UBS Spared $2 Bln in Penalties After French Supreme Court Calls for New Trial in Tax Case
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UBS Group won’t have to pay around $2 billion after the French Supreme Court partly overturned a decision from a lower court that had fined the bank in a long-running tax-fraud case but confirmed a ruling that the bank had helped wealthy clients in France evade taxes. The latest ruling, announced Wednesday by the Supreme Court, effectively rescinds the financial penalties imposed on UBS in December 2021. At the time, a Court of Appeal had levied a fine of 3.75 million euros ($4.1 million) on the bank, the confiscation of EUR1 billion, and awarded civil damages of EUR800 million to the French state, which UBS appealed. Wednesday’s decision can’t be appealed as it comes from the highest court in France. However, the Supreme Court said in its ruling that it would send the case back to the Paris Court of Appeal to reconsider potential penalties on the elements of the case that were overturned. UBS said it acted in accordance with all applicable laws and regulations at all times and that it would defend itself in the forthcoming trial. UBS said in its latest financial report that its balance sheet at the end of September had provisions of EUR1.1 billion in relation to the tax case, a figure that it said reflected its best forecasts of possible financial implications. UBS shares closed up 2.26% at CHF 22.59.
The Swiss stock market closed little changed on Wednesday. The SMI lost 0.1 per cent to 10,708 points. Among the 20 SMI stocks, there were 13 price gainers and 7 price losers. A total of 23.38 (previously: 24.4) million shares were traded. Contrary to the sluggish trend on the market as a whole, the reporting season provided a major boost. Alcon shares plummeted by 5.3 per cent following the figures. The pharmaceutical company, which specialises in eye diseases, reported disappointing figures and narrowed its forecast to the lower end of the previous range. UBS continued the previous day's recovery and gained a further 2.26 per cent. Roche and Novartis proved to be the brakes on the SMI, falling by 0.7 and 1.1 per cent respectively. Heavyweight number three Nestle was up slightly. Givaudan (+2.4 per cent), Kühne+Nagel (+1.4 per cent) and Logitech (+1.6 per cent) were among the stellar performers.
Stocks in Europe made solid gains on Wednesday on hopes that central banks may be done with their aggressive rate hikes following better-than-expected inflation readings in the U.S. and the U.K. "There is growing evidence that the major central banks' efforts are bearing fruit," Swissquote Bank pointed out. The Stoxx Europe 600 index gained 0.4% to 454.5 points. In Paris, the CAC 40 and SBF 120 rose by 0.3% each. The DAX 40 in Frankfurt climbed 0.9%, while the FTSE 100 in London added 0.6%. Rail equipment manufacturer Alstom fell by 15% after announcing on Wednesday a vast savings and debt reduction plan, including asset disposals, a possible capital increase, the loss of 1,500 jobs and the separation of the roles of chairman and chief executive. Credit insurer Coface (-6.8%) reported third-quarter sales of €458.1 million, 7% below the consensus estimates compiled by the company. German semiconductor manufacturer Infineon (+9.4% in Frankfurt) announced higher-than-expected fourth-quarter results, enabling it to meet its targets for the 2022-2023 financial year and increase its annual dividend. In the wake of these announcements, STMicroelectronics gained 5.3% in Paris. Power generation equipment manufacturer Siemens Energy (+8.7% in Frankfurt) reported a net loss for the fourth quarter of its 2022-2023 financial year, due to increasing difficulties in its wind turbine business.
Growing evidence of a gradually cooling economy helped push stocks higher once again Wednesday. The S&P 500 rose 0.2%. The tech-heavy Nasdaq Composite gained 0.1%. The Dow Jones Industrial Average rose 0.5%, or around 164 points. Seven of the 11 sectors within the S&P 500 closed higher. The major indexes have risen sharply so far this week, prompted by growing investor confidence that the Federal Reserve can achieve a so-called soft landing, a scenario in which inflation drops but the economy avoids a significant contraction. New data released Wednesday bolstered that view. Producer prices fell 0.5% in October from the previous month, the Labor Department said, marking the largest single- month decline since April 2020. Retail sales fell 0.1% over the same period, the first decline since March. That followed Tuesday’s news that consumer prices grew less than investors expected. Target shares surged 18%, the stock’s best day since 2019, after the retailer reported higher profit than analysts had forecast. Shares of off-price retailer TJX fell 3.3% after earnings. Disney shares rose 3.1% after hedge fund ValueAct Capital took a stake in the company. Two of the year’s best-performing stocks finished the day in the red: Nvidia stock fell 1.6%, while Eli Lilly was off 3.7%. Walt Disney shares gained 3.2% to $94.95 in response to reports from CNBC that ValueAct Capital, an activist fund, is considering the entertainment giant to have upside potential. Retailer Target (+18%) reported a higher-than- expected profit for the three months to the end of October, despite a 4.3% fall in sales and slightly lower revenue than forecast. Berkshire Hathaway (+0.8%) sold its stakes in carmaker General Motors and pharmaceutical company Johnson & Johnson (+0.8%) in the third quarter. Warren Buffett's investment company also sold its smaller holdings in consumer goods manufacturer Procter & Gamble (-0.4%), food group Mondelez International (+0.2%) and parcel delivery specialist UPS (+2.8%). It reduced its investments in technology giant Amazon (-1.8%), oil company Chevron (+0.4%) and IT group HP (+0.6%). Processor manufacturer Nvidia (-1.6%) suffered from profit-taking after closing the previous day at a new all-time high for the tenth session in a row.
Stocks in Asia mostly fell on Thursday. In Tokyo, the Nikkei index slipped by 0.3 per cent to 33,426 points. The HSI in Hong Kong lost 1.2 per cent and on the Chinese mainland the Shanghai Composite dropped 0.5 per cent. China Evergrande declined by 1.8 per cent, Longfor and China Vanke lost 0.6 and 1.1 per cent respectively. Lenovo shares slipped 2.2 per cent. The world's largest PC manufacturer recorded a marked decline in profits in the second quarter, although exceeding market expectations. In South Korea, the Kospi remained virtually unchanged.
U.S. Treasury yields climbed Wednesday, with the 10-year and 30-year yields increasing the most in about a week, as traders pulled back from the prior session’s aggressive round of buying. The 10-year Treasury note yield recovered 9 basis points to 4.539% while the 2-year Treasury note added 10 basis points to 4.916%.
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