Goldman Sachs (+ 0.7%) reported sharply higher profit for the fourth quarter, bolstered by a strong performance in its asset and wealth management business. The bank on Tuesday said quarterly profit was $2.01 billion, up 51% from a year ago. The strength wasn’t in Goldman’s traditional powerhouses, investment banking and trading. Its investment-banking revenue fell 12%, while revenue for all its big rivals, including JPMorgan and Morgan Stanley, was up. Goldman’s trading revenue was down 3%, while most rivals eked out small gains. Rather, what propelled Goldman’s earnings this time were the units it is prioritizing and expanding. Asset and wealth management, where Goldman has pinned much of its hopes, increased revenue by 23%, thanks in part to a much stronger stock market. Separately, revenue from lending to institutional clients was up. Goldman also carried out its plan to cut staff. It finished the year with 45,300 employees, down 1% from the end of September and 7% from the end of 2022. Citigroup said last week it plans to cut 20,000 jobs.
Overall, Goldman’s revenue was $11.32 billion, up 7% from a year ago. That beat the $10.8 billion expected by analysts.

The Swiss stock market ended trading on Tuesday with a slight gain, making up for the previous day's losses. The SMI improved by 0.2 per cent to 11,230 points. Of the 20 SMI stocks, there were 11 losers and 9 winners. A total of 16.11 (previously: 9.86) million shares were traded. In contrast to the weak banking sector in Europe, UBS (+0.2%) and Julius Baer (-1.5%) showed a mixed trend. Participants referred to a bearish sector study by JP Morgan. Lindt & Sprüngli shares rose by 6.6 per cent. For the analysts at Stifel, the chocolate manufacturer delivered double-digit organic growth in 2023, exceeding its own forecast and consensus estimates. Lindt expects an EBIT margin of 15.5 per cent, which is at the upper end of the previously stated range for the 2023 financial year. The Swiss company also provided a "reassuring" outlook for the current financial year. Richemont and Swatch recorded negative signs, falling by 1.7 and 0.8 per cent respectively. HSBC has lowered its price targets for these companies. By contrast, Novartis shares climbed 0.9 per cent to CHF 92.80. The analysts at UBS upgraded their rating to "buy" from "neutral" and increased their target price to 104 Swiss francs.

Europe
The European stock markets closed lower on Tuesday. The Stoxx Europe 600 index lost 0.2% to 473.1 points. In Paris, the CAC 40 and the SBF 120 each dropped 0.2%. The DAX 40 in Frankfurt slipped 0.3% and the FTSE 100 in London declined 0.5%. Air France-KLM (-2.6%) and CMA CGM announced an overhaul of their strategic partnership, which came into effect in April 2023, allowing the shipping group to exit the airline's capital earlier than initially planned. Dassault Systèmes gained 2.7% to 45.76 euros. Sartorius Stedim Biotech lost 2.3% to 226.40 euros. UBS lowered its recommendation regarding the pharmaceutical industry supplier from "buy" to "neutral" and its price target from €390 to €260. Worldline slid 1.2% to €13.12. Stifel downgraded its recommendation for the electronic payments specialist from "buy" to "hold", while lowering its target price from €42 to €15. British oil company Shell (-1% in London) has suspended all transit through the Red Sea indefinitely, as US and UK strikes against Houthi rebels in Yemen have raised fears of a further escalation there, people briefed on the decision informed the Wall Street Journal.

United States
Stocks opened the week lower, hinting at why some investors believe the “everything rally” of late 2023 will be hard-pressed to continue. All three major indexes are in the red for 2024 after Tuesday’s session. The S&P 500 slipped 0.4%, while the tech-heavy Nasdaq Composite dropped 0.2%. The Dow Jones Industrial Average fell 0.6%, or 232 points. On Tuesday, Goldman Sachs said it bagged more than $2 billion in profit in the fourth quarter, bolstered by a strong performance in its asset and wealth-management business. “This was a year of execution for Goldman Sachs,” Chief Executive David Solomon said in a call with analysts. Investors, however, mostly shrugged. Goldman shares wavered throughout the afternoon before edging up to close 0.7% higher. Morgan Stanley, meanwhile, skidded 4.2% after it reported a slowdown in earnings from last year. Losses Tuesday spanned major international oil companies, pharmaceutical giants and streaming companies, but no component of the Dow lost bigger than Boeing. The manufacturing company’s shares skidded 7.9% after a long-awaited resumption of deliveries of 737 MAX jets to China faced fresh delays. Hammered by investors after the Alaska Airlines incident, Boeing stock has fallen 23% this year. Elsewhere in air travel, Spirit Airlines shares tumbled 47% after a federal judge blocked JetBlue’s acquisition of the company. Shares in JetBlue rose 4.9%. The stock market was closed Monday for Martin Luther King Jr. Day. Tuesday’s losses may have stung major indexes even more were it not for the AI trade. Shares in chip maker Nvidia rose 3.1%, while Advanced Micro Devices climbed 8.3%. Tesla ticked 0.5% higher after CEO Elon Musk said he wants greater control of the electric-vehicle maker as it pushes further into artificial intelligence and robotics.

Asia
Stocks in Asia mostly felll on Wednesday, with Hong Kong (-3.1 per cent) and Seoul (-2.0 per cent) recording sharp declines. In Shanghai, the decline was more moderate at 0.9 per cent. Tokyo is an exception: the Nikkei index gained 0.1 per cent to 35,653 points. Among the individual stocks in Seoul, LG Display was able to buck the downward trend with a mini gain. The company achieved a profit turnaround in its fourth quarter. Heavyweight Samsung Electronics, on the other hand, lost 1.9 per cent.

Bonds
U.S. government debt yields posted their biggest one-day jumps in one or two months on Tuesday after central bank officials in the U.S. and Europe pushed back on market expectations for the timing and pace of 2024 interest-rate cuts. The 10-year Treasury note yield jumped by 12 basis points to break the 4% barrier at 4.066%. The 2-year Treasury note yield also climbed nearly 10 basis points to 4.228%.

Analysis
Rating Sandoz: Citigroup starts with Buy - Target 35 CHF
Target price Tecan: Berenberg downgrades to 375 (461) CHF - Buy
Target price Julius Baer: JP Morgan lowers to 57 (60) CHF - Overweight

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