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Research Market strategy
by Swissquote Analysts
Morning News

AB InBev Withdraws 2020 Earnings Guidance

Topic of the day

Anheuser-Busch InBev SA is withdrawing its guidance for 2020, joining the list of many global companies that have done the same, as the extent of the impact caused by the Covid-19 pandemic on businesses and economies remain uncertain. The pandemic represents unprecedented challenges for societies, governments and businesses across the world, AB InBev Chief Executive Carlos Brito said in a statement. Multinational companies around the world, including Ford Motor Co., Marriott International Inc. and Airbus, have also said they are withdrawing their outlook and guidance for 2020 due to the economic uncertainty caused by the pandemic. Some companies have also been drawing on credit lines and suspending dividend payments, signaling the deep impact the virus is likely to create on companies’ financials. The spread of the virus, which has so far claimed over 14,500 lives and has infected more than 300,000 people, has led to governments around the world imposing tighter border controls and restrictions on travel, and recommending social distancing. Last week, AB InBev said it was drawing down $9 billion in loan facilities, in addition to more than $7 billion in cash and cash equivalents on the company’s balance sheet at the end of 2019.

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Swiss stocks

The SMI slumped 5.4 percent to 8,161 points Monday with all 20 stocks lower. Amid the coronavirus crisis, even the US Federal Reserve’s open-ended promise to buy bonds only brought markets short-term relief. A USD 2 trillion stimulus programme for the US economy failed to pass the Senate Sunday. Also, the numbers of infected people are surging, not just in Europe, but also in US cities, especially New York. Second weakest stock was Adecco, crashing 9.4 percent to almost half its year’s high. The staffing agency is set to be among the hardest hit by the slump in the economy. Bringing up the rear was Alcon, which slid 10.6 percent. As a producer of ophthalmology pharmaceuticals, Alcon is being overshadowed by pharmaceutical companies closer to the coronavirus pandemic. Analysts had lowered their target for the stock. Among cyclical stocks, ABB fell 6.7 percent and Lafargeholcim 6.6 percent. Defensive heavyweights Nestle, Novartis and Roche slid by between 4.8 percent and 6.1 percent.

International markets

Europe

European stocks weakened as a rise in global coronavirus cases fueled worries about the economic impact of the pandemic. The Stoxx Europe 600 fell 4.3%, the FTSE 100 dropped 3.8%, the DAX declined 2.1% and the CAC-40 shed 3.3%. The number of global coronavirus infections has topped 350,000, according to Johns Hopkins University, and "the fear factor is setting in for traders, which is why they are dumping equities," CMC Markets analyst David Madden said. Travel and leisure stocks including easyJet and Cineworld Group fell on coronavirus concerns. Virgin Money U.K. shares dropped 22% as bank branches closed. Shares in U.K. office-space provider IWG declined 17% after the suspension of its dividend as well as a planned share buyback. Airbus SE (-13,8%) traded down on Monday after the European plane maker scrapped its 2019 dividend and withdrew its 2020 guidance as it faces the coronavirus pandemic. French energy giant Total SA (+6%) said Monday that it will provide health-care workers in France with vouchers for gasoline worth up to 50 million euros ($53.5 million).

United States

U.S. stocks dropped in another volatile session intraday as the Federal Reserve unveiled additional support for the financial system. The rapid spread of coronavirus cases and Washington's delay over an economic rescue package have rattled markets, sending U.S. stocks, global shares and oil prices lower. The Dow Jones Industrial Average fell nearly 1,000 points, recovered most of those losses and then tumbled again. The blue-chip index was off about 640 points, or roughly 3.4% with about one hour left in the trading day. The S&P 500 lost 3.2%. The tech-heavy Nasdaq Composite edged down 1%. Major U.S. indexes staged a short-lived rebound after Senate Minority Leader Chuck Schumer said lawmakers are "very close to reaching a deal" aimed at easing the economic damage from the virus. But they dropped again after the measure was put to a vote and Senate Democrats formally blocked the advancement of the deal for the second straight day. The White House is discussing easing social-distancing guidelines as early as next week as advisers and business leaders push President Trump to boost an economy beset by deepening job losses nationwide, people familiar with the discussions said. The president has told people that he wants to open the economy as soon as possible.

Asia

After the heavy losses on Monday, most stock exchanges in East Asia and Australia rose clearly on Tuesday. Japan's Nikkei 225 and South Korea's Kospi led a regional rally, with both indexes gaining more than 6%. A second day of sharp gains for SoftBank Group on a $41 billion asset-sale plan helped buoy the Nikkei. Most Asian currencies strengthened against the greenback after the Fed signaled it will do practically anything to mitigate the U.S. economic fallout from the coronavirus pandemic, boosting risk sentiment

Bonds

Treasury yields and some corporate borrowing costs fell intraday as investors digested a broad array of moves from the U.S. Federal Reserve to calm the nation's debt markets from the coronavirus lockdown. Benchmark 10-year bond yields gyrated sharply after the Fed's move, and were recently at 0.740%, down from 0.932% on Friday. The Fed said it would buy unlimited amounts of government bonds to support markets.

Analysis

IR lowers the Fiemann target to 50 (74) EUR – Hold
IR rises the Morphosys to Buy (Hold) – Target 119 (130) EUR
IR lowers the VW target to 108 (166) EUR – Hold

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