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Infineon Technologies to Raise EUR1.5 Billion in Capital Increase
Topic of the day
Infineon Technologies (IFX.XE) said Monday that it approved a capital increase aimed at raising roughly 1.5 billion euros ($1.68 billion) in gross proceeds, which it plans to use to help fund its recent takeover of Cypress Semiconductor Corp. (CY). The capital increase will raise Infineon's share capital by up to 10% through the issuance of new shares. The capital increase will be conducted through an accelerated bookbuilding, Infineon said. Proceeds will be used to partially finance Infineon's planned acquisition of Cypress for about EUR8.4 billion, Infineon said. Infineon Technologies AG has thus broadened its position and risen from the tenth to the eighth largest chip group in the world, and Infineon has become the market leader in the automotive sector. The acquisition of Cypress is the largest acquisition in Infineon's history.
The SMI closed up 4 points on 9,852 points Monday amid investor caution before Wednesday’s US Federal Reserve (Fed) interest-rate decision. While the Fed had recently indicated it would take action if needed, a rate cut is not expected until July, as the Fed usually gives markets a verbal heads-up beforehand. This scenario could fit the unexpectedly weak Empire State Manufacturing Index, which took the biggest monthly slide in its history in June, falling to minus 8.6, instead of the expected plus 10.5, from 17.8 in May. European sentiment was buoyed by gains in bank and insurance stocks. Credit Suisse led the SMI, rising 0.7 percent on media reports it was examining options for fund platform InvestLab, including a possible sale. Insurers Zurich Insurance rose 0.4 percent and Swiss Re 0.2 percent. In London,shares of recruiter Staffline slumped after it issued a warning about higher costs, partly due to UK minimum wage rules. The news did not affect Adecco, which was up 0.4 percent.
Europe's main markets ended the day mixed as investors look toward the Federal Reserve meeting on Wednesday, an analyst said. France's CAC 40 closed 0.4% higher and Italy's FTSE MIB ended 0.1% up. However, Spain's IBEX 35 fell 0.7%, Germany's DAX ended 0.1% lower and the Stoxx Europe 600 closed down 0.1%, 0.41 points, to 379.22 as gains for Germany's Deutsche Bank eclipse losses for the country's flag carrier, Deutsche Lufthansa. Shares in Deutsche Bank climb 1.9% after reports claimed it plans to set up a 'bad bank' to house or sell assets valued at up to 50 billion euros ($56.02 billion). Still, Lufthansa tops the pan-European losers, down 10% after cutting its 2019 outlook in response to overcapacity and competition. Other airlines fall in sympathy, with easyJet off 5%, Ryanair down 4.3% and Air France-KLM shedding 2.9%. Staffline said it now expects to report increased one-off and exceptional charges in 2018 due in part to issues with U.K. minimum-wage compliance, and is now mulling a new share placing. Shares down 89.60 pence, or 37%, at 149.40 pence.
U.S. stocks rose ahead of central bank policy meetings around the world as investors continue to bet the Federal Reserve will slash interest rates this year. The tech-heavy Nasdaq Composite jumped 60 points, or 0.8%, lifted by shares of companies like Facebook and Netflix. The S&P 500 rose 5 points, or 0.2%. The Dow Jones Industrial Average added 0.2%. Investors will be watching the Federal Reserve's meeting concluding Wednesday for clues on whether the central bank will slash rates this year, after ramping up expectations of an interest-rate cut in recent weeks. The Bank of Japan and the Bank of England also hold meetings this week. Monday's moves built on two weeks of gains by major U.S. stock indexes. U.S. stocks have rallied in June after Fed Chairman Jerome Powell said the central bank would act to sustain U.S. economic expansion in the face of escalating geopolitical and trade tensions. Now, expectations that central bankers could send a similar message later this week helped lift markets, analysts said. Many expect the Fed to keep interest rates unchanged this month but cut them later this year, data from CME Group show.
Asian markets were mostly higher, with the Hang Seng continuing to post strong gains after the suspension of an unpopular extradition bill. The Nikkei was the only major regional index in the red.
Treasurys are little changed from Friday, having retraced overnight declines after the Empire State Manufacturing index registered its largest monthly decline on record. The 10-year Treasury note yield stands at 2.084%, near its lowest level since Sep. 2017. The benchmark rate has dropped around 60 basis points, or 0.60 percentage points, since the start of the year as calls for rate cuts have stepped up. Debt prices move in the opposite direction of yields.
HSBC upgrades SAP to Buy (Hold) – Target 135 (110) EUR
IR downgrades FMC target to 74 (79) EUR - Hold
Warburg downgrades Comdirect target to 11,70 (13) EUR - Buy
UBS downgrades United Internet target to 38 (42) EUR - Buy
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