FINMA Concludes Proceedings Against Credit Suisse Related To Lex Greensill
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The Swiss Financial Market Supervisory Authority or FINMA, announced it has concluded its enforcement proceedings against Credit Suisse Group (CS) in connection with its business relationship with financier Lex Greensill and his companies. FINMA finds that Credit Suisse seriously breached its supervisory obligations in this context with regard to risk management and appropriate organizational structures. FINMA has ordered remedial measures. In future, the bank will have to periodically review at executive board level the most important business relationships (around 500) in particular for counterparty risks. In addition, the bank is required to record the responsibilities of its approximately 600 highest-ranking employees in a responsibility document. FINMA has also opened four enforcement proceedings against former Credit Suisse managers. The news was received calmly on the stock market on Tuesday. Credit Suisse remains a "major construction site" anyway, commented one analyst. The price of the CS share dropped at the outset, but eventually turned into positive territory and closed at 2.85 francs, 0.6 per cent higher than the previous day.
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The Swiss stock market ended Tuesday's trading session with a marked decline. While the other European stock exchanges were able to recover from their lows, the decrease of the index heavyweights Novartis, Roche and Nestle pushed the SMI into the red. These shares lost up to 2.4 per cent. The SMI fell by 1.1 per cent to 11,098 points. Among the 20 SMI stocks, there were 15 price losers and 5 price winners. 58.04 (previously: 36.59) million shares were traded. The high turnover was also explained by reallocations at the end of the month. The European banking sector was the strongest gainer with a premium of 1.5 per cent. Banking stocks had benefited from rising interest rates, participants pointed out. UBS gained 0.6 per cent. Credit Suisse shares also advanced 0.6 per cent despite Switzerland's financial market regulator Finma ending its investigation into loss-making supply chain finance funds alleging serious failings by the bank. Adecco decreased by 2.9 per cent. Fourth-quarter and full-year 2022 trading results were described as quite decent. SIG Group impressed in terms of sales in the final quarter and achieved a currency-adjusted increase of 39.9 percent in the fourth quarter of 2022, which exceeded market expectations. Due to acquisitions, price increases and uncovered cost inflation, margins did not keep pace and just missed consensus at 23.5 per cent EBITDA level. The outlook looks solid. The share gained 6.5 per cent.
European stocks traded lower on Tuesday after higher-than-expected French and Spanish inflation figures furthered the probability of a European Central Bank rate hike of 50 basis point in May. The Stoxx Europe 600 index fell 0.3% to 461.1 points. In Paris, the CAC 40 and the SBF 120 lost 0.4% each. The DAX 40 index in Frankfurt dropped 0.1% while the FTSE 100 in London gave up 0.7%. Casino (-3.6%) reported a 4.4% rise in fourth-quarter like-for-like sales on Tuesday, but its sales in France were almost flat. Chemicals company Solvay (+0.4%) indicated on Tuesday that it expects organic growth in gross operating profit (Ebitda) at its Soda Ash & Derivatives division to accelerate "to around 10% per annum over the next five years, while maintaining a cash conversion of over 70%". Axa (+1.6%) announced on Monday evening that it had sold almost all of its stake, i.e. around 7.94%, in the Italian bank Banca Monte dei Paschi di Siena (-8.2% on the Milan stock exchange) for a total of 233 million euros. SES (-8.8%) tumbled for the second session in a row, after publishing an outlook on Monday that was deemed disappointing by analysts. The German chemical and pharmaceutical group Bayer (-3.7%) published on Tuesday a net profit below expectations for the fourth quarter despite the growth of its turnover, and declared that it expects a decline in its profits in 2023 due to the increase in its costs.
U.S. stock indexes dropped Tuesday in a relatively quiet session, ending a down month on a disappointing note. The Dow Jones Industrial Average slid 232.39 points, or 0.7%, to 32656.70. The S&P 500 ticked down 12.09 points, or 0.3%, to 3970.15, while the technology-focused Nasdaq Composite slipped 11.44 points, or 0.1%, to 11455.54. The indexes were in the red for the month of February, after charging higher to kick off 2023. The S&P 500 and Nasdaq Composite peaked for the year on Feb. 2. But the gains unraveled as hotter-than-expected economic releases, including data on the labor market and consumer spending, spurred investors to reassess their expectations for inflation and monetary policy. The Dow dropped 4.2% in February and is down 1.5% in 2023. The S&P 500 and Nasdaq declined 2.6% and 1.1%, respectively, for the month. They are hanging on to gains of 3.4% and 9.4% this year. Derivatives markets show traders now expect the Federal Reserve to lift interest rates well above 5% this year, and then hold them there, as officials try to bring inflation under control. Earlier this year, traders had anticipated the central bank would cut rates in 2023. That change spurred many investors to reshuffle their portfolios throughout February. Some investors pulled money out of equity funds and scooped up hedges to protect against a downturn. Among individual stocks, Target climbed $1.69, or 1%, to $168.50 after the retailer said its same-store sales rose 0.7% in its most recent quarter from a year earlier, with more shoppers visiting. But Target said shoppers spent differently, with strong sales in food, beauty and essentials such as paper towels offsetting weaker spending in other areas. Goldman Sachs Group shares fell $13.88, or 3.8%, to $351.65 as the bank held an investor day and CEO David Solomon said it was considering strategic alternatives for its struggling consumer platforms business. Shares of Zoom Video Communications gained 87 cents, or 1.2%, to $74.59, boosted by higher sales in the fourth quarter and a stronger profit forecast than Wall Street expected. The videoconferencing company was a pandemic-era market darling whose shares have suffered over the past half-year as many Americans have returned to the office.
In Asia, major indexes broadly closed with gains. The Chinese stock exchanges stand out with marked price increases due to the purchasing managers' indices pointing to a strong revival of the domestic economy in February. China’s benchmark Shanghai Composite edged up 0.8 per cent, while Hong Kong’s Hang Seng even improved by 3.3 per cent. Shares in the telecoms sector are again benefiting from the Chinese government's latest digitalisation plan. China Unicom rose by 7.3 per cent and China Telecom by 8.4 per cent. The stock exchange in Seoul, South Korea, is closed on Wednesday for a public holiday. Japan’s Nikkei 225 gained 0.3 per cent. Among individual stocks, Ajinomoto added 9.2 per cent after the company raised its full-year profit forecast. At Kansai Paint (-3%), news that major shareholders intend to sell their shares has a negative impact.
U.S. Treasury yields notched their biggest monthly advance since September and October on Tuesday, as signs of stubborn inflation in Europe increased concerns that central banks will continue tightening monetary policy. The 10-year Treasury note fell slightly to 3.914%. The 2-year Treasury note gained 1 basis point to 4.803%. The 6-month T-bill rate rose to 5.13%, just shy of its highest level since March 12, 2007.
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