By Swissquote Analysts
Credit Suisse Flags CHF1.5 Bln 4Q Loss as Wealth Management Comes Under Strain
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Credit Suisse Group AG said Wednesday it expects to make a loss before taxes of around CHF1.5 billion in the fourth quarter, as net-asset outflows cause its wealth-management business to slump amid a painful restructuring of the bank. Lower deposits and assets under management are set to lead to reduced net interest income and recurring commissions and fees, which will drag wealth management into a loss in the three months to the end of the year, the Swiss lender said. Credit Suisse experienced deposit and net-asset outflows in the first two weeks of October, it said, after social-media reports and a spike in credit-default swaps caused a frenzy over the bank’s financial position. “In wealth management, these outflows have reduced substantially from the elevated levels of the first two weeks of October 2022 although have not yet reversed,” the Zurich-based bank said in a statement. The company’s actual results will depend on several factors including the investment bank’s performance for the remainder of the quarter, the continued exit of noncore positions, any goodwill impairments, and potential real estate sales, Credit Suisse added.
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The Switzerland stock market ended slightly down after a choppy ride on Tuesday with investors largely refraining from making significant moves. The benchmark SMI, which climbed to 11,104.84 around mid-morning after a weak start, slipped into the red soon, and struggled to move higher till around late afternoon. It eventually ended the session at 11,04.30, recording a loss of 10.74 points or 0.1%. Credit Suisse shed nearly 2.5%. Lonza Group ended 1.44% down, while Swisscom, Sika, Roche Holding and Partners Group ended lower by 0.7 to 1.2%. UBS Group, Richemont and Givaudan posted modest losses. Alcon climbed 1.2%. Novartis ended 0.71% up, while ABB, Zurich Insurance Group, Holcim and Geberit gained 0.3 to 0.5%. In the Mid Price Index, AMS ended lower by 2.5%. Zur Rose, VAT Group, SGS and Swatch Group shed 0.6 to 0.8%. SIG Combibloc, Julius Baer and Kuehne & Nagel gained 1.3 to 1.8%. Schindler Holding, Lindt & Spruengli, Helvetia, Baloise Holding and Barry Callebaut also closed on firm note.
European stocks closed higher on Tuesday, as a rally in commodity prices triggered some hectic buying in materials and energy sectors. The mood, however, remained cautious amid concerns about a surge in Covid cases in China, geopolitical tensions, and fears over further monetary tightening by central banks. Investors were also reacting to mixed comments from ECB policymakers on the rate hike path. After several ECB officials hinted at slower rate hikes, ECB policymaker Robert Holzmann has backed another 75-bps rate hike at the next rate-setting meeting in December. The pan European Stoxx 600 climbed 0.73%. The U.K.'s FTSE 100 surged 0.96%, Germany's DAX gained 0.29% and France's CAC 40 advanced 0.35%, while Switzerland's SMI edged down 0.1%. Among other markets in Europe, Austria, Belgium, Denmark, Finland, Greece, Ireland, Netherlands, Norway, Poland, Portugal, Sweden and Turkey closed higher. Czech Republic ended weak, while Iceland and Spain closed flat. Shares of oil firms rose, tracking higher oil prices after Saudi Arabia's energy minister denied a report that suggested OPEC+ was considering an increase in supply. In the UK market, Harbour Energy shares climbed more than 7%. BP gained 6.5%, while Entain and Shell moved up 5.3% and 4.84%, respectively. Glencore, Frasers Group, Fresnillo, JD Sports Fashion, Antofagasta, Rio Tinto and BAE Systems gained 2 to 4%. Sainsbury (J), Endeavour Mining, Anglo American Plc, SSE, Kingfisher and Tesco also ended notably higher. Babcock International, an aerospace, defense and nuclear engineering services company, surged 2% after backing its FY23 outlook. Airtel Africa, Hargreaves Lansdown and Vodafone Group ended more than 3% down.
U.S. stocks rose Tuesday in thin preholiday trading, with investors remaining focused on the path of the Federal Reserve's interest-rate increases. The S&P 500 climbed 53.64 points, or 1.4%, to 4003.58, after dropping 0.4% in the previous session. The Dow Jones Industrial Average gained 397.82 points, or 1.2%, to 34098.10, and the Nasdaq Composite added 149.90 points, or 1.4%, to 11174.41. Many traders were away from their desks ahead of the Thanksgiving holiday. Just 18.9 billion shares in New York Stock Exchange and Nasdaq-listed stocks changed hands on Monday and Tuesday, the lowest number in any two days since the period ended Jan. Among individual stocks, Best Buy gained $9.05, or 13%, to $79.88 and was the best performer in the S&P 500. The electronics retailer reported quarterly results that beat expectations and raised its outlook. Meanwhile, Dollar Tree fell $12.87, or 7.8%, to $152.37 and was the worst performer in the index. The discount retailer said it expects earnings to come in toward the lower half of its previous guidance for the year, citing elevated costs and a shift in consumer purchases. HP Inc. said it would slash up to nearly 10% of its workforce with a sharp slump in demand for personal computers expected to stretch into next year. The computer and printer maker, which currently has around 61,000 employees, on Tuesday said it would part with 4,000 to 6,000 employees as part of a transformation plan that aims to achieve $1.4 billion in annualized cost savings. The company had a payroll of about 51,000 people a year ago.
The stock markets in East Asia and Australia are mostly up in the middle of the week. There is no trading on the Tokyo Stock Exchange on Wednesday due to a public holiday. On the Chinese mainland, the Shanghai Composite is up 0.2 per cent. Meanwhile, on the Hong Kong stock exchange, the Hang Seng Index is up 0.7 per cent after recent declines. While the rising number of Covid 19 cases in China is unsettling investors, measures by the People's Bank of China to support the property market and comments by US Federal Reserve officials signaling support for a slower pace of interest rate hikes are likely to help brighten investor sentiment, analysts at KGI Securities said.
The yield on U.S. 10-year Treasury notes edged down to 3.757% from 3.825% Monday. That decline on the yield, which moves inversely to the price of the bonds, snapped a three-day streak of gains.
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