Research Market strategy
By Swissquote Analysts
Published on 26.07.2022
Morning news

UBS 2Q Net Profit Rose But Missed Views Amid Tough Conditions

Topic of the day

UBS Group AG’s second-quarter earnings inched higher, though they fell short of analysts’ expectations, held back by steep falls in global stock and bond markets. The Swiss bank on Tuesday reported a quarterly net profit of $2.11 billion, up from $2.01 billion a year earlier. Revenue was $8.92 billion, inching up from $8.90 billion, it said. Analysts had expected UBS to post a net profit at $2.40 billion on revenue of $9.43 billion, according to a company-compiled consensus. UBS’s wealth-management division, the company’s crown jewel, recorded a 2% revenue drop, dragged by negative market performance, adverse currency effects and lower levels of client activity, especially in the Americas and Asia-Pacific regions. Net new fee-generating assets stood at roughly $400 million. Over the first half of the year, net new fee-generating assets were $19.8 billion. Net new fee-generating asset flows for the quarter were positive by more than $3 billion in Asia-Pacific, a key region where wealth managers have recently experienced weakness as clients dialed down on risk. “The second quarter was one of the most challenging periods for investors in the last 10 years,” Chief Executive Ralph Hamers said. “Our underlying performance reflected a good result in an environment with lower asset levels, higher volatility and increasing rates,” he said. The bank said it is well-positioned as it heads into the second half of 2022, and backed its plan to buy back around $5 billion of its shares by the end of the year.

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Swiss stocks

On Monday, the SMI gained 0.3 per cent to 11,129 points. Among the 20 SMI stocks, there were eleven price gainers and nine price losers. 29.31 (previously: 25.91) million shares were traded. Julius Baer was up 2.2 per cent after starting with heavy losses. On the one hand, the group suffered from a slowdown in client activity and volatile markets in the first half. It announced that net profit fell 26 per cent year-on-year to 450.6 million Swiss francs. On the other hand, this was offset by positive data, such as the recent recovery in net new money inflows from the end of April. Kuehne & Nagel lost 2.5 per cent. There was no criticism of the strong business figures for the past quarter. However, there were signs of a weakening of price trends in the sea and air segments, which probably had a negative impact on sentiment. The SMI also owed its slight gain to the profits of heavyweight Roche, which rose by 0.8 per cent. Luxury goods stock Richemont (+1.9%) was also in demand, but Swatch (+0.2%) less so. At the other end of the SMI ranked Lonza (-2.2%) and Logitech (-2.4%).

International markets


European shares were little changed on Monday, hovering around the flat line, as investors held their fire at the start of a heavy week of big U.S. earnings, the deteriorating supply of Russian gas to Europe and Federal Reserve action. A mixed bag of results in Europe and some weak economic data ensured a cautious opening session. In Germany, the Ifo business-climate index showed a sharp deterioration in business confidence due to the energy crisis in Europe's largest economy. The Stoxx Europe 600 index closed up 0.1%, at 426.3 points. In Paris, the CAC 40 and the SBF 120 gained 0.3% and 0.2% respectively. However, the DAX 40 in Frankfurt was down 0.3%. The FTSE 100 in London ended up 0.4%. Satellite operator Eutelsat (-17.8%) has entered into discussions with its co-shareholders in UK broadband provider OneWeb. Eutelsat already holds a 23% stake in OneWeb. Forvia, the automotive supplier created at the beginning of the year from the merger between Faurecia (+2.8%) and the German group Hella, has confirmed its annual outlook, although its half-year results have suffered from the inflationary environment. Its competitor Plastic Omnium (-0.1%) also reiterated its targets for the 2022 financial year and announced results above analysts' forecasts for the first half. Telecoms operators Orange (+1.5%) and Masmovil signed an agreement to combine their activities in Spain. The real estate group Icade (+1%) maintained on Monday its outlook for 2022 after publishing results described as "solid" in the first half of the year. Philips shares lost 7.7% in Amsterdam. The Dutch medical technology group saw its results decline in the second quarter and lowered its sales forecast for 2022. German carmaker Volkswagen (-3.9% in Frankfurt) announced on Friday evening that Herbert Diess would step down from his position on 1 September and be replaced by Oliver Blume, who will also retain his position as chairman of the board of sports car manufacturer Porsche.

United States

U.S. stocks swung between small gains and losses at the start of a crucial week for global markets, with investors awaiting the Federal Reserve’s latest policy decision and a slew of corporate earnings reports. The S&P 500 added 5.21 points, or 0.1%, to 3966.84. The Dow Jones Industrial Average gained 90.75 points, or 0.3%, to 31990.04. The tech-heavy Nasdaq Composite Index lost 51.45 points, or 0.4% to 11782.67. The Fed on Wednesday is expected to deliver another 0.75-percentage-point interest-rate increase as it attempts to cool soaring inflation. Markets have come under pressure this year as investors worry that the central bank’s aggressive tightening will lead the U.S. economy into recession. After markets closed Monday, Walmart warned that higher prices for food and fuel are causing consumers to pull back, hurting the retail giant’s profits for the current quarter and fiscal year. The stock tumbled 8.8% after hours; Target shares slumped as well. Tech shares were mostly lower to start the week. Alphabet slipped 39 cents, or 0.4% to $107.51. Apple fell $1.14, or 0.7%, to $152.95. Tesla shares dropped $11.43, or 1.4% to $805.30. Shares of World Wrestling Entertainment rose 8.4% after Chief Executive and Chairman Vince McMahon on Friday said he would retire. Shares of gold miner Newmont fell 13%. The firm lowered its annual gold production outlook, citing operational challenges at one of its mines and an increasingly competitive labor market. Tesla (-1.4%) disclosed Monday it took a $170 million charge in its first-half accounts to reflect the impairment of bitcoins it holds. At the same time, the U.S. group realized a $64 million gain from the sale of a portion of its bitcoin inventory during the period, according to a financial report filed Monday with the Securities and Exchange Commission (SEC). American Express (+0.5%) continued its advance from Friday. The stock was supported by several recommendation upgrades in the wake of the release of its quarterly results and the raising of its annual revenue forecast.


In Asia, major indexes broadly closed with gains. Only Tokyo is lagging behind, with the Nikkei index almost unchanged at 27,694 points. Hong Kong, on the other hand, is the strongest performer, rising by 1.5 per cent, while Shanghai adds 0.8 per cent. South Korea’s Kospi increases by 0.3 per cent. Among individual stocks, Alibaba adds roughly 4 per cent in Hong Kong. The Nasdaq-listed company now plans to pursue a priority stock listing in Hong Kong.


Long-dated U.S. government debt yields climbed on Monday as a 75-basis point rate increase at Wednesday’s Fed meeting seems to be priced in. The 10-year Treasury note was yielding 2.82%, up 3 basis points while the 2-year Treasury note gained 4 basis points to 3.027%.


Jefferies cuts Julius Baer target to CHF 65 (69) - Buy

Jefferies reduces Adecco target to CHF 36 (40) - Hold

RBC lowers Flughafen Zurich to Sectorperform (Outperform) - CHF 150 (175)

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