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Research Market strategy
by Swissquote Analysts
Morning News

U.K. Parliament Votes Down May's Brexit Deal

Topic of the day

British lawmakers rejected Prime Minister Theresa May's Brexit divorce deal for a second time, making a delay in the U.K.'s scheduled March 29 departure from the European Union all but inevitable and intensifying political turmoil and business uncertainty. The deal was meant to set the terms of the end of the U.K.'s decadeslong membership in the EU and its separation from a bloc that represents half of all British trade. Mrs. May's defeat makes it likely that Parliament will force the government to delay Brexit beyond the end of the month to allow for further negotiations. Mrs. May could now seek further concessions to her bill from the EU. However, a delayed departure increases the chances for a range of other outcomes, including another referendum over the U.K.'s membership in the EU or a general election. Alternatively, Mrs. May could try to seek a different path to a majority vote by pursuing a closer relationship with the EU than she has spelled out so far, for example by seeking to stay inside the bloc's common market or its customs union. The next step is for British lawmakers to vote Wednesday on whether to rule out leaving the bloc on March 29 without a deal, an outcome that would cause likely widespread disruption to travel and trade. A subsequent vote, likely on Thursday, will decide whether to postpone the scheduled departure date to allow for further negotiations. Both proposals are expected to pass.

Swiss stocks

The SMI closed down 0.1 percent on 9,332 points Tuesday, with investors focused on the Brexit vote in the UK Parliament Tuesday evening. Despite late concessions granted by the EU, the deal was expected to be rejected yet again, triggering further votes and making a deferral of the UK exit more likely. Company news was again thin on the ground. Online chemist Zur Rose surged 5.1 percent on the news of its takeover of French marketplace Doctipharma from the Lagardere group, which it said will give it a strong market position already on market entry. Zur Rose plans to integrate Doctipharma into its subsidiary Promofarma in the coming months, thus generating synergies. Temping group Adecco rose 0.3 percent after German competitor Amadeus Fire released good figures and British competitor Staffline Group had surged 28.4 percent on resuming trading after reaching an agreement with UK tax authorities following accusations of underpaying workers and confirming its outlook.

International markets

Europe

The Stoxx Europe 600 Index finished down 0.22 point, or 0.06% to 373.25, and now is down four of the past five trading days. The index now is off 9.86% from its record close of 414.06 hit April 15, 2015. The DAX was down 19.31 points, or 0.17% 11524.17 and now is down four of the past five trading days. The FTSE 100 Index was up 20.53 points, or 0.29%, to 7151.15. It is now up for two consecutive trading days. The CAC-40 Index was up 4.29 points, or 0.08%, to 5270.25.

United States

The S&P 500 edged higher intraday, led by shares of technology and energy companies, after investors got further evidence that inflation remains steady. The broad index opened higher after new data confirmed that inflationary pressures remain tame, giving some investors a reassuring sign that the Federal Reserve will continue to hold off on further interest-rate increases for now. Although most major indexes registered modest advances in midday trading, a run-up in energy stocks alongside higher oil prices, as well as ongoing strength from fast-growing tech companies, helped extend the S&P 500's second consecutive day of gains. Still, gains were tepid, a sign of investors' caution after the S&P 500 and other major indexes suffered their worst week of the year last week. With events like another crucial Brexit vote scheduled for later in the day, money managers said they are bracing for another bout of volatility.

Asia

Asian shares were lower amid continuing global uncertainties that weighed on stocks as some traders took profits from a rally earlier in the week. Among individual stocks, SoftBank and Toyota fell in Tokyo trading. AAC and Geely Automotive slid in Hong Kong, while Samsung dropped in Korea. Energy stocks such as Beach Energy and Woodside Petroleum slipped in Australia.

Bonds

U.S. government bond prices rose intraday after a key measure of inflation rose less than forecast, bolstering the argument for the Federal Reserve to remain on hold. The yield on the benchmark 10-year Treasury note fell to a recent 2.627%, according to Tradeweb, from 2.643% Monday.

Analysis

Warburg raises Fuchs Petrolub target to 37,10 (36,80) EUR - Hold
Barclays upgrades Saint-Gobain to Overweight (Equalw.) – Target 40 EUR
UBS raises Evonik target to 23 (21) EUR - Sell
Berenberg downgrades Ahold Delhaize target to 17,70 (18,20) EUR


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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