Morgan Stanley shares climbed 4% on Thursday after the bank and broker forecast a robust flow of deals as it beat both profit and revenue expectations for the latest quarter. Among the standout numbers in the fourth quarter, Morgan Stanley’s revenue in the institutional-securities business jumped 47.1% from a year ago to $7.27 billion, well above the FactSet consensus of $6.19 billion, with the bank citing “strong client activity and improved market conditions.” Within the institutional-securities business, equity revenue soared 51% to $3.33 billion, beating the FactSet consensus of $2.64 billion, amid notable strength in the prime brokerage. The margin of that beat was the widest since the third quarter of 2021. Fixed-income revenue climbed 34.7% to $1.93 billion, above expectations of $1.62 billion, amid strong lending and securitization activity. Investment-banking revenue grew by 24.5% to $1.64 billion. Total revenue rose 25.8% to $16.22 billion, above expectations of $15.03 billion. Wealth-management revenue increased 12.5% to $7.48 billion and investment-management revenue rose 12.2% to $1.64 billion, with both results topping expectations. Net income for the quarter more than doubled, coming in at $3.71 billion, or $2.22 a share, up from $1.52 billion, or 85 cents a share, in the year-ago quarter. That beat the FactSet consensus for earnings per share of $1.70. Provisions for credit losses rose to $115 million from $3 million, driven by growth in the corporate-loan portfolio. The quarter included $62 million in charge-offs related to the commercial real estate sector. Morgan Stanley’s stock advanced 9.2% over the past three months through Wednesday, while the Financial Select Sector SPDR ETF XLF gained 4.2% and the S&P 500 index SPX tacked on 1.8%.

The Swiss stock market ended trading on Thursday with gains. The SMI was driven by surprisingly strong figures from Richemont. As a result, the share price jumped by a massive 16.4 per cent. The SMI climbed 1.4 per cent to 11,942 points. Of the 20 SMI stocks, there were 16 gainers and 4 losers. A total of 21.5 (previously: 18.24) million shares were traded. Richemont increased sales in the third quarter more strongly than expected to a record level. Sales climbed by 10 per cent compared to the previous year to 6.15 billion euros. Analysts had only expected 5.6 billion in the Visible Alpha consensus. This was the highest quarterly turnover in the Group's history. The shares of competitor Swatch rose by 2.8 per cent. Geberit presented preliminary business figures for 2024, which were not well received by the market. The share price fell by 3.2 per cent. Index heavyweight Nestlé rose slightly by 0.3 per cent. Among the pharmaceutical giants, Roche advanced by 1.0 per cent, while Novartis closed little changed. Among small caps, Aryzta rose by 7.0 per cent. The baked goods group achieved its medium-term targets for 2025 a year early.

The European stock markets surged on Thursday, buoyed by a surge in luxury stocks thanks to record quarterly sales by Swiss giant Richemont. The Stoxx Europe 600 index gained 1% to 520.1 points. The CAC 40 and SBF 120 closed up 2.1% and 2% respectively. The DAX 40 climbed 0.4% in Frankfurt and the FTSE 100 advanced 1.1% in London. The Swiss luxury group's announcements benefited its competitors. In Paris, shares in Kering (+6.2%), LVMH (+9.2%) and Hermès (+4.9%) stood out, as did Moncler (+6.3%) in Milan and Burberry (+4.1%) in London. Car manufacturer Renault (+1.8%) on Thursday forecast that its worldwide sales would increase by 1.3% in 2024 compared with the previous year, to 2,264,815 vehicles. Technology stocks performed very strongly on the market with gains of 2 per cent. ASML increased by 4.6 per cent. Defence stocks continued their upward trend. Renk improved by 4.5 per cent. After receiving an order from the Italian army for 280 million euros, Rheinmetall picked up 4.5 per cent.

Declines in technology stocks dragged on major indexes Thursday, while Treasury yields dropped for the third straight session. A day after both stocks and bonds got a big lift from encouraging inflation data, it was a quieter session in markets. Despite gains in eight of its 11 sectors, the S&P 500 fell 0.2%, weighed down by losses among the largest tech names. The tech-heavy Nasdaq Composite shed 0.9%, while the Dow Jones Industrial Average slipped 0.2%, or roughly 68 points. Among individual companies, Apple fell 4%, Tesla lost 3.4% and Amazon.com dropped 1.2%. UnitedHealth slid 6% after reporting weaker-than-expected quarterly revenue. Some chip stocks received positive impetus from Taiwanese industry giant Taiwan Semiconductor Manufacturing Co (TSMC), which has forecast strong sales growth for the current year, fuelled by high demand for AI chips. TSMC's ADRs traded in the USA advanced by 3.9 per cent. Applied Matierals rose by 4.5 per cent and Broadcom by 0.6 per cent. Nvidia, meanwhile, fell 1.9 per cent. Economic data released Thursday was mixed. Initial jobless claims rose slightly more than expected last week. In addition, retail sales rose a touch below forecast in December, but the details of the report were more encouraging.

Asian stocks were mixed on Friday, with Shanghai (+0.6%) and Hong Kong (+0.4%) rising slightly. Tokyo is bringing up the rear. The Nikkei 225 index fell by 0.4 per cent to 38,433 points. Seoul closed just in the red. At 5.4 per cent, the Chinese economy grew faster in the last quarter of 2024 than economists had estimated at 5.1 per cent. Among individual stocks, TSMC in Taiwan gained just under 5 per cent. The chip manufacturer had presented strong business figures after the end of trading the previous day. In Tokyo, Nintendo fell by over 4 per cent after the company announced that the successor to its Switch console will not be launched until later in the year. Following a nine-day winning streak, the shipyard share Hanwha Ocean (-1.3 per cent) saw slight profit-taking in Seoul. The competitor stock HD Hyundai Heavy Industries (-1.3%) was also sold.

U.S. government debt yields turned slightly lower Thursday, reversing direction from earlier in the day, after one key policymaker spoke about the possibility of multiple 2025 rate cuts by the Federal Reserve. The 10-year Treasury note yield dropped 4 basis points (0.04 percentage points) to 4.62%, while the 2-year Treasury note yield declined by 2 basis points to 4.25%.

Target price Lindt&Sprüngli: Stifel upgrades to CHF 11400 (11200) - Buy
Target price Sika: UBS lowers to CHF 290 (295) - Buy
Target price Clariant: Jefferies cuts to CHF 12.00 (13.60) - Buy

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