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Research Market strategy
by Swissquote Analysts
Morning News

HSBC Plans Job Cuts as Interim CEO Seeks to Make his Mark

Topic of the day

HSBC Holdings PLC is planning further job cuts to its 238,000 workforce, a person familiar with the matter said, as interim Chief Executive Noel Quinn looks to make his mark on the bank as he competes for the top job. The cuts are in addition to around 5,000 job cuts that were announced earlier this year. Up to 8,000 jobs would leave the bank under plans to sell its French retail banking unit, first reported by The Wall Street Journal in September. HSBC shares fell 0.76% in early London trading, in line with other banks in a broadly lower stock market. Mr. Quinn -- who is vying to become the permanent CEO after replacing John Flint on an interim basis in August -- is trying to cut the bank's cost base in anticipation of lower revenues in key markets, including Hong Kong. The Chinese territory is one of HSBC's two main markets along with the U.K. In August, HSBC's finance chief Ewen Stevenson said the bank expects "some impact" in the second half from antigovernment protests in the territory but said Hong Kong fundamentally remains "robust." The U.K.'s plan to exit from the European Union has also weighed on household and business spending, with the British economy contracting in the second quarter for the first time since 2012.

Swiss stocks

On Monday, the Swiss equity market was one of the stronger stock markets in Europe. The SMI rose by 0.9 percent to 9,914 points. Novartis, Roche and Nestle all gained around 0.9 percent. Novartis had presented positive data on Zolgensma gene therapy. While building materials stocks lagged behind the European market after a profit warning from the British building materials dealer SIG, Lafargeholcim was unimpressed in Switzerland with a plus of 1.1 percent. Following a buy recommendation with an increase in Vontobel's target price for Swiss Re, the share price climbed by 1.2 percent. By contrast, the shares of the Austrian semiconductor group AMS listed in Switzerland lost 0.9 percent of their second-line value. The company had failed in its attempt to acquire the German Osram. AMS had not been able to secure the required 62.5 percent of Osram's capital. But the Austrians do not want to give up. Freenet, as a major shareholder of the mobile communications group Sunrise, had intensified its criticism of the planned takeover of the Swiss cable network operator UPC and saw increasing support for the rejection. Sunrise fell by 0.6 percent.

International markets

Europe

European markets rose after early gains on Wall Street as the upbeat mood from solid payroll numbers on Friday continued, though U.S.-China trade uncertainty weighs. The Stoxx Europe 600 advanced 0.7%, while the FTSE 100 was up 0.6% and the DAX and CAC-40 gained 0.7% and 0.6% respectively. "Initial weakness has been shrugged off across US markets, as Wall Street looks to continue the bounce from the tail-end of last week," IG's Chris Beauchamp said. "Concerns over U.S.-China trade talks will dominate the week, which will doubtless lead to some whipsaw action throughout equities in coming days." German manufacturing orders declined by 0.6% on the month, official data showed. Economists polled by The Wall Street Journal had forecast a small improvement of 0.2% growth. Shares of auto-parts maker Continental AG were among the biggest decliners in the region Monday, falling 1.1%. The company last month confirmed it would close production plants in several countries. Its competitor, Michelin, also said in September it would shut a factory in Germany.

United States

U.S. stocks inched lower intraday, pressured by a streak of disappointing economic data from around the world. The Dow Jones Industrial Average declined 44 points, or 0.2%, to 26530. The S&P 500 fell 0.2% and the Nasdaq Composite lost 0.1%. Data Monday heightened investors' worries about the health of the global economy. Factory orders in Germany slipped more than expected in August, while confidence among eurozone investors fell to the lowest level in six years. The reports, coming days after a gauge of U.S. factory activity slipped to the lowest level in a decade, added to signs that economic growth is softening around the world. While U.S. stocks remain up double-digit percentages for the year, helped by investor confidence that the Federal Reserve will keep lowering interest rates, some analysts warn further deterioration in economic data could chip away at the rally. Among individual stocks, General Motors fell 0.2% after negotiations between the firm and the United Auto Workers union broke down over the weekend. PayPal shares fell 1.1% after it said it was withdrawing from the group of companies Facebook assembled to launch a global cryptocurrrency-based payments network.

Asia

Asian markets gained in early trading Tuesday after U.S. stocks had inched lower. China's services activity expanded at its slowest pace in seven months, a private gauge showed, in line with official data that pointed to a deceleration in growth. Hong Kong Exchanges & Clearing abandoned its $36.6 billion attempt to take over London Stock Exchange Group, saying it couldn't pursue the deal without any input from the target's management.

Bonds

U.S. government bond yields crept higher, edging away from their 2019 lows. The yield on the benchmark 10-year Treasury note rose to settle at 1.553%, according to Tradeweb, from 1.515% Friday. Yields, which rise when bond prices fall, climbed in early trading after European stocks and oil prices gained.

Analysis

IR rises H&M to Hold (Sell) – Target 210 (145) SEK
Citi rises Uber to Buy (Neutral) – Target 45 USD
Barclays lowers the Carrefour target to 17,50 (18,20) EUR – 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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