including debt, the companies announced Friday.
The Asian stock exchanges take up the momentum from the late US business from the end of the week with new record highs and rally on Monday. US President Joe Biden's invitation to the presidents of China and Russia to a climate summit is well received. Initial reports of success in freeing the container ship stuck in the Suez Canal are also supporting sentiment in Asia. After all, the important waterway is of immense importance for Asia's export-oriented economies.
U.S. Treasury yields continued to climb on Monday, with bond traders concerned about the potential for the Biden administration's $1.9 trillion fiscal stimulus and pent-up household spending to course through the U.S. economy in the months ahead, releasing inflationary pressures. The 10-year Treasury note yield was last at 1.661% having climbed 4.4 basis points to 1.658% on Friday. That trimmed a 7.1 basis points decline for the week, its largest such increase since December.
Citi lowers the Just Eat Takeaway target to 144 (156) EUR – Buy
JPM lowers the Scout24 target to 70 (83) EUR – Overweight
IR rises the Deutsche Euroshop target to 15 (14) EUR – Sell
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