By Swissquote Analysts
UBS Posts Surprise 4Q Rise in Profit After Wealth Management Grew Assets
Topic of the day
UBS Group AG on Tuesday reported a surprise rise in fourth-quarter profit as its wealth-management arm attracted billions in new client money, despite difficult macroeconomic headwinds. The Swiss bank reported a net profit of $1.65 billion in the three months to the end of December, up from $1.35 billion for the same period a year earlier. Revenue was $8.03 billion compared with $8.71 billion in the fourth quarter of 2021. It meant the Zurich-based bank beat 4Q estimates of net profit of $1.28 billion and revenue at $7.98 billion, according to analysts’ consensus provided by the company. UBS said it took on $23.3 billion in net new fee-generating assets at its key wealth-management business in the quarter, at a time when its local rival Credit Suisse Group AG had struggled with a flight of assets. The bank also cited persistent inflation, rapid central-bank tightening, the Ukraine war, and geopolitical tensions that affected asset-pricing levels and investor sentiment in the year. UBS said it would propose a dividend of $0.55 for 2022.
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The Switzerland market shrugged off a negative start and a subsequent weak spell that lasted till about a couple of hours past noon, and ended on a firm note on Monday with stocks finding support in late afternoon trades. The benchmark SMI ended with a gain of 47.34 points or 0.42% at 11,379.64, after scaling a low of 11,287.93 and a high of 11,397.53 intraday. Nestle and Swisscom gained 1.5% and 1.42%, respectively. Sonova, Swiss Re, Givaudan, Novartis and Alcon advanced 0.6 to 0.8%. Lonza Group, Holcim, UBS Group and Zurich Insurance Group posted modest gains. Credit Suisse drifted down nearly 2%. Partners Group ended lower by about 1.25%, while Logitech ended 0.74% down. In the Mid Price Index, Barry Callebaut climbed 1.8%, while Lindt & Spruengli and SIG Combibloc both gained nearly 1%. Straumann Holding ended nearly 3% down. AMS, Zur Rose and Flughafen Zurich lost 2.2 to 2.6%. VAT Group, Bachem Holding and Julius Baer ended lower by 1.6%, 1.5% and 1.1%, respectively.
Despite coming off early lows, European stocks closed broadly lower on Monday with investors focusing on corporate earnings updates and looking ahead to the upcoming policy meetings of central banks. The Federal Reserve is scheduled to announce its monetary policy on Wednesday. The bank is widely expected to raise rates by 25 or 50 basis points. The Bank of England and the European Central Bank are also set to announce their policy statements this week. Both these banks are likely to hike rates by 50 basis points. The pan European Stoxx 600 ended down 0.17%. Germany's DAX edged down 0.16% and France's CAC 40 ended lower by 0.21%, while the U.K.'s FTSE 100 gained 0.25%. Switzerland's SMI ended 0.42% up. Among other markets in Europe, Austria, Belgium, Finland, Iceland, Ireland, Netherlands, Norway, Poland, Portugal and Turkiye ended weak. Spain edged down marginally. Denmark, Greece and Russia closed higher, while Czech Republic and Sweden ended flat. In the UK market, Standard Chartered ended 3.45% down. Fresnillo drifted down 2.65%, while Prudential, Scottish Mortgage, Legal & General, Barratt Developments, Antofagasta, Persimmon, BT Group, IAG, Ocado Group and Anglo American Plc lost 1 to 2%. 888 Holdings plunged nearly 28%. The betting and gaming company announced the departure of Itai Pazner, its chief executive officer (CEO) and executive director. The company also said it has suspended VIP activities in some of its .com markets pending the outcome of an internal compliance investigation. Sainsbury (J) climbed more than 4%. Auto Trader Group, Kingfisher, Reckitt Benckiser, B&M European Value Retail, Halma, Experian, Sage Group, Unilever, Frasers Group, Burberry Group and British American Tobacco gained 1 to 3%. In Paris, Renault ended more than 4% down. The automaker has agreed with Japanese automotive firm Nissan Motor for a new collaboration to boost their ties.
U.S. stocks fell Monday, with investors growing cautious at the start of a bumper week of central-bank meetings and corporate earnings. The S&P 500 was down 52.79 points, or 1.3%, to 4017.77, while the Dow Jones Industrial Average fell 260.99 points, or 0.8%, to 33717.09. The Nasdaq Composite declined 227.90 points, or about 2%, to 11393.81. Stock markets have been volatile in recent weeks, driven by signs of softening inflation and hopes that the Federal Reserve will continue to moderate - and eventually halt - its interest-rate increases. U.S. indexes registered solid weekly gains last week, with the S&P 500 adding 2.5%, the Nasdaq Composite jumping 4.3% and the Dow industrials rising 1.8%. In the S&P 500, 48 of last year's 50 worst-performing stocks are up this year, notching an average gain of 17% through January, according to Dow Jones Market Data. In comparison, 30 of last year's 50 best-performing S&P 500 stocks are up, posting an average advance of less than 1%. Shares of several major auto makers fell Monday after Ford Motor said it would cut prices and boost production of its Mustang electric crossover. Ford's stock declined 38 cents, or 2.9%, to $12.89. Tesla shares fell $11.24, or 6.3%, to $166.66, the worst performer in the S&P 500. Deep price cuts across the company's U.S. lineup this month sparked a backlash from customers, many of whom paid thousands of dollars more for their vehicles just weeks earlier. GE Healthcare Technologies shares gained $1.42, or 2%, to $71.50, one of the top five performers in the S&P 500, after the company reported its first quarter as a standalone publicly traded company.
Concerns about the monetary policy outlook of the central banks in the USA, Europe and Great Britain are giving investors cold feet on the Asian stock markets on Tuesday. Uncertainty about the future interest rate increases the risk for equities because corporate profits and thus valuations depend to a large extent on interest rate levels, they say. Investors are therefore divesting themselves of shares in the run-up to the decisions. In China, even significantly improved economic data did not tempt investors to buy; the Shanghai Composite fell by 0.4 per cent.
The yield on the U.S. benchmark 10-year Treasury note climbed to 3.550% from Friday's 3.517%. Bond yields and prices move in opposite directions.
UBS raises LVMH target to EUR 905 (832) – Buy
Citi raises Ferrari target to EUR 236 (216) – Neutral
Citi lowers Ericsson target to SEK 60 (65) – Neutral
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