UBS reported a robust profit of $1.4 billion in the third quarter, aided by the integration of Credit Suisse, which is on track to yield significant cost savings. However, investor expectations remain high, with a projected return on equity below 10% disappointing many, as UBS faces pressure to enhance its competitive edge amid ongoing discussions about banking consolidation in Europe.
Goldman Sachs maintains a 'Buy' rating for UBS with a target price of 38.70 francs, while JPMorgan upgrades its rating to 'Overweight' with a target of 31 francs, citing strong quarterly results and effective restructuring. UBS reported a profit of 1.43 billion USD in Q3 2024, exceeding market expectations, despite a slight dip in share price.
Europe's competition officials warn that proposed changes to merger rules aimed at creating corporate giants may backfire, potentially harming the economy. While calls for consolidation in sectors like telecoms and banking grow, officials emphasize the need to address regulatory fragmentation rather than relax competition rules. The focus should remain on fostering strong competition to prepare European firms for global challenges.
Inflation in Germany has unexpectedly risen to 2.0% in October, driven by higher prices for food and services, prompting concerns about the European Central Bank's (ECB) interest rate cuts. While some experts warn of persistent inflation due to rising wages, others believe this is not indicative of a second wave of inflation. The ECB faces pressure to reconsider its monetary policy as inflation exceeds its 2% target, with predictions of further increases in the coming months.
The DAX index rose 0.4% to close at 19,532 points, surpassing the September top of 19,492. A break above the October 15 peak at 19,634 could lead to a sprint towards the all-time high of 19,675, while a drop below 19,492 may test the September uptrend line and lower support levels.
Germany's Chancellor Olaf Scholz now views the EU as a problem to manage, reflecting a shift from past collaborative efforts. With a struggling economy and few allies, Germany's recent actions, such as rejecting tariffs on Chinese electric vehicles and imposing border checks, signal a "Germany First" approach that complicates EU unity. As member states increasingly pursue their own agendas, the need for collective action to address structural challenges remains critical.
Germany is seeking a new financial adviser to guide its strategy regarding the remaining 12% stake in Commerzbank AG. This decision follows criticism of the previous selldown, which allowed UniCredit SpA to acquire shares. The government is currently engaging potential advisers to discuss future divestment options or the possibility of retaining the stake.
The DAX index closed the week with a slight gain of 0.1% at 19,464, following a recovery after three consecutive losses. To regain upward momentum, it must surpass the September peak of 19,492 and confirm a rise above 19,634, targeting the all-time high of 19,675. Conversely, a drop below 19,330 could lead to testing lower support levels, including the critical 19,000 mark.
Commerzbank CEO Bettina Orlopp emphasized the necessity of establishing a banking union in Europe before pursuing cross-border mergers. She stated that a conducive environment for consolidation must be created, as the current banking union has yet to be finalized.
Falling interest rates in the eurozone are failing to stimulate the economy, which is showing signs of contraction, particularly in Germany and France. The Purchasing Managers' Index indicates a downturn, with concerns of a potential recession looming as demand weakens and uncertainty grows over the impact of the upcoming US elections.
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