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Research Market strategy
by Swissquote Analysts
Morning News

BMW, Jaguar Land Rover Team Up to Share Electrification Technology

Topic of the day

BMW AG (BMW.XE) said Wednesday that it is teaming up with Tata Motors Ltd.'s (500570.BY) Jaguar Land Rover to collaborate on electrification technology. The German luxury-car maker said both companies will work to develop new electric motors, based on the fifth-generation of BMW's eDrive technology. This new technology will be introduced starting next year with the BMW iX3 Sports Activity Vehicle and will be the propulsion system upon which subsequent evolutions launched by the two companies will be based, BMW said. A joint team will be located in Munich tasked with further developing the Gen 5 power units with production to be undertaken by each partner in their own manufacturing facilities, BMW said. This will allow both parties to deliver cost efficiencies arising from shared technology development and production planning costs as well as economies of scale from joint purchasing.

Swiss stocks

The SMI closed up 0.6 percent on 9,659 points Wednesday, with speculation about rate cuts now driving Swiss stocks up too with a day’s delay. New developments in Italy saw defensive index heavyweights in demand again. Novartis, Roche and Nestle rose by between 0.3 percent and 1.1 percent. The EU Commission’s recommendation to launch a new excessive deficit procedure against Italy threatens to spark a new power struggle between Brussels and Rome and cause turmoil on the financial markets. The news pushed down European financial stocks in particular, led by Italy. SMI bank stocks UBS and Credit Suisse recovered in late trading from interim losses and bucked the Europe-wide downtrend to rise 0.2 percent and 0.6 percent respectively. Swatch (up 1.9 percent) and Richemont (up 1.4 percent) were among the day’s winners. Both stocks were among the hardest hit by the fallout from the US-China trade dispute in recent weeks, as China is a very important market for the luxury goods sector.

International markets

Europe

The Stoxx Europe 600 gained 0.2% as an upbeat end to trading on Wall Street lifted investor confidence in Europe. The DAX, however, fell 0.2%. "The move was driven by a slight cooling of trade tensions, and Fed members Jerome Powell and Richard Clarida suggested they would be open to cutting interest rates should it be warranted," says David Madden at CMC Markets. The European Union threatened to punish Italy for flouting budget rules, but Rome is unlikely to heed the EU unless it faces investors' wrath. Italy's public debt, which is more than double the EU limit and is rising, prompted the bloc's executive arm Wednesday to call for steps to shrink the country's budget deficit. "Italy deliberately decided to ignore the European fiscal rules, and it feels like Groundhog Day," said Markus Ferber, a conservative member of the European Parliament from Germany.

United States

Stocks climbed as investors further embraced the possibility that the Federal Reserve might cut interest rates to boost the economy. The Dow Jones Industrial Average gained 183 points, or 0.7%, while the S&P 500 added 0.7% and the Nasdaq Composite rose 0.5%. The gains for stocks in the Dow industrials and S&P 500 followed the two indexes' best day in five months Tuesday. They climbed more than 2% after supportive commentary from Federal Reserve officials buoyed investor confidence, which has been hit by concerns over Washington's trade disputes in recent months. Technology stocks bounced back after suffering a brutal start to the week. On Monday, tech giants Facebook and Alphabet tumbled more than 6% after a report that the Federal Trade Commission had secured rights to begin a potential antitrust investigation into the social media company and on a report that the Justice Department had been given chief oversight over a Google probe. On Wednesday, the S&P 500's tech sector rose 1.1% in recent trading.

Asia

Asian markets were mixed as investors weighed pessimism over global trade tensions against optimism that the Federal Reserve would cut interest rates.

Bonds

U.S. government bond prices flitted higher, then ended on the flatline after a mixed batch of economic data. The yield on the benchmark 10-year U.S. Treasury note settled at 2.119%, unchanged from Tuesday.

Analysis

IR lowers the Shell target to 32 (33) EUR – Buy
HSBC rises the Vinci target to 100 (93) EUR – Buy
H&A rises the Nexus target to 37 (36) EUR – Buy


Produced by MBI Martin Brückner Infosource GmbH & Co. KG on behalf of Swissquote. All news is acquired with journalistic accuracy. No liability is assumed for delays or errors.

 
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