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Research Market strategy
by Swissquote Analysts
Morning News

Merck to Acquire Tilos Therapeutics

Topic of the day

Merck (NYSE: MRK), known as MSD outside the United States and Canada, today announced that it has entered into a definitive agreement to acquire Tilos Therapeutics, a privately held biopharmaceutical company developing therapeutics targeting the latent TGF complex for the treatment of cancer, fibrosis and autoimmune diseases. "At Merck we continue to enhance our robust pipeline through active execution of our business development strategy," said Dr. Dean Li, senior vice president, discovery and translational medicine, Merck Research Laboratories. "Tilos has developed a compelling portfolio of candidates that employ a novel approach to modulating the potent signaling molecule TGF by binding to latency-associated peptide, with potential applications across a range of disease indications." Under the terms of the agreement, Merck, through a subsidiary, will acquire all outstanding shares of Tilos for total potential consideration of up to $773 million, including an upfront payment as well as contingent milestone payments.

Swiss stocks

US interest-rate cut speculation after weak US labour market data, plus signs of détente in the US-Mexico migration and the US-China trade conflicts, boosted the SMI up 0.7 percent to 9,749 points Friday. Cyclicals ABB rose 1.3 percent and Lafargeholcim 1.1 percent. Hopes of an end to the trade disputes helped Apple supplier AMS surge 3.2 percent and Logitech rise 2 percent. Index heavyweights Nestle rose 1.1 percent and Roche gained 0.4 percent. Novartis closed almost unchanged, weighed down by news that Novartis’ pharmaceuticals division head, Paul Hudson, will move to French competitor Sanofi as CEO. Reinsurer Swiss Re closed up 1.8 percent on news it is proceeding with IPO preparations for subsidiary ReAssure on the London Stock Exchange. Credit Suisse bucked the trend, sliding 0.5 percent in a low-interest environment. UBS closed nearly unchanged, buoyed by its planned joint venture with Japanese Sumitomo Mitsui Trust Holdings to target the wealth management sector in Japan.

International markets

Europe

European markets finished higher as trade worries fade after President Trump called off tariffs on Mexican goods and claimed that Beijing will make a trade deal, said David Madden of CMC Markets U.K. France's CAC 40 finished the day 0.3% higher, Spain's IBEX 35 closed up 0.6%, Italy's FTSE MIB ended the day 0.6% higher, while Germany's DAX was closed for a national holiday. The Stoxx Europe 600 ends trading 0.2% higher. "The absence of tough trade talk has boosted investor confidence," Madden said. THOMAS COOK GROUP PLC (TCG.LN) confirmed Monday that it is in talks with its largest shareholder Fosun International Ltd. (0656.HK) to sell its tour-operator business to Fosun. HELICAL PLC (HLCL.LN) confirmed that it had been approached by a number of interested buyers, but said that all offers had been at a discount and didn't reflect the fair value of the company

United States

U.S. stocks rose, buoyed by relief over the White House's decision to drop a threat to hit Mexico with tariffs on billions of dollars of goods. Treasury yields and shares of manufacturers and technology firms rose after President Trump said tariffs on Mexican imports, which had been set to go into effect Monday, had been "indefinitely suspended." Worries about the U.S.' trade fight with China and more recently, Mexico, had sent stocks swinging and bond yields falling well below the highs they hit last year. The deal that Mexico and the U.S. inked late last week to avert tariffs helped reassure investors that trade tensions between the two countries are winding down for now. The Dow Jones Industrial Average climbed 123 points, or 0.5%, to 26106, heading for its sixth consecutive session of gains. The S&P 500 added 0.6% and the Nasdaq Composite advanced 1.3%. Financial shares helped lead the broader market higher Monday, with Goldman Sachs jumping 2.4% and Morgan Stanley adding 1.7%. Rising bond yields tend to help lenders, since they increase the gap between what banks charge borrowers and what they pay depositors. Shares of car makers also bounced higher, with Ford Motor rising 0.8% and General Motors advancing 1.7%. The two stocks have been particularly sensitive to trade tensions between the U.S. and Mexico, since the companies build a hefty chunk of their cars in Mexico.

Asia

Asian markets made modest gains Tuesday, with Chinese benchmarks outperforming despite the latest rhetoric from Donald Trump. The People's Bank of China said Tuesday it will issue central bank bills in Hong Kong for a second straight month, utilizing a tool that analysts say helps stabilize the yuan's exchange rate in the offshore market.

Bonds

Treasury prices came under pressure, pushing yields higher, as investors jumped into stocks and out of government paper, following the apparent end of the Trump administration's tariff threat against Mexico.

Analysis

Dt. Bank lowers the K+S target to 17 (19) EUR – Hold
Jefferies lowers the Covestro target to 57 (62) EUR – Buy
Roth Capital rises Tesla to Buy (Neutral) – Target 238 USD

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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