European stocks extended their recent heavy losses on Friday as
banking shares fell after a spike in cost of insuring against risk
UBS and Credit Suisse shares fell by more than 5%, as the two
banks are among institutions scrutinized as part of a U.S. Justice
Department investigation into whether bankers helped Russian
oligarchs evade sanctions, Bloomberg reported.
Meanwhile, Deutsche Bank shares fell more than 8% amid reports
of a rise in the price of its so-called credit default swaps.
Read European Baking Shares Fall as Sector Worries Ripple
Read Weak U.S., European Banking Shares Headwind for Economic
Stocks to Watch
BMW's results are reason for optimism but not for excitement,
Berenberg likes the German car maker's thick order book, which
it said should ease demand risks in 1H. "But a slowing order intake
in parts of Europe--and cost pressures--make significant upside
difficult, in our view."
Berenberg projects a slightly better earnings year with a flat
margin before taxes and interest compared to 2022.
Still, it prefers Mercedes-Benz in the premium-car category,
citing both lower valuation and risk as it starts its buyback
Read BMW Has Hope in China, US Despite Murky Demand Outlook
UBS could initiate share buybacks as early as 2026 as the Swiss
bank digests its acquisition of peer Credit Suisse, Citi said.
Citi said it expects the CET1 ratio will likely trough at around
13% over 2024, 2025, and that UBS is likely to make a loss in 2023
on a statutory basis.
UBS is expected to swing to a profit in 2024 and deliver a
return on tangible equity in the mid-teens by 2027, Citi added.
The Swiss bank's acquisition could be earnings accretive on a
statutory basis from 2027, Citi said.
Citi retained its buy rating on UBS but also considers the stock
high risk for the near, medium-term.
Read UBS Faces Risks, Uncertainties Over Next Year Following
Credit Suisse Deal
European Central Bank
The ECB's deposit rate is expected to peak at 3.75%, SEB said,
cutting its previous forecast by 25 basis points.
"Our base case is that the banking turbulence can be contained,
and the ECB will hike rates further."
However, "due to tighter credit conditions, the deposit rate
will peak at 3.75% in early summer, 25bps below our previous
prediction," SEB added.
Read Too Early to Bet on End of ECB's Interest-Rate Rise
Stock futures were falling on continued worries about banks.
Stocks to Watch
Block was down 3.5% in premarket trading. Shares closed almost
15% lower on Thursday after being targeted by short-selling firm
Meta Platforms rose 0.4% in premarket trading and Snap gained
0.9% after it appeared more likely that Congress would impose a ban
on TikTok following a grilling of the popular short-video social
media app's CEO at a hearing Thursday.
Netflix led the S&P 500 on Thursday, closing with a gain of
9%. In premarket trading, shares of the streaming company were up
The economics calendar includes durable-goods orders and flash
PMI, with St. Louis Fed President Bullard due to speak.
Follow WSJ markets coverage here
The euro remained weaker on the day after a key survey showed
eurozone services activity expanded further in March but
manufacturing activity contracted at a faster pace.
The S&P services PMI rose to 55.6 in March from 52.7 in
February while the manufacturing PMI fell to 47.1 from 48.5.
Read Eurozone Economy Gained Momentum in March, PMIs Suggest
Sterling rose versus the euro but fell against the dollar as
traders digested the latest retail sales and PMI data along with
remarks from Bank of England Governor Andrew Bailey.
U.K. retail sales rose 1.2% month-on-month in February, more
than the 0.3% increase expected by analysts in a WSJ survey.
However, the S&P U.K. composite PMI, which measures services
and manufacturing activity, dropped to 52.2 in March from 53.1 in
February against an expected 52.6.
Meanwhile, Bailey told the BBC's Today program that interest
rates will rise further if firms raise prices.
The dollar is likely to weaken as concerns remain about U.S.
regional banking troubles, which should keep alive the prospect of
the Federal Reserve cutting interest rates later this year, ING
"A situation that neither develops into a fully-fledged systemic
crisis (which would be dollar positive) nor significantly improves
on the U.S. regional banking side, which should keep markets
betting on Fed easing later this year" endorses ING's "baseline
bearish bias on the dollar."
Eurozone government bond yields fell, shrugging off reasonably
solid purchasing manager surveys as markets kept their focus on the
expectation that central banks' interest rate rises could be
nearing an end.
"The purchasing managers' indices for March show that Germany's
economic situation brightened further at the end of the first
quarter," Union Investment said.
At first glance, this signals that the German economy is
emerging from the weak winter phase and is doing better than feared
but he warns against too much optimism or hope for an imminent
Long German government-bond yields are likely to remain volatile
and lack clear direction in the coming months, SEB said.
In its base scenario, with banking sector turbulence remaining
contained, markets may move to price some risks of the ECB's
deposit rate peaking at 3.75% rather than 3.50%.
SEB still forecasts the German curve starting to steepen and
sees value in forward starting steepeners on the EUR swap
Read Potential OAT-Bund Spread Widening Seen Contained Amid
Base metal prices were higher, as the weaker dollar and
improving Chinese demand acted as tailwinds for commodities.
Meantime, gold futures dipped but remained close to 9% higher
ANZ Research said base metals have been buoyed by "the prospect
of the Fed pausing rate hikes due to the banking turmoil."
A nearly 6% rise in Chinese steel output during January and
February versus year-earlier levels likely indicates strong pent-up
demand as China emerges from years of strict Covid-19 controls,
Commonwealth Bank of Australia said.
"China's manufacturing sector certainly suggests strong
underlying demand to start the year" and "we think pent-up demand
will help support China's steel output in H1 2023," CBA said.
China and South Korea are outliers among the world's largest
steel producers, with production in other countries mostly weaker
recently and overall global crude steel output down last month
versus a year ago, CBA added.
DOW JONES NEWSPLUS
Eurozone Economy Gained Momentum in March, PMIs Suggest
Business activity in the eurozone gathered steam in March driven
by resilience in the services sector, suggesting the region is on
track to avoid a contraction in the first quarter despite high
inflation and rising interest rates, data from a purchasing
managers survey showed Friday.
The S&P Global Flash Eurozone PMI Composite Output
Index-which gauges activity in the manufacturing and services
sectors-increased to 54.1 in March from 52.0 in February, a
10-month high. The indicator suggests private-sector activity in
the eurozone continued to expand in March as it came in well above
the 50 no-change threshold.
UK Retail Sales Rose on Month in February, Boosted by Discount
U.K. retail sales increased more than expected on month in
February, indicating consumer spending was resilient despite high
inflation squeezing Britons' purchasing power.
Retail sales volumes rose 1.2% in February from the previous
month, data from the Office for National Statistics showed Friday,
beating the 0.3% rise expected by economists polled by The Wall
U.K. Consumer Confidence Rose to 12-Month High in March
Confidence among U.K. consumers rose in March to its highest
level in a year but remained subdued as persistently high inflation
continued to weigh on household finances.
Research firm GfK said its consumer-confidence barometer
increased to minus 36 in March from minus 38 a month earlier, in
line with economist estimates in a poll by The Wall Street
TUI to Launch $1.95 Bln Capital Increase to Repay German
Covid-19 State Aid, Debt
TUI AG said Friday that it would launch a 1.8 billion euros
($1.95 billion) capital increase to repay German state aid granted
during the pandemic and significantly reduce its credit lines so as
to strengthen its balance sheet.
The London-listed German travel operator said 329 million new
ordinary registered shares will be offered at a subscription ratio
of 8:3 with a EUR5.55 subscription price per new share,
representing a 39.85% discount to theoretical ex-rights price, or
Battered by Year of Shelling, Front-Line City Yearns for
ORIKHIV, Ukraine-Only three people remain in a nine-story block
of 146 apartments in this front-line city of southern Ukraine. For
the past several months, they have been living in a basement, using
a small generator because daily Russian shelling has long disrupted
electric supplies to Orikhiv.
Despite all that, Vitaliy Pilyay, one of the basement's three
dwellers, was in a good mood on a recent day. Ukrainian forces are
preparing a counteroffensive, possibly aiming to oust Russia from
this part of the country, and he said he was confident that the end
of Orikhiv's yearlong ordeal is near.
Over a Million French Protesters March Against Macron's
PARIS-More than a million protesters took to the streets across
France on Thursday in a full-throated rebuke of President Emmanuel
Macron's decision to push his pension overhaul through
The turnout, which produced a river of humanity that snaked
through the boulevards of Paris, was a sign that public resistance
to Mr. Macron's overhaul isn't letting up even as the measures are
set to become law.
Iran Could Produce Nuclear Weapon in Several Months if It
Decides to Do So, Mark Milley Says
Iran would need only several months to build a nuclear weapon if
Tehran opted to produce a bomb, Gen. Mark Milley, chairman of the
Joint Chiefs of Staff, told Congress on Thursday.
Gen. Milley's assessment provides a significantly shorter
estimate for how quickly Tehran could become a nuclear power than
other public estimates by Western officials and adds to mounting
concern about the advances in Iran's nuclear program.
U.S. Strikes Iranian-Backed Groups in Syria After Drone Attack
Kills One American and Wounds Six
The U.S. carried out airstrikes against Iranian-backed militias
in Syria on Thursday after a drone struck a base used by U.S.
personnel in the northeast part of the country, the Pentagon
One U.S. contractor was killed in that drone attack, which U.S.
intelligence officials said was carried out by an unmanned aerial
vehicle made by Iran.
First Republic, Regional Bank Stocks Rebound After Yellen Says
Tools Could Be Used
Regional bank stocks were slightly higher early on Friday after
Treasury Secretary Janet Yellen said the emergency actions used to
contain the fallout from Silicon Valley Bank could be used again if
The SPDR S&P Regional Banking exchange-traded fund (ticker:
KRE) was up 0.3% in premarket trading Friday. Shares of First
Republic Bank (FRC) and PacWest Bancorp (PACW), which have been in
focus, climbed 1.2% and 2%, respectively. Western Alliance Bank
(WAL) also advanced 2%.
The U.S. Is Scaring Off Foreign Investors. Where They're Going
Welcome to America the Uninvestible.
That seems like a strange thing to say about the go-to
destination for investors around the world, offering the world's
biggest companies, the most liquid markets, and rule of law to
protect shareholder returns. Government interference, too, is
supposed to be limited. The fact that U.S. stocks have outperformed
the rest of the world over the past decade has certainly helped as
Companies Big and Small Lose Access to Credit Amid Bank
The capital markets have been on ice since the collapse of
Silicon Valley Bank two weeks ago.
No companies with investment-grade credit ratings sold new bonds
over the seven business days from March 9 through March 17, the
first week in March without a new high-grade bond sale since 2013,
according to PitchBook LCD. The market for new junk-bond sales has
largely stalled this month, and no companies have gone public on
the New York Stock Exchange in more than two weeks.
Where to Put Your Money During a Banking Crisis
This year's market turmoil has sent nervous investors rushing to
cash. But protecting your money isn't as simple as parking it in a
Despite recent strains in the banking sector, a bank account
remains the simplest place to store cash. Balances up to $250,000
are protected by the Federal Deposit Insurance Corp., or FDIC, at
any U.S. bank.
North Korea Threatens 'Radioactive Tsunami' With New Underwater
SEOUL-North Korea said leader Kim Jong Un oversaw an attack
simulation of an underwater drone capable of carrying nuclear
warheads, threatening use of a new weapon that could target the
vessels and ports of the U.S. and its allies.
The new drone detonated a mock nuclear payload underwater and
cruised in figure-eight and oval-shaped patterns at a depth of
around 260 to 490 feet for nearly 60 hours, North Korean state
media said on Friday.
Chinese Authorities Raid Office of U.S. Investigations Firm
NEW YORK-Authorities this week raided the Beijing offices of
Mintz Group, detaining all five of the New York-based due diligence
firm's staff members in mainland China, the company said-an
incident likely to unnerve global businesses operating in the
The move comes as the heads of multinational companies including
Apple Inc. and Pfizer Inc. are due to arrive in Beijing to meet
with top Chinese officials. This weekend's annual China Development
Forum will be the first to be held fully in-person since the
Covid-19 pandemic broke out, and is just weeks after Beijing
installed a slate of new government leaders as it signals fresh
efforts to boost foreign investment.
Do Kwon Arrested in Montenegro as U.S. Charges Crypto Fugitive
The Justice Department charged South Korean crypto entrepreneur
Do Kwon with fraud on Thursday as officials in Montenegro arrested
the creator of the failed TerraUSD stablecoin.
In an indictment unsealed in a New York federal court, Mr. Kwon
was charged with eight criminal counts of fraud and is accused of
conspiring with an unnamed U.S.-based investment firm to use
trading strategies to alter the price of the stablecoin in May
2021. That month, TerraUSD fell beneath its $1 peg but recovered, a
rebound that Mr. Kwon later cited as evidence of its stability.
Grand Jury Won't Act in Trump Hush-Money Payment Investigation
The Manhattan grand jury hearing evidence about former President
Donald Trump's role in paying hush money to a porn star won't take
action this week, people familiar with the matter said.
Grand jurors met Thursday, but to hear another matter unrelated
to Mr. Trump, the people said. It is common for grand juries in New
York to hear multiple cases at a time. Grand jury schedules can be
unpredictable because panels juggle cases with competing demands
and deadlines, former prosecutors said.
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(END) Dow Jones Newswires
March 24, 2023 07:00 ET (11:00 GMT)
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