Research Market strategy
By Swissquote Analysts
Published on 03.01.2023
Morning news

Deutsche Bank to Hold Higher Capital Buffer in 2023

Topic of the day

Deutsche Bank AG said it will have to back its business with more capital in 2023 than last year, based on European Central Bank regulations. The German lender said that its pillar 2 capital requirements will rise by 20 basis points to 2.7% under the ECB’s supervisory review and evaluation process, known as SREP. “The increase is driven by the ECB’s newly introduced separate assessment of risks stemming from leveraged-finance activities,” Deutsche Bank said. The ECB’s requirements for Deutsche Bank’s common equity tier 1 capital ratio will be 10.55%, higher than the 10.43% at the end of September 2022, the Frankfurt-based lender added.

Swiss stocks

The Switzerland stock market ended notably lower on Friday due to sustained selling at several counters. Worries about slowing growth and rising interest rates, and escalating tensions between Russia and Ukraine hurt the market. The benchmark SMI ended with a loss of 127.95 points or 1.18% at 10,729.40, the day's low. The index shed about 17% in 2022. All the components of the SMI and the Mid Price Index ended in negative territory. Credit Suisse, Swiss Re, Sika, Lonza Group, Partners Group, ABB, Novartis, Richemont and Zurich Insurance Group lost 1.3 to 2%. Roche Holding, Swiss Life Holding, UBS Group, Nestle and Sonova also ended notably lower. In the Mid Price Index, Zur Rose drifted down 3.62%. Tecan Group ended lower by 2.2%, while Flughafen Zurich, VAT Group, Bachem Holding, Adecco, Georg Fischer, Roche Holding, Swatch Group and Ems Chemie Holding lost 1.3 to 1.6%. In economic news, Switzerland's economic outlook is set to improve somewhat at the beginning of 2023, results of a key survey by KOF Swiss Economic Institue showed. The economic barometer rose to a three-month high of 92.2 points in December from 89.5 in September, which was revised from 89.2, the KOF Swiss Economic Institute said. Economists had forecast a score of 90.5.

International markets


Continental European stock markets closed sharply higher on Monday, benefiting from cheap buying, while many global exchanges remained closed. The Stoxx Europe 600 index rose 1% to 429.0 points. In Paris, the CAC 40 and SBF 120 rose 1.9% and 1.8% respectively. In Frankfurt, the DAX 40 rose by 1.1%.Downturn in the euro area manufacturing slowed in the final month of 2022 amid healing supply chains and softening inflationary pressures, final results of the purchasing managers' survey from S&P Global showed Monday. The manufacturing Purchasing Managers' Index rose to a three-month high of 47.8 in December from 47.1 in November. The reading came in line with the flash estimate. Atos jumped 20% as the opening of the capital of its Evidian division became clearer. According to Les Echos, the group is reportedly discussing the acquisition of a stake by Airbus (+2.6%) in this unit, which groups together activities related to digital transformation and big data and security (BDS). Questioned by the Agefi-Dow Jones agency, an Atos spokeswoman confirmed that preliminary negotiations were underway "with potential future minority shareholders" of Evidian. The legal merger of Societe Generale's French retail networks (+3%) took place on 1 January. Launched in 2020, the merger of the Société Générale and Crédit du Nord networks should enable the La Défense-based bank to save €450 million per year from 2025.

United States

U.S. stocks inched lower in the final trading session of 2022, closing out a punishing year with further losses. 2022 proved to be one of the worst years for markets in recent history. Stocks and bond prices both fell, exceptional volatility roiled currencies and commodities, and cryptocurrency prices cratered as a series of crises gripped the emerging industry. The S&P 500 fell 9.78 points, or 0.3%, to 3839.50 on Friday, while the Dow Jones Industrial Average lost 73.55 points, or 0.2%, to 33147.25, and the Nasdaq Composite declined 11.61 points, or 0.1%, to 10466.48. All three benchmarks pared deeper losses from earlier in the day. For the year, the S&P 500 posted a 19% decline, its biggest pullback since 2008. The Dow industrials dropped 8.8% and the Nasdaq slid 33%, stung by declines in technology shares. Money managers entered 2022 expecting that advances in the stock market would slow after three consecutive years of blockbuster gains. But few were prepared for how tough the year would be. Inflation remained stickier than many on Wall Street expected, forcing the Federal Reserve to kick off its most aggressive interest-rate increases in decades. Russia's war in Ukraine and the subsequent scrambling of energy markets caught traders off guard. And the specter of a global recession loomed. Trading volumes this week were light -- a contrast to a hectic year in markets. Many traders had hoped the stock market would end the year on a high note, as part of what is colloquially known as the "Santa Claus rally." U.S. stocks tend to rise during the Santa Claus rally period, averaging since 1950 a 1.3% gain during the last five trading sessions of the year and first two of the new year. So far, the S&P 500 has fallen 0.1% through the first five days of the period.


Tuesday is a mixed day on the East Asian stock markets and on the Sydney Stock Exchange. With the exception of Seoul, it is the first trading day of the year everywhere because on 2 January there were public holidays or compensation days for the turn of the year, which fell on a weekend. In Tokyo, however, business is still suspended. The stock market year does not begin there until tomorrow, Wednesday. On the Chinese stock exchanges, after significant declines at the start, there is now an upward trend, in Hong Kong by 1.3 per cent and in Shanghai by 0.5 per cent.


In the U.S. government bond market, Treasury yields inched lower last Friday. The yield on the benchmark 10-year U.S. Treasury note ended at 3.826%, from 3.833% Thursday.


Warburg raises Encavis target to EUR 21 (20.60) – Hold
DZ raises Covestro target to EUR 37 (33) – Hold

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