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Research Market strategy
by Swissquote Analysts
Morning News

Lufthansa Shareholders Approve EUR9-Bln Rescue Package

Topic of the day

Deutsche Lufthansa AG's shareholders overwhelmingly approved a 9 billion euros bailout plan that will help the German airline weather the coronavirus crisis. During an extraordinary general meeting, "a total of 39% of the share capital was represented," Lufthansa said, adding that "of these, 98% of the capital present voted to accept the company's proposed resolution." The plan received far more than the two-thirds majority required for adoption. The long-awaited rescue package will leave the German government with a 20% stake in the company and should allow Lufthansa to survive the Covid-19 crisis. "The company's liquidity is secured on a sustained basis," Lufthansa said. At the beginning of the meeting, Lufthansa Supervisory Board Chairman Karl-Ludwig Kley said "without support, insolvency threatens in the next few days." The European Commission also gave the green light for Germany's largest bailout. Lufthansa said that following the approval of the plan, it will expand its flight schedule in the coming weeks. "The plan is to include 90% of all originally planned short-haul destinations and 70% of all long-haul destinations in the flight schedule again by September," it said.


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Swiss stocks

After Wednesday’s sharp decline, the SMI stabilised Thursday, closing 0.7 percent firmer on 10,090 points as the downside factors remained: fears of a new coronavirus wave and speculation about new UStariffs on goods from Europe. The strong rise in new cases in the US, which Wednesday had reported 35,900 new cases in 24 hours, almost as many as at the peak of the crisis in April, and in South America, dampened hopes of a rapid economic recovery. Furthermore, the IMF warned that recent stock prices increases were not underpinned by fundamental data. Cyclical stocks Kühne + Nagel shrank 2.2 percent and Richemont 0.8 percent. Defensive heavyweights Novartis, Nestle and Roche rose by between 0.2 percent and 1.6 percent. Domestic appliance maker V-Zug opened at CHF 72 on the day of its IPO and closed at CHF 78.15, up 8.5 percent. Parent company Metall Zug, which retains a 30 percent strategic stake and remains an anchor shareholder, slumped 32.7 percent from Wednesday after the spin-off.

International markets

Europe

European stocks gain as markets stay positive despite signs of increasing US coronavirus infection rates. The Stoxx Europe 600 and Germany's DAX both rise 0.7%, the FTSE 100 is up 0.4% and the CAC-40 advances 1%. The Dow climbs 0.3% and the price of a barrel of Brent crude is 1.2% higher at $41.02. "Indices have managed to clock up some passable gains this afternoon, though this is more of a holding action rather than a solid rebound from yesterday's heavy losses," IG Chief Market Analyst Chris Beauchamp says. "The key question for investors now is whether the rise in cases is a series of localized outbreaks or the beginning of a real second wave. Wirecard's shares have been suspended from trading until 0920 GMT after its management board filed an application to open of insolvency proceedings. Wirecard shares fell almost 90%, wiping out nearly $12 billion of market value since the disclosure last week that EUR1.9 billion of cash supposedly held in trust accounts that couldn't be confirmed. Wirecard confirmed the money probably didn't exist. Auto Trader shares fall 2.3% after the U.K. automotive marketplace scrapped its final dividend, citing coronavirus uncertainties.

United States

U.S. stocks climbed Thursday, led by shares of banks, which rose on a regulator's decision to ease some post-financial crisis requirements. The Dow Jones Industrial Average gained 298 points, or 1.2%, in a volatile session of trading that saw the index swing in and out of the red. The S&P 500 and Nasdaq Composite mirrored the moves and were both recently up about 1.1% as of 4 p.m. Eastern time. Shares of banks moved solidly higher after the Federal Deposit Insurance Corp. voted to reduce the amount of cash that banks must set aside as collateral to cover potential losses on swap trades. Other regulators signaled they plan to sign off on the changes, pushing the KBW Nasdaq Bank Index of the biggest banks in the U.S. up 2.1% in recent trading. Shares of several banks rose to the top of the S&P 500's leaderboard. Amerprise Financial added 5%, while Wells Fargo and Goldman Sachs gained 3,5% and 3.3%, respectively. JPMorgan advanced 2.7%. But retailers, airliners and other companies particularly sensitive to further statewide shutdowns logged losses. American Airlines slid 3.2%, Kohl's declined 5% and MGM Resorts slipped 3.3%.

Asia

Most Asian benchmarks advanced Friday, but gains were limited, and U.S. stock index futures were held back after the Fed announced the results of its latest stress tests, which showed U.S. banks healthy enough to withstand the coronavirus crisis. "There's a growing sense that risk markets have reached a near-term exhaustion point," wrote said Stephen Innes of AxiCorp in a report.

Bonds

Treasury yields fell slightly Thursday as reports of soaring coronavirus cases in a number of states shook investor optimism to the benefit of government debt. The 10-year Treasury note rate was down 0.9 basis points to 0.674%, around a two-week low, while the two-year note yield was virtually unchanged at 0.184%, but also around a two-week low.

Analysis

Citi raises L'Oreal target to 240 (220) EUR
HSBC raises Siemens target to 125 (105) EUR - Buy
HSBC raises LVMH target to 450 (440) EUR - Buy
UBS downgrades Siltronic to Neutral (Buy) - Target 92 (88,40) EUR


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