Research Market strategy
By Swissquote Analysts
Published on 28.11.2022
Morning news

Credit Suisse Stock Tests Record Lows Even as Bank Secures $4 Billion From Investors

Topic of the day

Credit Suisse shares plunged 6.6% after the lender issued another profit warning, predicting a fourth-quarter pre-tax loss of up to $1.6 billion. The bank also announced details of a bid to raise capital amid concerns over customers withdrawing funds. Credit Suisse's stock is testing record lows, even as the Swiss bank is pulling in about $4.2 billion of new equity funding to shore up its finances.
Its shares closed Thursday at 3.55 Swiss francs, the second day in a row that it registered a new closing low. They sank as low as 3.48 francs on Friday morning. The levels are lower than the 3.82 francs per share that investors including Saudi National Bank paid to buy $1.87 billion worth of stock Thursday. Credit Suisse is in the process of selling another slug of stock to existing investors. The reference price for the stock being sold was set in October, before the shares took another lurch downward. Saudi National Bank, which invested about $1.25 billion, committed to buy a 9.9% stake in Credit Suisse, and said it wants to foster more business for the bank in the Middle East and draw on its expertise for its own development.

Swiss stocks

The Switzerland stock market ended slightly up on Friday after a choppy ride, as investors largely refrained from making significant moves amid a lack of fresh triggers. The benchmark SMI ended with a small gain of 10.47 points or 0.09% at 11,168.03. Credit Suisse shares plunged 6.6% after the lender issued another profit warning, predicting a fourth-quarter pre-tax loss of up to $1.6 billion. Partners Group shed 2.28%, Richemont lost about 1%, while Logitech and Lonza Group both ended nearly 1% down. Novartis climbed 1.12% and Roche Holding ended nearly 1% up. Holcim advanced 0.78% and Zurich Insurance Group gained 0.4%. Among the stocks in the Swiss Mid Price Index, Zur Rose tanked 8.2%. Swatch Group ended 2% down, while SGS, AMS and Straumann Holding closed lower by 1.6%, 1.4% and 1%, respectively. On the economic front, data released by Swiss Federal Statistical Office showed Switzerland's non-farm payrolls rose 2.2% year-on-year to 5.362 million in the third quarter of 2022, following a 3.2% advance in the previous quarter.

International markets

Europe

European stocks struggled for momentum on Friday, as concerns remained about consumer sentiment and economic growth, with investors clinging to hopes that central banks will turn towards less aggressive rate hikes. Trading volumes were lighter again, with a shortened session on Wall Street as Black Friday shopping swings into focus. The DAX stagnated at 14,541 points and the Euro-Stoxx-50 did not move either, closing almost unchanged at 3,962 points. The so-called "Black Friday" discount battle shed particular attention on retail stocks. The Stoxx retail sub-index lost 0.6 per cent, making it one of the weaker sectors - weighed down by concerns about consumer reluctance to spend due to inflation. In the sector, Adidas weighed down with a 2.1 per cent drop; the stock cannot shake off the shadow of former bandwagoner Kanye West. Zalando slipped 2.9 per cent. Helma Eigenheimbau plunged 6 per cent after a profit warning. Uniper plummeted 12.3 per cent to 4.80 euros. Citi analysts had stressed that the recent recovery of the share was not justified and only driven by covering short trading positions. Thyssenkrupp shed 1 percent after the company's capital markets day. The steelmaker at least confirmed its medium-term forecast. However, it intends to take its time with the Nucera IPO. Westwing, on the other hand, gained 3 per cent after the furniture retailer announced a small share buyback programme. Formycon shares, which were around 8 per cent firmer the previous day, lost 1 per cent. The developer of biopharmaceutical follow-on products had presented nine-month figures. The share price of British utility SSE edged 0.4 per cent lower in London. It had sold 25 per cent of its grid business to Ontario Teachers for 1.47 billion pounds. That was a premium of 80 per cent on the regulatory asset value, Jefferies analysts praised. Shares in Devro shot up 62 per cent in London. The Scottish sausage maker had agreed to a takeover bid by Germany's Saria.

United States

U.S. stocks ended mixed in a shortened trading session Friday, with markets subdued following Thursday’s Thanksgiving holiday. The S&P 500 fell 1.14 points, or less than 0.1%, to 4026.12. The tech-heavy Nasdaq Composite Index dropped 58.96 points, or 0.5%, to 11226.36. The Dow Jones Industrial Average rose 152.97 points, or 0.4%, to 34347.03. U.S. stock markets closed early at 1 p.m. ET. Despite the interruption of the holiday, equities continued their recent winning streak. The S&P 500 rose 1.5% for the week, and has risen four of the past six weeks. The Dow gained 1.8% this week, and has risen in six of the past eight weeks. Investors have been watching Black Friday crowds for clues on how spending among U.S. consumers is holding up amid high inflation and rising borrowing costs. Recent economic data has suggested consumers continue to spend, but analysts have a mixed outlook for the crucial holiday period. S&P Global Market Intelligence expects holiday sales to rise 4.5% this year, slowing from last year’s 12.6% pace but still above prepandemic levels. Adjusting for inflation, holiday sales are expected to decline for the first time since 2009, according to S&P Global, suggesting that people are buying fewer, higher-priced items. Classic consumer stocks such as Amazon (-0.8%), Walmart (+0.4%) and Target (little changed) were therefore closely watched. In corporate news, shares of Activision Blizzard fell $3.12, or 4.1%, to $73.47 after Politico reported late Wednesday that the Federal Trade Commission was likely to file an antitrust lawsuit to block its acquisition by Microsoft. Apple lost 2.0 per cent. Clashes between employees and police at the Foxconn factory in China could have a sensitive impact on the production of Apple's iPhone. Foxconn is a contract manufacturer for Apple and makes the US technology giant's mobile phone. More than 30 per cent of November production is now on the line, according to media reports. In addition, Apple is considering buying Manchester United football club for 5.8 billion pounds, according to the British newspaper Daily Star. Shares of Manchester United jumped $2.41, or 13%, to $21.21, continuing to gain on news that the controlling Glazer family is exploring a sale. Ford Motor (+0.4%) recalled 518,993 vehicles in the US because of the risk of fires under the bonnet.

Asia

Asian stock markets are trading mostly lower on Monday, as traders reacted to the growing unrest in China amid the zero-COVID policy with record-high domestic daily Covid-19 cases and the unprecedented COVID restrictions in several cities in China. While the Shanghai Composite loses 1.1 per cent, the HSI in Hong Kong declines by 2.1 per cent. The Nikkei-225 in Tokyo sheds 0.5 per cent. The Kospi in Seoul edges 1.2 per cent lower - also burdened by North Korea's increasingly far-reaching nuclear weapons ambitions. Semiconductor and shipyard stocks are the main sell-offs.

Bonds

U.S. bond yields finished a holiday-shortened New York trading session little changed Friday, as investors continued to ponder recent economic data and the latest Federal Reserve meeting minutes. The 10-year Treasury note was yielding 3.698% while the 2-year Treasury note gave up 3 basis points to 4.475%.

Analysis

UBS increases SAP target to EUR 120 (107) - Buy
RBC lifts Lloyds Banking to Outperform (Underperform) - Target 57 (44) p
Berenberg raises Novo Nordisk target to DKK 810 (780) - Hold

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