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Research Market strategy
by Swissquote Analysts
Morning News

British government wants more time for Brexit negotiations

Topic of the day

The British government is trying to gain more time from the London Parliament for Brexit renegotiations with the EU. In an interview with the BBC on Sunday, Housing Minister James Brokenshire called for a new vote in the House of Commons on the modalities of Brexit to be postponed until 27 February if May cannot negotiate the desired concessions in Brussels beforehand. According to current plans, the House of Commons will again vote on several Brexit options on 14 February. A majority for the already negotiated Brexit treaty in Brussels is not in sight - neither is the EU's approval of the changes desired by London. Further talks will be held in Brussels on Monday. Brokenshire now recommended the later voting date in order to get more time for negotiations. The aim is to find a parliamentary majority for an agreement. "What gives us security is an agreement," he said. "That is why we want people to join us, to join this process." The motions put to the vote so far on 14 February could limit Prime Minister May's room for manoeuvre and give MEPs more say in the Brexit process. The new proposal from May's cabinet is also intended to prevent parliamentarians from restricting the government's freedom to negotiate. Brokenshire reiterated that the government has a clear strategy and timetable for a resignation agreement for the fragmented parliament to agree on. If the decisive vote does not take place on Thursday, "Parliament would have this further option by 27 February at the latest," the minister said.

Swiss stocks

The SMI closed down 0.4 percent on 9,003 points Friday, after undercutting 9,000 points during the day. Negative sentiment was driven by the stalemate in the US-China trade dispute negotiations, with slim comfort from reports that the US will now leave the tariffs on Chinese imports at the current rate of 10 percent after 1 March, instead of raising them to the threatened 25 percent. Various disappointing data releases are also fuelling worries about the global economy, which some experts seeing an imminent recession. Julius Baer slid 3 percent, most likely profit-taking after the stock had risen for three consecutive days. Fellow bank stocks Credit Suisse fell 2.1 percent and UBS slid 1.1 percent. Cyclical stocks ABB declined by 1.6 percent and Lafargeholcim by 1.7 percent. Luxury goods stocks Richemont fell 1.8 percent and Swatch slid 1.4 percent. Defensive heavyweights fared relatively well, with Nestle slipping 0.1 percent, while Novartis rose 0.1 percent and Roche gained 0.7 percent.

International markets

Europe

The Stoxx Europe 600 fell 0.6%, or 2.01 points to 358.07 as trade and economic fears hit market sentiment. "A varied set of indicators flashing signs of slowing global growth were enough to unnerve investors," said an analyst at London Capital Group. "The huge reversal in industrial production during December in the Netherlands, a record loss from Tata Motors and a dividend cut from global construction giant Skanska were some signs of a weaker global environment that caught our eye." Swedish air-conditioning and refrigeration supplier Dometic Group was the top riser, up nearly 16% after a 25% increase in fourth-quarter sales.

United States

The Dow Jones Industrial Average pared its losses heading into the closing bell to notch its seventh consecutive weekly gain, a sign of the stock market's resilience even in the face of heightened uncertainty. A late-afternoon comeback left the blue-chip index down 63.20 points, after earlier falling more than 285 points. The index surged in the final 10 minutes of the session to secure a 0.2% gain for the week--its longest winning streak since November 2017 when the market rose for eight straight weeks. Stocks had been under pressure earlier in the day amid growing investor unease about shaky economic data from the eurozone, renewed trade uncertainty and concerns about weakening corporate earnings. Investors were jolted Thursday when the European Commission slashed its growth forecasts for Germany and Italy, and the Bank of England sounded a warning on a slowing global economy. Later that day, White House economic adviser Larry Kudlow said the U.S. and China were still "far away" from securing a trade deal. "I'm worried," said a senior portfolio manager with Morgan Stanley Investment Management. While global growth is an ever-present concern, he said he is focusing on recent signs of a slowdown in corporate earnings.

Asia

Asian stocks were mixed, with markets in China and Taiwan, reopening after a weeklong Lunar New Year break, edging higher on hopes that American and Chinese officials will make progress on a wide-ranging dispute that has weighed on the global economy. Japanese markets were closed for a holiday.

Bonds

Treasury prices rose amid increasing investor worries about U.S.-China trade tensions. The yield on the benchmark 10-year Treasury note settled at 2.632%, compared with 2.652% Thursday. Yields, which fall as bond prices rise, slipped as signs mounted that U.S. and Chinese negotiators have made little progress. Reports that President Trump is unlikely to meet with Chinese President Xi Jinping have diminished investor expectations that the two sides could reach an agreement before the March 1 deadline, at which point U.S. tariffs are set to increase.

Analysis

Warburg lowers Heidelberger Druck target to 2,80 (3) EUR - Buy
HSBC raises Ferrari target to 130 (125) EUR - Buy
CFRA lowers Sanofi target to 85 (87) EUR - Buy
Deutsche Bank raises Compugroup target to 63 (62) 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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