Germany’s Allianz faces probes from the U.S. Justice Department and SEC, as well as lawsuits from investors, over options losses by its investment funds. Allianz SE set aside more than $4 billion for legal expenses stemming from losses its investment funds racked up during the March 2020 market panic when their options trades went bad. The financial giant said it accounted for the 3.7 billion euros in legal provisions, equivalent to $4.2 billion, in its 2021 results. As a result, Allianz’s net income fell 2.6% to €6.6 billion. The fund losses have drawn probes from the U.S. Justice Department and Securities and Exchange Commission as well as several lawsuits from the funds’ investors. Allianz had warned last year that its future earnings could be hurt by the legal fallout. In a statement, Allianz said it took the legal provisions “in anticipation of settlements with major investors in the AllianzGI U.S. Structured Alpha funds and in light of the current discussions with U.S. governmental authorities.” Allianz said it couldn’t predict reliably what its total legal costs will be, and that it expects to “incur additional expenses before these matters are finally resolved.” Allianz also said it expects to reach settlement agreements with major fund investors shortly.

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On Thursday, the Swiss stock market suffered once again from developments surrounding the Ukraine conflict. The SMI lost 1 per cent to 12,075 points. Among the 20 SMI stocks, there were 16 price losers and three price winners, and one share closed unchanged. 37.07 (previously: 31.17) million shares were traded. In a weak market, Nestle held its own with a gain of 0.1 per cent, although market assessments of the business figures were rather mixed. Sika was also among the firmer stocks with very narrow losses; the specialty chemicals group will present business figures on Friday. After the previous day's positive share price reaction to the financial results, the shares of the eye care company Alcon now fell by 3.6 per cent. Meanwhile, Bernstein confirmed a strong start to the year for domestic watch exports. Richemont and Swatch, however, lost 1.2 and 0.8 per cent respectively in the weak overall market - even good business figures from French competitor Kering did not support them. Among the small caps, there were a number of figures to digest, but most of them faded into the weakness of the overall market - unlike Valiant, which gained 1.6 per cent after presenting its balance sheet. The bank's branch network is to be reduced by 23 locations.

European Stocks fell Thursday as worries over a war in Eastern Europe remained front of mind, with mixed messages over Russian troop movements on the Ukraine border injecting volatility into the market. The Stoxx Europe 600 index lost 0.7% to 464.6 points. In Paris, the CAC 40 and SBF 120 were down 0.3% each, despite strong results from several large French companies, including Kering and Carrefour. In Frankfurt, the DAX 40 lost 0.7%, while the FTSE 100 in London fell 0.9%. Kering (+5%) reported better-than-expected fourth-quarter results. The owner of Gucci, Yves Saint Laurent and Bottega Veneta reported sales of €5.41bn, up 31.9% on the same period in 2020 on a like-for-like basis. Air France-KLM (-7.6%) is planning new measures worth up to €4 billion to strengthen its balance sheet, which has been shaken by the health crisis. Klépierre (+5.7%) has forecast revenues of €1.07bn in 2021, up from €1.13bn in 2020, driven by a 6.9% rise in rental income on a like-for-like basis to €879.5m. The shopping centre operator reported encouraging operating data for 2021, according to Invest Securities. Eutelsat (-6.6%) was cautious about its outlook for the year to the end of June 2022. Carrefour (+4.8%) reported better-than-expected results for 2021 and announced a new €750m share buyback programme for the current financial year, as well as further cost-saving efforts to mitigate the impact of inflation. Sodexo (-6.1%) has permanently appointed the chairwoman of its board of directors, Sophie Bellon, as CEO. Commerzbank (+3.2% in Frankfurt) returned to profit in the fourth quarter and expects to resume dividend payments in 2022.

The Dow Jones Industrial Average dropped more than 600 points Thursday, its steepest one-day loss of 2022, as geopolitical tensions and the prospect of tighter monetary policy ahead roiled markets. The blue-chip index slid 622.24 points, or 1.8%, to 34312.03, its worst session on a point and percentage basis since November. The S&P 500 fell 94.75 points, or 2.1%, to 4380.26. The tech-focused Nasdaq Composite Index dropped 407.38 points, or 2.9%, to 13716.72. The losses were broad-based. Tesla fell 5.1%, Morgan Stanley dropped 4.9% and Facebook parent Meta Platforms Inc. slid 4.1%. Nine of the 11 sectors in the S&P 500 declined, led by the technology and communication services groups, which both fell about 3%. All three major stock indexes are on track to notch weekly losses. The Dow is off 6.8% from its record set in early January, and the S&P 500 and Nasdaq have suffered even steeper losses in 2022. Shares of big tech companies have been particularly sensitive to the prospect of rising interest rates. Thursday’s drop in the shares of Facebook’s parent pushed the company out of the ranks of the 10 largest global companies by market value. The stock is down 46% from its September peak. Walmart shares rose $5.35, or 4%, to $138.88 after it reported a profit that beat estimates and increased its dividend. The country’s largest retailer by sales indicated it has been able to navigate higher supply-chain and wage costs, labor shortages and rising prices. DoorDash shares surged $10.14, or 11%, to $105.03 after the food-delivery company reported a jump in revenue. Palantir Technologies tumbled $2.20, or 16%, to $11.77 after posting a wider loss. Nvidia declined $20.04, or 7.6%, to $245.07 despite reporting record sales, making it one of the worst performers in the S&P 500. It said its automotive segment saw a sharp drop in revenue because of supply-chain issues.

Asian benchmarks were mixed. Japan's Nikkei Stock Average trimmed earlier losses and closed down 0.3% at 27165. The index opened lower, dragged by especially sharp falls in electronics stocks, as the yen strengthened alongside reports that Russia continues to mass troops on Ukraine's border. USD/JPY was at 114.82, down from 115.24 as of Thursday's Tokyo stock market close. Investors were also paying attention to Covid-19 infection trends in Japan and the government's countermeasures. The Kospi in Seoul finished also only just in the red, while in Hong Kong the market edged half a per cent lower.

Long-dated U.S. government debt yields fell across the board Thursday, with the two-year rate posting its biggest one-day drop in nearly a month, as investors monitored developments around Ukraine and continued to weigh the outlook for Federal Reserve interest rate increases starting next month. The yield on the 10-year US Treasury bond slipped 7 basis points to 1.970% from 2.042% on Wednesday evening. The yield on the two-year bond also decreased 5 basis points to 1.474%.

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