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Research Market strategy
by Swissquote Analysts
Morning News

Volkswagen China Production Sites Back in Operation

Topic of the day

All FAW-Volkswagen Automobile Co. production sites have recommenced operations following closure due to the coronavirus epidemic, the company said. Production for most of the SAIC joint venture has restarted with two sites still preparing to come back online. All Volkswagen Group China and partner component production sites have also recommenced operations. "We are working hard to resume our business as usual, while facing challenges such as a slow national supply chain and logistics ramp-up, as well as limited travel options for production employees," said the company in a statement. Volkswagen also has health and safety measures in place, such as temperature screening at the entrance of facilities, regular disinfection of working areas and the distribution of masks.

Swiss stocks

The SMI slumped 3.6 percent to 10,713 points Monday with all 20 stocks lower after hitting a low of 10,650 points in trading. Markets Europe-wide took a downturn after several Italian cities were quarantined as the coronavirus spread. Fears of its impact on the global economy sent stocks into free-fall as investors fled to safe havens like gold, whose price hit a seven-year high in dollars, and Swiss francs, with the euro hitting CHF 1.059 during the day, its lowest level since mid-2015. China-related stocks were sold off. Luxury papers Swatch fell 3.8 percent and Richemont 2.8 percent. Cyclical stocks Adecco slumped 6.7 percent, Sika slid 6.3 percent and ABB 4.8 percent. Bank stocks UBS and Credit Suisse fell by up to 5.1 percent. Index heavyweight Nestle fell 2.9 percent. Swisscom fared best, falling only 0.6 percent. Tech stocks were particularly badly hit by fears about the effects of a virus epidemic. Second tier stocks AMS crashed 7.1 percent and Logitech 4.9 percent.

International markets

Europe

European stocks plunged as the continued spread of the coronavirus epidemic spooks global markets. The Stoxx Europe 600 dropped 3.8%, the FTSE 100 retreated 3.3%, the CAC-40 backtracked 3.9%, the DAX was down 4% and Milan's FTSE MIB was off 5.4%. Airlines and mining stocks were among the biggest decliners as investors fretted about the potential effect of the virus on global travel and trade. "The FTSE MIB is at the forefront of the declines, seeing as Italy is the epicenter for the health crisis in Europe," David Madden at CMC Markets said. "European equity benchmarks were too complacent when the health crisis was raging in China, but now they're getting their come-uppance." Shares in Novacyt soar 24% as the spread of the coronavirus epidemic sparks hopes of increased demand for the Anglo-French drug company's new test for the condition. On Feb. 17, Novacyt launched a European Union-approved version of the Covid-19 test, allowing laboratories and hospitals to use it directly to test patients without clinical validation. The European Bank for Reconstruction and Development said Monday that the European Union and the public bank have provided 15 million euros ($16.2 million) worth of loans to Banca Intesa for lending to private businesses in Serbia, with most of money aimed at green technology and energy efficiency.

United States

Investors around the world stepped up their retreat from stocks and piled into haven assets like government bonds and gold, reflecting escalating worries that the coronavirus will crimp global growth. The Dow Jones Industrial Average dropped more than 1,000 points; the yield on the benchmark 10-year Treasury note approached its record low; and gold prices climbed for the eighth straight session to a fresh seven-year high. The blue-chip index fell 801 points, or 2.8%, erasing it gain for the year. The index earlier dropped as many as 1,080 points. The S&P 500 declined 2.6%, with all 11 sectors posting declines. The Nasdaq Composite suffered the steepest losses, dropping 2.8%. Tech stocks have continued to lead the market this year, and the Nasdaq is hanging on to a 3.7% gain for 2020. PepsiCo Inc. (-2,2%) has agreed to buy Be & Cheery, an online snack company in China from Haoxiangni Health Food Co., for $705 million. Based in Hangzhou, Be & Cheery’s products include nuts, dried fruits, meat snacks, baked goods and confectionery that are mainly sold online through major e-commerce platforms in China. Shares of the biotech company Gilead Sciences jumped to a 52-week high on Monday after a World Health Organization official said that global efforts to find a treatment for the novel coronavirus should be more focused on the company's experimental antiviral drug remdesivir.

Asia

In Asian, stocks were falling for a second session. Japan's Nikkei led losses as it reopened following a holiday closure Monday and played catch-up with global markets.

Bonds

The yield on the 10-year U.S. Treasury note fell close to an all-time low after a jump in the number of coronavirus cases outside China stoked fears about a slowdown in global economic growth. In recent trading, the yield on the benchmark 10-year note was 1.376%, according to Tradeweb, compared with 1.470% Friday.

Analysis

UBS rises the FMC target to 95 (90) EUR – Buy
CS rises the Schneider Electric target to 115 (101) EUR – Outperform
UBS rises the Allianz target to 255 (240) 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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