UBS Raises Dividend After Scrapping Wealthfront Deal
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UBS Group upped its 2022 dividend by 10% and said it will buy back more shares after abandoning a $1.4 billion acquisition of online wealth adviser Wealthfront last week. Its shares rose 1.3%. The Swiss bank had been targeting share buybacks of up to $5 billion this year, and said it repurchased $4.1 billion worth of stock as of Friday. Now it said it expects to spend more than $5 billion in 2022, and that the buybacks and rising dividends should continue next year. UBS and Wealthfront didn't give a reason earlier this month when they said they mutually agreed to pull out of the all-cash deal, which was originally announced in January. The acquisition wasn't expected to make any profits for years. But it was a demonstration of UBS's goal, under chief executive Ralph Hamers, to reach less-rich customers through their personal devices, and for UBS to win a greater share of the U.S. wealth market.
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After holding in positive territory till more than a couple of hours past noon, the Switzerland stock market slipped into the red on Tuesday after U.S. inflation data raised fears that the Fed might be aggressive with interest rate hike at its upcoming meeting next week. The benchmark SMI ended with a loss of 99.21 points or 0.9% at 10,891.54, falling nearly 200 points from the day's high of 11,083.49. Sika and Lonza Group dropped 5.9% and 5.4%, respectively. Partners Group, Givaudan, Credit Suisse and Geberit shed 3.46 to 3.9%, and Logitech ended 2.74% down. ABB, Richemont, Alcon and Holcim also ended notably lower. Zurich Insurance Group gained about 1%. Nestle, Roche Holding and Swisscom edged up marginally. Among the stocks in the Swiss Mid Price Index, Zur Rose tanked more than 9%. Straumann Holding declined 6.7% and AMS ended 5.2% down, while VAT Group and Ems Chemie Holding both ended lower by about 4.5%. Bachem Holding, Sonova, Adecco, Schindler Ps, Schindler Holding, Temenos Group and Clariant were among the other major losers. On the economic front, Switzerland's producer and import price inflation eased for the second successive month in August, data from the Federal Statistical Office showed. Producer and import prices rose 5.5% year-on-year in August, slower than the 6.3% increase in July. Further, this was the weakest rate of increase since January last year, when prices had grown 5.4%. The producer price index climbed 3.8% annually in August, following a 4.1% rise in the previous month. Import prices increased 8.9% from last year. On a monthly basis, producer and import prices dropped 0.1% in August, linked to lower prices for petroleum products, basic metals and semi-finished metal products.
Unexpectedly persistent US inflation abruptly ended the upward momentum on the European stock markets Tuesday afternoon. The DAX lost 1.6 per cent to 13,189 points while the Euro-Stoxx-50 slipped 1.6 per cent to 3,588 points. With the exception of the utilities index, all Stoxx sub-indices turned more or less significantly into negative territory in the course of the day. The index of interest-related technology stocks and the index of retail stocks lost more than 3 per cent. Shares of the online grocer and retail technology specialist Ocado fell almost 15 per cent in London. Although the company increased its selling prices by 5 per cent year-on-year, it was unable to compensate for high energy costs. Within the DAX, Infineon fell 5 per cent. SAP lost 1.3 per cent after being up for a long time following strong figures from rival Oracle. Internet-based consumer stocks were hit even harder. Zalando slumped 8.3 per cent and DAX relegated Hellofresh plummeted 6.8 per cent. Among interest-based construction and real estate stocks, Vonovia fell by 5 per cent and Heidelbergcement by 4 per cent. On the other hand, reinsurers extended their recent winning streak: Hannover Re gained 0.4 per cent and Munich Re 0.6 per cent. The biggest winners on the DAX, however, was RWE, which rose by 2.9 per cent. Here, investors continued to bet on a reform of the EU electricity market with a relatively high price cap. In Vienna, Verbund (+1.8 per cent) benefited from this assumption.
Stocks suffered their worst day in more than two years after hotter-than-expected inflation data dashed investors’ hopes that cooling price pressures would prompt the Federal Reserve to moderate its campaign of interest-rate increases. Investors sold everything from stocks and bonds to oil and gold. All 30 stocks in the Dow Jones Industrial Average declined, as did all 11 sectors in the S&P 500. Only five stocks in the broad benchmark finished the session in the green. Facebook parent Meta Platforms dropped 9.4%, BlackRock declined 7.5% and Boeing fell 7.2%. The Dow fell 1,276.37 points, or 3.9%, to 31104.97. The S&P 500 declined 177.72 points, or 4.3%, to 3932.69. The Nasdaq Composite slid 632.84 points, or 5.2%, to 11633.57. All three indexes posted their steepest one-day losses since June 11, 2020. The declines left the Dow industrials down 14% in 2022, while the S&P 500 has lost 17% and Nasdaq Composite has retreated 26%. Compared to the same month a year ago, consumer prices were up by 8.3 percent in August, reflecting a slowdown from the 8.5 percent spike in July. However, economists had expected the annual rate of growth to slow to 8.1 percent. Communication services, technology and consumer discretionary sectors of the S&P 500 all fell more than 5%. Semiconductor stocks were particularly hard hit: Nvidia, Advanced Micro Devices and Micron Technology declined more than 7%. Interest rate-sensitive housing stocks also saw substantial weakness, as reflected by the 5.9 percent plunge by the Philadelphia Housing Sector Index. Furthermore, retail stocks showed a significant move to the downside, dragging the Dow Jones U.S. Retail Index down by 5.8 percent. Computer hardware, telecom, airline and biotechnology stocks also saw considerable weakness amid broad based selling on Wall Street.
In Asia, major indexes broadly closed with losses on Wednesday, following the broadly negative cues from global markets overnight. Among the weakest stock exchanges in the region are Hong Kong (-2.5%) and Tokyo (-2.4%). Market heavyweight SoftBank Group is losing almost 4 percent and Uniqlo operator Fast Retailing is down almost 3 percent. Among automakers, Honda is edging down 0.4 percent and Toyota is slipping by almost 1 percent. The Shanghai composite falls a more moderate 1.0 per cent. In South Korea, the Kospi declines by 1.3 per cent, clearly recovering from the day's lows.
U.S. government bond prices fell sharply Tuesday, pushing the yield on the 10-year Treasury note close to its 2022 high, following the release of surprisingly high inflation data. The 10-year Treasury note gained 6 basis points to 3.418%, up from around 3.3% before the inflation figures were released. The 2-year Treasury note jumped 17 basis points to 3.745%.
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