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Research Market strategy
by Swissquote Analysts
Morning News

British Parliament Rejects Any No-deal Brexit, 16 Days Before Deadline

Topic of the day

The U.K. Parliament on Wednesday voted against a no-deal, hard Brexit, in line with expectations. The motion passed by a margin of just four votes, less than in January, when it was first voted on. Lawmakers then confirmed a rejection of any no-deal in a follow-on vote. Parliamentarians also rejected the so-called Malthouse compromise, which included an extension of the March 29 deadline to May 22 to manage a no-deal exit. On Thursday, Parliament will vote on whether to request an extension to the March 29 deadline--just 16 days away--to reach a trade agreement with the European Union. On Tuesday, lawmakers rejected Theresa May's deal for leaving the EU for the second time following an initial vote in January.

Swiss stocks

The SMI closed up 0.6 percent on 9,387 points Wednesday, with investor sentiment still muted because of the ongoing uncertainty surrounding Brexit. After Prime Minister Theresa May’s deal with the EU was again rejected Tuesday, a further vote Wednesday evening was to decide if the UK can leave the EU with no deal. If this motion is rejected as expected, yet another vote is set to take place Thursday on postponing the exit date. The rejection of the deal has increased the risk of an unregulated Brexit, according to the EU, as the circumstances of whether and how the UK will exit the EU on 29 March are fully unclear. An EU Commission spokesperson said the EU was willing to consider a “justified application” for a deferral of the Berxit date, to which all the other 27 EU member states would then have to consent, however. All 20 SMI stocks closed up, led again by bank stocks, as on Monday. Credit Suisse, UBS and Julius Baer all rose between 0.7 percent and 1.2 percent.

International markets

Europe

The Stoxx Europe 600 rose 0.1%, or 0.53 points, to 373.78 as corporate results boost financial stocks and Spain's Banco Santander gets a broker upgrade. The U.K.'s Standard Life Aberdeen topped the pan-European index, up 2.8% after the pension provider reported in-line results and boosted its dividend. Santander rose 2.2% after RBC Capital Markets upgraded it to outperform from sector-perform. Austria's Raiffeisen Bank International gained 1.7% after it pledged to distribute up to half of its annual profit to shareholders. However, Spanish fashion group Inditex dropped 3.5% after reporting worse-than-expected fourth-quarter results.

United States

U.S. stocks rose intraday, putting the S&P 500 on track for a five-month high after economic data showed fresh signs of stability in the manufacturing sector and muted inflation. The benchmark equity gauge added 0.9%, heading for a third consecutive advance and its highest close since early October after falling in every session last week. The Dow Jones Industrial Average climbed 112 points, or 0.4%, to 25667. The tech-heavy Nasdaq Composite rose 1%. Renewed faith in U.S. economic growth and a patient approach by the Federal Reserve regarding interest-rate increases have powered this year's stock rebound, pushing the S&P 500 up 12% for the year and within 4% of its September record. Despite slowing growth overseas, some analysts expect stable economic activity and the Fed's cautious stance to keep markets supported moving forward. Wednesday's market rally was broad, with every S&P 500 sector climbing, led by the health-care, financial and technology groups.

Asia

Asian markets were mixed in early trading Thursday. Trump spoke about China on Wednesday in Washington, and said that while he was optimistic a deal will be reached, he may walk if terms are not to his liking. "We're making great deals, or we're not going to make them at all. We're going to go (with) tariffs," Trump said. On Thursday, China's National Bureau of Statistics said industrial output slowed more than expected in January and February, suggesting China's economy is slowing down. That sent stocks falling in mainland China. After early gains, the Shanghai Composite was last down and the smaller-cap Shenzhen Composite was off more than 2%. Stocks in Hong Kong gave up early gains as well, Japan's Nikkei was up, while South Korea's Kospi was flat.

Bonds

U.S. government bond prices inched lower intraday. The yield on the benchmark 10-year U.S. Treasury note was last at 2.618%, compared with 2.605% Tuesday. Yields, which rise as bond prices fall, retreated from the day's highs after weaker-than-expected data on producer prices showed inflationary pressures remained muted in February.

Analysis

CFRA downgrades Volkswagen target to 162 (165) EUR - Hold
IR downgrades Adidas target to 220 (230) EUR - Hold
IR downgrades Essilorluxotica to 110 (126) EUR - Hold
Barclays: Eon benefits from cost reduction - Equalw.


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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