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Research Market strategy
by Swissquote Analysts
Morning News

Michelin Net Profit, Sales Rose in 2019

Topic of the day

Compagnie Generale des Etablissements Michelin (ML.FR) said Monday that 2019 net profit rose 4.4% on higher sales. Profit in the period totaled 1.75 billion euros ($1.92 billion), from EUR1.66 billion last year, on sales that rose 9.6% to EUR24.14 billion. The French tire maker said acquisitions helped buoy sales. However volumes slid by 1.2%--in line with markets. This was offset by a positive price-mix effect as well as currency tailwinds. Looking ahead, the company guided for slight declines in the passenger-car and light-truck tire markets. Demand in the replacement segment is forecast to be flat, while the original equipment segment is expected to experience sharp decline. Michelin added that the mining-tires markets are expected to shrink, citing inventory adjustments, while tire consumption should be sustained. Overall, the company guided for 2020 operating income slightly lower on the year before, with free cash flow in excess of EUR1.5 billion when excluding the effects of the coronavirus outbreak in China.

Swiss stocks

The SMI closed 0.3 percent firmer on 11,040 points Monday. As worries about the ongoing spread of the coronavirus still dominate, the Chinese central bank announced a stimulus package worth EUR 39 billion to support the China during the virus. On the domestic front, the reporting season dominated, with Credit Suisse, Nestle and Zurich Insurance to release figures Thursday. Zurich Insurance gained 0.7 percent and Swiss Re 0.2 percent on the news that French Covea Cooperations expressed interest in acquiring Partner-Re, valued at USD 9 billion, from Agnelli holding Exor, and that Axa plans to sell its eastern Europe activities to Austrian group Uniqua for some EUR 1 billion. Roche slid 0.1 percent on the news that a Phase II/III study of Alzheimer drug Gantenerumab failed to reach its target. Credit Suisse gained a further 0.8 percent, rebounding from Friday’s setback when CEO Tidjane Thiam resigned. Among second-tier stocks, DKSH surged 14.7 percent on releasing figures

International markets

Europe

The Stoxx Europe 600 index rose 0.3% as strength in the U.S. economy seemed to trump coronavirus concerns. Among European equities, shares in Bank of Ireland Group fell 9.1% after the Irish elections signaled an inconclusive result Sunday, prompting uncertainty about the formation of a new government. Rival AIB Group fell 5.3%.German car maker Daimler AG (+0,4%) is planning to cut up to 15,000 jobs and ramp up cost savings, reports a German newspaper , citing company sources. The company said in November that it is planning to cut at least 10,000 jobs and reduce staff costs by around EUR1.4 billion. The savings are now likely to exceed the previously announced figure, reports the newspaper. European plane maker Airbus (-0,1%) is in advanced talks to acquire Bombardier's stake in the A220 program, according to The Wall Street Journal. Bombardier's 34% stake in the program is likely worth between $2.2 billion and $3 billion which represents between EUR2.4 and EUR3.5 per Airbus share, Citi says.

United States

U.S. stocks rose as investors balanced concern about the deadly coronavirus outbreak against signs of strength in the domestic economy. The S&P 500 gained 0.3%, while the Dow Jones Industrial Average inched up 0.2%. The tech-heavy Nasdaq Composite Index advanced 0.7%. Concerns about the potential economic implications of China's efforts to curtail travel and limit business operations have ebbed and flowed in recent weeks, leading to increased volatility in markets. The S&P 500 has jumped or fallen more than 1% in five of the past 10 trading sessions, after previously not moving that much on a single day since October. In trading Monday, Microsoft gained 1.8% and regained its former title as the largest U.S. company by market capitalization. Apple has held that position since Oct. 31, 2019, according to Dow Jones Market Data. Electric-car maker Tesla, whose stock has been on a tear in recent days, rose 2.2%. Betting that the stock would fall has cost investors $8.4 billion since January. Eli Lilly dropped 1% after an experimental therapy for people with a form of Alzheimer's failed in a clinical study. Investors will listen Tuesday as Federal Reserve Chairman Jerome Powell begins two days of testimony before Congress. At their meeting last month, Fed officials held their benchmark interest rate steady and maintained their wait-and-see policy stance.

Asia

On Tuesday, in Asia indexes mostly rose as expectations of further policy easing by China's central bank built, AxiCorp said. Chinese President Xi Jinping paid his first public visit to the front lines of the coronavirus outbreak, stopping at a Beijing hospital treating infected patients and at a local disease-control office after weeks of remaining largely out of public view.

Bonds

Treasury yields inched lower as investors tentatively reacted to lingering worries around the coronavirus, amid questions whether supply chains and factories in China will reopen soon. The 10-year Treasury note yield was down to 1.554%, while the 2-year note rate edged lower to 1.379%. The 30-year bond yield fell to 2.027%.

Analysis

UBS rises the Unicredit target to 16,20 (14,90) EUR – Buy
CS rises the Arcelormittal target to 29 (27) EUR – Outperform
CS lowers the OMV target to 52,50 (55) EUR – Underperform


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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