Bayer Lifts 2022 Guidance But Impairments, Charges Weigh on Earnings
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Bayer AG lifted its guidance for the full year after a sales beat in the second quarter and a boost from positive currency effects, though it posted a net loss for the quarter and said it took on some impairments and litigation-related charges. The German pharmaceutical-and-agricultural company posted a net loss of 298 million euros ($303 million) for the second quarter, narrowed from a loss of EUR2.34 billion the year prior, when profits were affected by the setting aside of provisions to continue litigation on its Roundup weedkiller. Earnings before interest and taxes swung to €169 million from a loss before interest and taxes of €2.28 billion the year prior. Bayer said the metric was hit by net special charges of €2.11 billion including impairment losses related to its agricultural division. Other special charges were related to continuing litigation and restructuring measures. The company also said that it took an additional provision of €694 million in the second quarter due to ongoing settlement negotiation with the U.S. state of Oregon on an environmental case.
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Not much happened on the Swiss stock market on Thursday. The SMI gained 0.2 per cent to 11,203 points. Among the 20 SMI stocks, there were 14 price gainers and five price losers, one share closed unchanged. A total of 30.52 million shares were traded (previously: 26.93 million). The Swiss stock market was held back by weakness in the defensive heavyweights Roche (-1.0%) and Novartis (-0.6%). Financial stocks, on the other hand, were in demand: UBS, Partners Group and Credit Suisse rose between 1.7 and 2.4 per cent. According to a Bloomberg report, thousands of jobs are on the cut list at Credit Suisse. In France, the series of strong business figures among financial institutions had continued. This time Credit Agricole delivered a convincing annual report, which supported the sector. Swiss Re (+0.5%) launched a new insurance-linked investment advisory business.
The European stock markets ended in positive territory on Thursday, after a session marked by the Bank of England's (BOE) more offensive approach in its fight against inflation and by new corporate results for the second quarter. The Stoxx Europe 600 index closed up 0.2% at 439.1 points. In Paris, the CAC 40 and the SBF 120 gained 0.6% each. The DAX 40 in Frankfurt. The Bank of England raised interest rates by the most in a quarter-century Thursday even as it predicted the U.K. economy will fall into recession later this year, underscoring global central banks’ urgency in fighting a surge in inflation. The rate increase to 1.75% from 1.25% was the largest since 1995 and the first half-point increase since the bank was granted independence in 1997. Deutsche Lufthansa AG on Thursday detailed its outlook for the year, forecasting continuing high ticket demand after it swung to profit in the second quarter. The German carrier sees adjusted earnings before interest and taxes at above 500 million euros ($508.3 million) for the full year, which it said was in line with market expectations. The company reported an adjusted EBIT loss of EUR2.35 billion for 2021. ING Groep NV reported on Thursday a decline in net profit for the second quarter of 2022, which still came in ahead of market views, and noted that total income increased on the back of higher interest income, a robust fee and commission income and strong trading results. The Dutch lender posted a net profit of 1.18 billion euros ($1.20 billion) compared with EUR1.46 billion for the same period a year earlier. Net profit was expected to decline to EUR958.1 million, according to FactSet and based on two analyst forecasts.
U.S. stocks closed mixed Thursday as investors considered a fresh batch of corporate earnings reports and the number of Americans applying for unemployment benefits increased. The S&P 500 lost 3.23 points, or less than 0.1%, to 4,151.94. The technology-focused Nasdaq Composite added 52.42 points, or 0.4%, to 12,720.58. The Dow Jones Industrial Average shed 85.68 points, or 0.3%, to 32,726.82. Shares of Coinbase Global surged $8.09, or 10%, to $88.90 after the cryptocurrency exchange announced a partnership with money manager BlackRock. Lucid Group fell $2, or 9.7%, to $18.56 after the electric-vehicle maker cut its forecast for car production. Clorox lost $6.81, or 4.7%, to $137.76 after the cleaning-product manufacturer posted flat revenue for its latest quarter. Eli Lilly lost $8.04, or 2.6%, to $305.79 after the pharmaceuticals company said revenue fell in the second quarter. Alibaba's New York-listed shares rose $1.71, or 1.8%, to $97.43 after the Chinese e-commerce company posted results. Stocks have ripped higher in recent weeks, pushing the S&P 500 13% higher from its mid-June low. Broadly positive earnings reports, coupled with signs that some drivers of the inflation surge are easing, have boosted the partial recovery in stocks after a difficult first six months of the year. Investors appear to be reasoning that slowing economic growth will pull the Fed back from raising interest rates, which would boost the price of stocks and bonds, Mr. Lawrence said. "That might be a little bit premature," he said, adding that expectations of corporate earnings "are pretty elevated for what seems to be turning into a slowdown."
Positive signs dominate the stock markets in East Asia and Australia at the end of the week. Some of the biggest gains were in Tokyo, where the Nikkei 225 index gained 0.9 per cent, and Seoul, also up 0.9 per cent. Investors in Shanghai (+0.3 per cent) and Hong Kong (+0.1 per cent) are more cautious.
U.S. Treasury yields fell, extending a spell of volatility as investors weighed high inflation and rising interest rates against a worsening outlook for the economy. The yield on 10-year Treasury notes fell to 2.674% on Thursday from 2.747% Wednesday, a decline that accelerated after the Bank of England forecast a prolonged recession in the U.K
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