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Research Market strategy
by Swissquote Analysts
Morning News

Nissan, Renault Near Deal to Resolve Corporate Governance Dispute

Topic of the day

Nissan Motor Co. and Renault SA are poised to resolve a standoff about Nissan's corporate governance ahead of the Japanese car maker's shareholder meeting next week, according to people familiar with their talks. A resolution would settle one of the most public and acrimonious disputes between the partners since the November arrest of Carlos Ghosn, who formerly led both car makers. Renault, which owns 43.4% of Nissan, has been trying to ensure its influence over Nissan doesn't slip, while the Japanese side has been pushing to maintain its independence. The latest clash was about whether Renault Chief Executive Thierry Bolloré should be given a post on a proposed audit committee on Nissan's board. Renault threatened to abstain in a vote on governance changes at Nissan, effectively scotching them, unless it got its way. That prompted Nissan Chief Executive Hiroto Saikawa to issue an uncharacteristic rebuke calling Renault's stance "most regrettable." Under the proposed plan, Mr. Bolloré would get the committee seat, said people familiar with the discussions. They cautioned that the deal wasn't final yet.

Swiss stocks

Ongoing rate-cut hopes drove the SMI to a new record high of 10,011 points Tuesday to close up 1.4 percent on 9,989 points. Statements from ECB President Mario Draghi pointed to a strong policy of monetary easing, while investors are already waiting for signs of monetary easing from the US Federal Reserve Wednesday, with no rate cut expected until July. Investors ignored increasing Middle East tensions, as the US sent more soldiers to the region, and Iran retaliated with threats to exceed enriched uranium limits. All 20 SMI stocks closed higher, even bank stocks, which have been subdued by low interest rates. UBS gained 1.3 percent and Credit Suisse 2.1 percent. Swatch was up 2.5 percent and Richemont 2.2 percent, both luxury goods makers with a China focus, after US President Donald Trump tweeted he would meet with Chinese President Xi Jinping at June’s G20 Summit, firing hopes of a resolution to the trade dispute. Sika led the SMI, up 2.6 percent to CHF 163.30 after analysts resumed observing the stock with a buy recommendation and a target of CHF 175.

International markets

Europe

The Stoxx Europe 600 ended the day up 6.32 points, or 1.67%, to 384.78. Europe's main markets rallied after Mario Draghi's dovish comments on the prospects of using additional stimulus, an analyst said. "The possibility of lower interest rates, and/or, a return to the bond-buying scheme has acted as a green light to the bulls," he added. Italy's FTSE MIB led the pack, closing 2.5% higher. France's CAC 40 closed up 2.2%, Germany's DAX ended 2% higher and Spain's IBEX 35 rose 1.2%. In Germany, the focus was on Infineon and Siltronic. Infineon has carried out a rapid capital increase to finance the recently announced acquisition of Cypress in the USA for 9 billion euros. "The planned financing share of 30 percent via equity is still about 1.15 billion euros short," a dealer calculated, suggesting that even more capital will probably be needed. Infineon lost 2.1 percent. Meanwhile, SAP, the favorite on the stock exchange, continued to expand its recent profits and reached a new all-time high of 118.22 euros.

United States

U.S. stocks rallied intraday after President Donald Trump signaled that trade talks with China had taken a turn for the better. The Dow Jones Industrial Average gained 354.15 points, or 1.4%, in afternoon trading while the S&P 500 added 1.1% and the Nasdaq Composite rose 1.6%. Stocks opened moderately higher but jumped after Mr. Trump tweeted that he and his Chinese counterpart Xi Jinping had a "very good telephone conversation" and would meet later this month in Japan. The threat of a mounting trade conflict with China has weighed on U.S. economic data and prompted uncertainty among investors. Technology stocks with significant Chinese exposure were among the biggest gainers. Apple climbed 2.5%, while chip makers Intel and NVIDIA were up 3% and 5.9%, respectively. Industrials also outperformed. Equipment-maker Caterpillar, whose shares are often seen as a bellwether for the global economy, rose 2.7%.

Asia

In Asia markets surged in response to the news that President Trump and Chinese President Xi Jinping will meet at the G-20 summit next week, spurring hopes for a trade truce that could stave off a fresh round of tariffs.

Bonds

Government-bond yields around the world fell to fresh lows for the year intraday after European Central Bank President Mario Draghi said the bank could soon add stimulus to support the region's economy. The yield on the U.S. government's 10-year Treasury note, which falls as bond prices rise, dropped to as low as 2.017%, according to Tradeweb, after fresh economic data offered signs that growth was further decelerating in Europe, adding to concerns that it could spill over to the U.S.

Analysis

IR downgrades Utd. Internet target to 42 (46) EUR - Buy
Barclays downgrades Lufthansa target to 17,30 (18,70) EUR - Underw.
CS downgrades Swatch target to 290 (310) CHF - Neutral
UBS downgrades Infineon target to 23,50 (25) 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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