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UBS has increased its price target for SAP from 222 to 237 euros, maintaining a "Buy" rating following strong third-quarter results. Analyst Michael Briest noted robust sales momentum and impressive free cash flow of 5 billion euros year-to-date.
UBS's new residential attractiveness indicator reveals that medium-sized centers like Locarno and Vevey are ideal for families with a gross income of CHF 145,000, due to better infrastructure and lower housing costs. In contrast, high-cost urban areas are less accessible for families with below-average incomes, pushing them towards more affordable locations outside city centers.
American Express reported a third-quarter profit of $2.51 billion, exceeding Wall Street expectations due to effective expense management, despite a slight revenue miss at $16.64 billion. The company’s focus on affluent customers has allowed it to maintain lower credit loss provisions compared to competitors. In other news, AI leader Genesys has confidentially filed for an IPO in the US, while UBS is selling a 50% stake in Swisscard to American Express.
UBS anticipates significant risks to the Federal Reserve's rate cut trajectory in the first quarter of 2024, particularly if inflation concerns resurface. While the firm forecasts 25 basis point cuts in the remaining meetings this year, strong economic data has led to skepticism about immediate cuts. Fed officials, including Minneapolis President Neel Kashkari, advocate for a cautious approach, emphasizing the need to balance rate adjustments with labor market stability.
UBS anticipates significant risks to the Federal Reserve's rate cut trajectory in Q1 2024, particularly if inflation concerns resurface. While the firm forecasts 25 basis point cuts in the remaining meetings this year, strong economic data has led to skepticism about immediate cuts. Fed officials emphasize a cautious approach, aiming to balance rates to support a robust labor market as inflation stabilizes.
The US economy shows signs of slowing, prompting the Fed to cut rates by 50bp, with expectations for further cuts in 2024. In Europe, the ECB's recent rate cut reflects weak growth and inflation progress, while China’s stimulus measures aim to stabilize growth amid economic challenges. Investment opportunities arise in high-quality credit and emerging markets, particularly in Asia, as monetary easing continues globally.
Investors are showing strong interest in the Utilities and Technology sectors, with Power stocks up 100-200% YTD and the S&P Tech Index climbing 32%. While renewables are regaining attention ahead of the US elections, concerns linger in Financials regarding net interest income and full valuations. In Consumer sectors, sentiment remains negative, with a shift in focus towards large-cap momentum names and quick-service restaurants.
American Express has acquired a stake in Swisscard from UBS, while also facilitating the transfer of Credit Suisse's card portfolios to UBS, with a transition expected in early 2025. American Express plans to expand its operations in Switzerland. Following the news, UBS shares fell by 1.55% to 28.02 francs, and American Express shares dropped by 2.15% to 270.85 US dollars.
Stahl Gerlafingen, Switzerland's oldest steelworks, faces potential closure amid financial struggles, including a CHF 300-400 million drop in turnover and high electricity costs. Over 400 employees rallied for federal support, as local and national politicians unite to advocate for the plant's survival, emphasizing its systemic importance and climate-friendly practices.
UBS has sold its 50% stake in Swisscard to American Express, marking a strategic move to restructure its business following the acquisition of Credit Suisse. This transaction will result in Swisscard becoming wholly owned by American Express, with UBS ending its involvement in the joint venture. Financial details remain confidential, and no changes to Swisscard's operations have been announced.
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