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Research Market strategy
by Swissquote Analysts
Morning News

Dassault Systemes Buys Medidata Solutions in $5.8 Billion Deal

Topic of the day

French technology company Dassault Systemes SE (DSY.FR) has agreed to buy U.S. medical-software maker Medidata Solutions Inc. (MDSO) in a deal with an enterprise value of $5.8 billion. The all-cash transaction, approved unanimously by the boards of both companies, sees the French company paying $92.25 for each share of Medidata, Dassault Systemes said Wednesday. Medidata shares closed at $94.75 on Tuesday. "With the acquisition of U.S.-based Medidata and its clinical and commercial solutions, Dassault Systemes will reinforce its position as a science-based company by providing the life sciences industry with an integrated business experience platform for an end-to-end approach to research and discovery, development, clinical testing, manufacturing and commercialization of new therapies and health technologies," it said. Shares in the French company traded 0.9% lower at 0748 GMT. "Acquiring Medidata would require raising debt, and this would be the first time in Dassault Systemes' listing history--since 1996--that the company would be in a net debt position," Bryan Garnier analyst Gregory Ramirez said.

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Swiss stocks

The SMI rose 0.2 percent to 9.860 points Wednesday, faring better than most of its neighbours thanks to the previous day’s all-time high and its defensive character, which is more attractive in times of uncertainty. Other upside factors were a weak Swiss franc against euro and dollar, helping Swiss exports, and hopes of a loosening of US monetary policy in the run-up to next week’s US Federal Reserve meeting. Lafargeholcim slumped 4.2 percent to CHF 48.23 after the group’s largest shareholder, Thomas Schmidheiny, cut his stake to 7.2 percent from 10.9 percent and sold the larger part at CHF 48.70. Bank stocks fell again after the previous day’s recovery in a low-interest environment. Credit Suisse fell 1.7 percent and UBS 1.1 percent. Market favourite Lonza continued its upward trend, rising 2.4 percent. The stock has now risen by around 32 percent since the start of the year. Index heavyweights kept the SMI up: Nestle, Novartis and Roche rose by between 0.5 percent and 0.7 percent.

International markets

Europe

Europe's main indexes ended the session on a down note following a strong start to the week as trade fears persisted, David Madden of CMC Markets said. "President Trump maintained his firm stance against China, and is still leaving the door open to the prospect of higher levies too," Mr. Madden said. Italy's FTSE MIB was the big loser, closing 0.7% lower, while France's CAC 40 ended the day down 0.6%, Spain's IBEX 35 closed 0.5% lower and Germany's DAX was off by 0.3%, as was the STOXX Europe 600. In Germany, final May inflation data is due. The headline print took a sizable fall last month, dropping from 1.84% on year in April to 1.64% in May, so Danske Bank is particularly interested in the drivers of this deterioration. "It is likely that service price inflation was a drag due to seasonal effects from the timing of Whitsun but whether core inflation also dragged the print down will be of great interest," it said. In the eurozone, industrial production had been on an upward trend since December 2018, but this ended in March, when the print came in at minus 0.5% on year.

United States

U.S. stocks extended their losses intraday, a day after snapping a weeklong winning streak amid lingering trade tensions and questions over the direction of Federal Reserve policy. The Dow Jones Industrial Average fell 52 points, or 0.2%, to 25996. The S&P 500 lost 0.2% and the technology-heavy Nasdaq Composite lost 0.4%. U.S. equity markets have eased over the past two sessions after rising sharply the prior week after Federal Reserve officials hinted that the central bank might lower interest rates at its meeting next week to offset the negative effects of trade disputes. "Stocks are likely pulling back due to profit-taking as investors look ahead to what the Fed is going to do next week," said Ed Cofrancesco, chief executive of International Assets Advisory LLC, an Orlando, Fla.-based brokerage firm. "Last week's jobs report wasn't as strong as we would have liked, but that justifies the Fed possibly cutting rates. The U.S. economy, however, continues to be strong." Some analysts say markets may have overestimated the likelihood of such a rate cut, given recent positive economic data.

Asia

Asian markets fell in early trading, with shares in Hong Kong hit following the violent protests in the city.

Bonds

Yields on short-term U.S. government bonds fell after another set of tame inflation data bolstered investors' expectations that the Federal Reserve will soon move to cut interest rates.

Analysis

UBS rises the Diageo target to 3.750 (3.300) p – Buy
CS lowers the BBVA to Underperform (Neutral) – Target 4,50 (5,40) EUR
Citi lowers Prada to Sell (Neutral) – Target 19 (23) HKD

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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