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Research Market strategy
by Swissquote Analysts
Morning News

BMW profit rises as efficiency measures kick in

Topic of the day

BMW AG reported a jump in third-quarter earnings, and its finance chief said the car maker's efficiency measures are bearing fruit. Earnings before interest and taxes rose 33% to 2.29 billion euros ($2.54 billion), while revenue rose 7.9% to EUR26.67 billion, the German luxury car maker (BMW.XE) said. "The efficiency-boosting measures we have implemented are bearing fruit," said Chief Financial Officer Nicolas Peter. The company is performing at a high level compared with its rivals and considering challenging conditions in the auto sector, he added. Net profit rose to EUR1.52 billion from EUR1.36 billion a year earlier. In the automotive segment, BMW's closely watched EBIT margin rose to 6.6% in the quarter from 4.4% a year ago. The Munich-based Group received support from new SUV models with high margins.

Swiss stocks

The SMI rose 0.4 percent to 10,318 points Wednesday, with the market still confident of resolution in the US-China trade dispute, despite media reports that China was demanding the punitive tariffs on US imports from China be lifted before signing a trade agreement. Defensive stocks Roche, Nestle and Novartis gained between 0.5 percent and 1.0 percent. Swiss Re surged 2.0 percent on confirming speculation that it plans to acquire a stake in China Pacific Insurance (CPIC), saying a deal had not yet been sealed. Market observers said investors would like the China connection and the fact that Swiss Re is not currently planning any capital measures. Outside the SMI, Züblin Immobilien Holding climbed 3.1 percent on quarterly figures, posting first-half 2019/20 profit of CHF 4.4 million (first half 2018/19: CHF 1.8 million) and earnings per share of CHF 1.33 (CHF 0.56). Vifor Pharma rose 1.1 percent on the news of a new joint venture with Germany’s Evotec to develop nephrology therapies.

International markets

Europe

The Stoxx Europe 600 index gained 0.1% on strength in the banking sector. Banks were among the biggest gainers in Europe. Shares in Société Générale rose 5.6% after a key measure of the French lender's capital strength improved in the third quarter. UniCredit shares increased 2.3% as the Italian lender moved a bad-loan portfolio off its books in a transaction that it said would amount to a "significant risk transfer." Meanwhile, the U.K.'s FTSE 250 index, which includes companies that are more exposed to the domestic economy than their larger peers, dropped 0.4% as political parties prepared for the Dec. 12 election with the outlook for Brexit as murky as ever. Though the chances of the U.K. leaving the European Union without a deal have dropped in recent weeks, Lyn Graham-Taylor, a rates strategist at Rabobank, said markets are grappling with the economic uncertainty. "No-deal is off the table in the short term, but depending on the election result, who knows how that is going to play out?" he said.

United States

U.S. stocks slipped intraday, led by a slump in energy shares, after major indexes notched a string of records in recent sessions. The Dow Jones Industrial Average and S&P 500 fell less than 0.1%, while the technology-heavy Nasdaq Composite dropped 0.3%. All three indexes have set new highs this week, driven by optimism about the potential for a partial trade deal between the U.S. and China, easing monetary policy from the Federal Reserve and a better-than-feared corporate-earnings season. Still, some investors remain cautious because there have been head fakes in the trade talks before. Markets are seeking clarity on any concessions offered by China and the U.S. to resolve the monthslong dispute. Without new trade-related headlines, investors focused on single-stock moves. Shares of HP jumped 8.6% after The Wall Street Journal reported that Xerox Holdings is considering making a cash-and-stock offer for the personal-computer maker. Xerox shares rose 3.6%. Shares of Uber fell 3.8% as the "lockup" period on the company's initial public offering expired, meaning investors in the initial offer can now sell shares. The stock is down about 40% from its May IPO price. Shares of CVS rose 5.1% after the company posted a stronger-than-expected profit and raised its outlook. Later in the day, a string of closely watched companies are set to report earnings, including Qualcomm , Fox and Chinese technology company Baidu . Energy shares were the weakest performers in the S&P 500.

Asia

Asian markets were mostly down on the trade-deal delay report, while major U.S. stock indexes closed near-flat after notching a string of records in recent sessions. Japanese stocks were slightly down in early trade, weighed by auto stocks, partly due to renewed U.S.-China trade uncertainty. Among individual movers, SoftBank Group was down 4.0% after the company swung to a net loss of more than $6 billion in the quarter ended Sept. 30.

Bonds

U.S. Treasury yields slipped intraday after reports said that a meeting between President Donald Trump and Chinese President Xi Jinping could be delayed until December, suggesting investors may have to wait longer for Washington and Beijing to sign off on a partial trade deal. The 10-year Treasury note yield fell 5.1 basis points to 1.814%, while the 2-year note rate retreated by 2.6 basis points to 1.607%. The 30-year bond yield slipped 5 basis points to 2.297%.

Analysis

CS rises Safran to Outperform (Neutral) – Target 162 EUR
IR lowers the Pfeiffer Vacuum to Sell (Hold) – Target 135 EUR
IR rises the Vonovia target to 49 (47) EUR – Hold
UBS rises the Rheinmetall target to 128 (117) 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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