Research Market strategy
By Swissquote Analysts
Published on 25.07.2022
Morning news

Julius Baer 1H Net Profit Fell Amid Rocky Markets, Activity Slowdown

Topic of the day

Julius Baer Group Ltd. suffered from a slowdown in client activity and volatile markets in the first half of the year. The Swiss private banking group announced that net profit fell 26 per cent year-on-year to CHF 450.6 million. On an adjusted basis, net profit was CHF 476 million, down 25 per cent. Operating profit was 1.87 billion Swiss francs, a decrease of 6.4 percent. It was impacted by lower transaction and trading related revenues combined with lower activity. Assets under management amounted to CHF 428 billion at the end of June, down from CHF 486 billion a year earlier. Julius Baer attributed this to the sharp declines in global markets. The Group recorded net new money outflows of CHF 1.11 billion but stressed that net new money inflows recovered from the end of April. The bank expects their development to normalize further in the second half of the year.

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Swiss stocks

On Friday, the Swiss stock exchange was weighed down by the foreign exchange market, where the franc gained in the wake of weak data on the dollar and the euro. The SMI lost 0.3 per cent to 11,096 points. Among the 20 SMI stocks, there were 14 price losers and five price winners, and one share closed unchanged. 25.91 (previously: 33.7) million shares were traded. One consequence of the poor economic data was lower interest rate speculation and lower market interest rates in Europe. This weighed on the banking sector; in Switzerland, UBS and Credit Suisse fell by 1.0 and 1.9 per cent respectively. Defensive heavyweights Nestle (+1.1%), Roche (-0.4%) and Novartis (unchanged) closed little changed. Sika lost 4 per cent despite what at first glance appeared to be positive business figures. Investors were bothered by the outlook. Lonza had presented strong business figures for the first half of the year. However, Citigroup pointed to special effects in the area of biologics. The share price fell by 5.8 per cent. Weaker than expected half-year figures put Schindler (-4.4%) under pressure. Addex again made the headlines, with the share price plummeting by a further 17.8 per cent. The struggling company had secured fresh capital by issuing new shares.

International markets


European shares rose modestly on Friday despite economic data that added to growing evidence of a likely recession. The flash estimate PMI for the eurozone showed its first contraction since early 2021, while similar surveys for Germany and France came in below expectations. Sentiment in the markets remains shaky due to weak growth, high inflation and rising interest rates. Traders remain focused on the flow of Russian natural gas through the critical Nord Stream pipeline, as well as the ripple effects from the resignation of Italian Prime Minister Mario Draghi. At the close, the Stoxx Europe 600 index gained 0.3% to 425.7 points. In Paris, the CAC 40 and the SBF 120 advanced 0.3% each. The DAX 40 in Frankfurt gained 0.1%, as did the FTSE 100 in London. For the week, the Stoxx Europe 600 index added 2.9%. In Paris, the CAC 40 and the SBF 120 advanced by 3% and 3.1% respectively. The DAX 40 in Frankfurt gained 3% and the FTSE 100 in London increased by 1.6%. The Eurozone's composite PMI fell to 49.4 in July, its lowest level in 17 months, after 52 in June. These statistics reinforce the likelihood of a recession, even as the major central banks are tightening their tone to curb runaway inflation. The European Central Bank (ECB) raised its key rates by 50 basis points on Thursday and the Federal Reserve (Fed) is heading for another 75 basis point rise next week. Gecina (+6.8%) increased its net recurring earnings (NRE) per share target for the current year, after benefiting from the recovery of the office market in the first half. Its competitor Covivio (+4.4%) has confirmed its adjusted EPRA (European Public Real Estate Association) earnings target of around EUR 4.5 per share in 2022, compared with EUR 4.35 in 2021. In their wake, the property sector as a whole gained ground, with Unibail-Rodamco-Westfield up 6.3% and Klépierre up 3.9%. Ubisoft (-1.3%) saw its business decline in the first quarter of its 2022-2023 financial year and announced the postponement of the launch of its game "Avatar: Frontiers of Pandora" until next year. Uniper announced on Friday morning a "stabilisation plan", including a €267 million capital increase, a €7.7 billion public loan in the form of convertible securities and the extension by state-owned bank KfW of a credit facility to €9 billion, up from €2 billion currently. In reaction to these announcements, the share price of Uniper's Finnish parent company, Fortum, fell by 8.4% and Uniper fell heavily by 28.9% as its recapitalisation came at a heavy discount.

United States

U.S. stocks slumped Friday, snapping a three-day winning streak, as some surprisingly weak quarterly updates from companies spooked investors. The S&P 500 fell 37.32 points, or 0.9%, to 3961.63 a day after the broad benchmark index jumped 1%. The Dow Jones Industrial Average edged down 137.61 points, or 0.4%, to 31899.29, and the Nasdaq Composite declined 225.50 points, or 1.9%, to 11834.11. Despite Friday’s losses, all three indexes posted weekly gains. With a 2.5% rise for the week, the S&P 500 capped its best week in a month. Nonetheless, few investors are willing to call a bottom to a selloff that has dragged the S&P 500 down 17% this year. Persistently high inflation, the possibility of a recession and the war in Ukraine remain at the forefront of investors’ minds. Next week’s meeting of the Federal Reserve, as well as coming gross domestic product data, could inject more volatility in the markets. Late Thursday, Snap, the parent company of popular photo-sharing social-media app Snapchat, posted its weakest quarterly sales growth as a public company and held off issuing new guidance. The stock tumbled $6.39, or 39%, to $9.96, weighing on other communication-services and technology stocks, the two sectors that were the biggest drags on the S&P 500 on Friday. Megacap technology companies Meta Platforms and Alphabet pulled back, falling $13.90, or 7.6%, to $169.27 and $6.44, or 5.6%, to $107.90, respectively. Meanwhile, American Express shares rose $2.83, or 1.9%, to $153.01 after the company reported a 31% rise in revenue. Verizon Communications shares fell $3.21, or 6.7%, to $44.45 Friday after the company said it expects cash-strapped customers and stiffer competition to pressure its business in coming months.


In Asia, major indexes broadly closed mixed on Monday. Tokyo edges lower by 0.7 per cent to 27,719 points. The Chinese stock exchanges are down by a similar amount. There, rising Covid 19 infections and the continuing problems in the real estate sector do not inspire a bullish sentiment. The stock market in Seoul escapes the downward trend with a plus of 0.7 per cent. Support comes from auto stocks Hyundai Motors (+2.1%) and Kia (+1.6%). Prices are also rising in the supplier sector, illustrated by Hanon Systems (+2.9%) and Hyundai Mobis (+3.4%).


Long-dated U.S. bond yields fell to their lowest levels in almost two months on Friday, while posting their second straight week of declines, on growing concerns the economy could tip into recession. The 10-year U.S. Treasury note eased by 12 basis points to 2.765%. The 2-year Treasury yield fell by 12 basis points to 2.978%.


Goldman Sachs cuts Porsche target to EUR 80 (97) - Buy

Goldman Sachs lowers Volkswagen target to 191 (224) EUR - Buy

Berenberg reduces target Anglo American to 3,200 (3,300) p - Buy

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