By Swissquote Analysts
Credit Suisse Warns of $1.6 Billion Loss After Clients Pull Money
Topic of the day
Credit Suisse Group AG warned it would lose around $1.6 billion in the fourth quarter after customers pulled their investments and deposits over concerns about the bank’s financial health. The warning of a big pretax loss pushed Credit Suisse’s shares to a new closing low, below a previous nadir hit in late September as concerns swirled about the bank’s financial health. Switzerland’s No. 2 bank by assets said outflows were around 6% of its total $1.47 trillion assets, or around $88.3 billion, between Sept. 30 and Nov. 11. Customers in its wealth-management arm—its main business serving the world’s rich—removed $66.7 billion from the bank. Credit Suisse in late October said that a social-media frenzy around its finances was causing large outflows. The bank typically attracts at least $30 billion in net new assets in a year and hasn’t posted an annual net outflow since 2008, according to its filings. Analysts at JPMorgan said the outflows and the anticipated loss were much worse than they expected. The bank “is not out of the woods yet in terms of stabilizing the franchise,” they said.
The Switzerland stock market ended marginally up on Wednesday after moving in a tight range with investors largely staying cautious and making stock specific moves. Worries about economic slowdown and uncertainty about the pace of interest rate hikes rendered the mood cautious. The benchmark SMI ended with a gain of 20.16 points or 0.18% at 11,094.46 after moving between 11,066.04 and 11,104.13. Givaudan climbed 2.21% and Swiss Re advanced 1.8%. Richemont, Geberit, Sika and Lonza Group gained 1 to 1.3%. Logitech, Roche Holding, Swiss Life Holding and Nestle posted modest gains. Novartis ended lower by 1.76%. Credit Suisse shares plunged more than 6% after the embattled Swiss lender said it would book a loss of up to 1.5 billion Swiss francs ($1.6bn) for the fourth quarter. Among the stocks in the Swiss Mid Price Index, Tecan Group, VAT Group and Straumann Holding gained 2.5% and 2.65%. Zur Rose, Belimo Holding, Lindt & Spruengli, SIG Combibloc, Baloise Holding, Kuehne & Nagel and Helvetia gained 0.8 to 1.3%.
European stocks closed higher on Wednesday, with investors digesting the latest batch of economic data from the region and looking ahead to the minutes of the Federal Reserve's recent policy meeting. The pan European Stoxx 600 climbed 0.6%. The U.K.'s FTSE 100 gained 0.17% and France's CAC 40 surged 0.32%, while Germany's DAX edged up 0.04%. Switzerland's SMI advanced 0.18%. Among other markets in Europe, Belgium, Denmark, Finland, Greece, Iceland, Ireland, Netherlands, Norway, Portugal, Russia, Sweden and Turkiye ended higher. Austria, Czech Republic and Poland closed weak, while Spain ended flat. In the UK market, Hargreaves Lansdown, Ocado Group, Frasers Group, ICP, Rolls-Royce Holdings, B&M European Value Retail, Whitbread, Associated British Foods and RightMove gained 2.5 to 4.6%. Glencore gained 2.3% after it entered into a binding amendment agreement with Metals Acquisition Corp for the sale and purchase of Glencore's Cobar copper mine in New South Wales, Australia. Harbour Energy declined more than 2.5%. GSK, Scottish Mortgage, Shell, Intertek Group and BP shed 1 to 2%. In Paris, Air Liquide surged nearly 2%. Hermes International, WorldLine, L'Oreal, STMicroElectronics and Saint Gobain gained 1 to 1.5%. Teleperformance ended 2.7% down. Stellantis drifted down 1.3%, while Sanofi, TotalEnergies, ArcelorMittal and Engie lost 0.7 to 0.8%. In the German market, Fresenius, HelloFresh, Zalando and Symrise gained 1.7 to 2.2%.
U.S. stocks rose Wednesday as minutes from the Federal Reserve's latest meeting showed most officials favored slowing interest-rate increases soon. The S&P 500 gained 23.68 points, or 0.6%, to 4027.26. The Dow Jones Industrial Average added 95.96 points, or 0.3%, to 34194.06. The Nasdaq Composite jumped 110.91 points, or 1%, to 11285.32. The Fed this year has been boosting interest rates at the fastest pace since the 1980s in an effort to reduce inflation. The central bank at its meeting early this month raised interest rates by a fourth consecutive 0.75 percentage point. U.S. stocks have mounted a turnaround lately amid expectations that the Fed will raise interest rates by a smaller amount in December. Futures markets show that around three-quarters of investors believe that the central bank will raise interest rates by a milder 0.5 percentage point. The minutes released Wednesday said that "a substantial majority of participants judged that a slowing in the pace of increase would soon be appropriate." Among individual companies, Deere & Co. was among the top gainers in the S&P 500, rising $20.96, or 5%, to $437.52 per share. The farm-equipment company reported an increase in sales as supply constraints eased and shipments rose. Manchester United shares jumped $3.86, or 26%, to $18.80 per share after its owners said Tuesday they were exploring a sale. Nordstrom's shares slid 96 cents, or 4.2%, to $21.69 after the company reported a fall in quarterly net sales and said it is working to clear out its excess inventory.
The stock markets in East Asia were friendly on Thursday. Overall, they are following the direction of Wall Street. The fact that the South Korean central bank has raised the key interest rate by 25 basis points to 3.25 per cent does not dampen the good mood. This was expected by the majority and also represents a slowdown in the pace of interest rate increases. According to market participants, this also fuels speculation that the inflation peak may have been seen. In Tokyo, the Nikkei 225 index is gaining 1.1 per cent to 28,427 points after the holiday break on Wednesday and Seoul is up by a similar margin. Sydney has already ended trading with a plus of 0.1 per cent - at the highest level since the end of May.
On the US bond market, yields went down in line with the interest rate speculation. The dollar was under pressure. Weak purchasing managers' indices and falling market interest rates weighed on the currency.
HSBC raises the Easyjet target to 380 (310) p – Hold
UBS raises the Eon target to EUR 8.80 (8.50) – Neutral
Citi lowers the Telefonica target to EUR 3.80 (4.50) – Neutral
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