Research Market strategy
By Swissquote Analysts
Published on 17.10.2022
Morning news

Morgan Stanley Earnings Fall for Third Consecutive Quarter

Topic of the day

A deal-making drought dinged Morgan Stanley’s third-quarter results, sending profit down 29%. The bank said Friday it posted a profit of $2.63 billion, or $1.47 a share. Analysts had expected $1.52 a share, according to estimates compiled by FactSet. Revenue fell 12% to about $13 billion in the quarter, which also missed expectations of $13.3 billion. It was Morgan Stanley’s third consecutive year-over-year profit decline. Investment banking revenue, including fees from mergers and acquisitions, declined 55%. Rising interest rates and a weak stock market have led corporate executives to hold off on plans to make deals or take their companies public. It is a stark reversal from the boom that characterized much of the past two years. The major banks JP Morgan, Citigroup and Wells Fargo also presented their figures on Friday. Bank of America and Goldman Sachs will follow this week.

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Swiss stocks

The Switzerland stock market ended on a firm note on Friday, tracking gains in markets across Europe, amid hopes that U.S. inflation would start trending lower in the coming months. The benchmark SMI, which climbed to 10,460.11, ended the session with a gain of 101.44 points or 0.99% at 10,329.34. Lonza Group gained about 3.1%, Alcon and Swiss Re, both gained nearly 3%, Sonovia advanced 2.35%, Givaudan climbed 2.15% and Sika surged about 2.1%. Geberit, Zurich Insurance Group, Swiss Life Holding and Roche Holding gained 1.2 to 1.7%. Credit Suisse drifted down 1.16%. Holcim and ABB posted moderate losses, while UBS Group edged down marginally. In the Mid Price Index, Belimo Holding, Bachem Holding, Swiss Prime Site, PSP Swiss Property, Kuehne & Nagel, SGS and Tecan Group gained 2 to 4%. Schindler Ps surged nearly 2%. Helvetia, Galenica Sante, VAT Group, Adecco, Schindler Holding, Baloise Holding and Lindt & Spruengli gained 1.4 to 1.8%. Temenos Group shares tanked nearly 19% after the banking software group slashed its 2022 guidance.

International markets


European stocks closed higher on Friday, extending gains from the previous session, amid hopes that U.S. inflation may have peaked and would start trending lower in the coming months. Markets also reacted positively to the British government announcing a U-turn on certain elements of its controversial fiscal policies. British Prime Minister Liz Truzz, who sacked finance minister Kwasi Kwarteng, announced a reversal of some tax-cutting plans laid out in a mini-budget last month. The pan European Stoxx 600 gained 0.56%. The U.K.'s FTSE 100 edged up 0.12%, Germany's DAX climbed 0.67% and France's CAC 40 surged 0.9%, while Switzerland's SMI gained about 1%. The FTSE 100 shed nearly 2% in the week, while CAC 40 and DAX both gained more than 1%. Among other markets in Europe, Belgium, Czech Republic, Denmark, Finland, Greece, Iceland, Ireland, Poland, Portugal, Spain, Sweden and Turkiye ended notably higher. Austria closed modestly higher, while Netherlands, Norway and Russia ended weak. In the UK market, Ocado Group rallied nearly 5%. Segro gained 3.9% and Unite Group surged nearly 3%. Rentokil Initial, United Utilities, Centrica, B&M European Value Retail, F&C Investment Trust, RightMove, Severn Trent and Mondi gained 2 to 2.7%. Harbour Energy shed about 5%. Fresnillo, BAE Systems, Rio Tinto, Prudential, Anglo American Plc, Standard Chartered and Shell also ended notably lower. Royal Mail shares slumped more than 11%. The postal service expects operating loss of about £350m in year to end of March, which could rise to £450m.

United States

U.S. stocks fell Friday, the latest U-turn for markets after a volatile week marked by big swings in both directions. Stocks fell to start the week, then tumbled again early Thursday after data showed inflation rose more than expected in September -- a major setback for investors who had hoped for a report that might give the Federal Reserve space to slow down its rapid pace of interest-rate increases. Then something unexpected happened. Stocks surged to finish the day higher. Thursday marked the first time the Dow industrials both fell at least 500 points and rose at least 800 points in a single trading day, according to Dow Jones Market Data. The S&P 500 shed 86.84 points, or 2.4%, to 3583.07 and finished the week with a 1.6% loss. The Dow Jones Industrial Average slipped 403.89 points, or 1.3%, to 29634.83 and rose 1.2% for the week. The Nasdaq Composite declined 327.76 points, or 3.1%, to 10321.39 and slipped 3.1% for the week. Stocks fell broadly Friday, with all 11 sectors of the S&P 500 posting losses. The materials and consumer-discretionary groups were among the biggest decliners. Bank stocks were mixed after large lenders reported profits dropping in the third quarter. The KBW Nasdaq Bank Index fell 1.4%. Shares of JPMorgan Chase gained $1.82, or 1.7%, to $111.19. The bank's revenue rose more than expected thanks to solid consumer spending, higher interest rates and strong performance on its trading desks. Wells Fargo rose 79 cents, or 1.9%, to $43.17 after delivering stronger-than expected revenue, in part because of a jump in its net interest income.


On Monday, the Asian stock markets followed the weak trend on Wall Street. There, the prospect of further increases in key interest rates had put a severe damper on share prices at the end of the week. In trading, however, negative signals from the Chinese Communist Party are also being pointed out. At the start of the Communist Party (CP) congress, President Xi Jinping called on his countrymen to "prepare for the worst". He threatened Taiwan with military action.


In the U.S. bond market Friday, the yield on the 10-year U.S. Treasury note rose to 4.005%, from 3.952% Thursday. Yields rise as bond prices fall.


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