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Research Market strategy
by Swissquote Analysts
Morning News

Oracle Results Bolstered by Cloud-Computing Growth

Topic of the day

Oracle Corp. said quarterly sales rose 2% as the business software company navigates changing customer spending habits. Businesses are broadly speeding up their shift to cloud-computing while curtailing spending on in-office tools. The company on Thursday posted sales for the August quarter of $9.37 billion and earnings of 72 cents a share. Wall Street expected $9.17 billion in sales and earnings of 67 cents a share, according to analysts surveyed by FactSet. Oracle, best known for its in-office database products, has been trying to remake itself after falling behind as many businesses embraced cloud-computing, the lucrative business where vendors offer remote hardware and software services. The Silicon Valley veteran also has become part of the race to acquire at least parts of video-sharing app TikTok whose owner, Beijing-based ByteDance Ltd., has come under U.S. government pressure to sell. A deal would add a marque name to Oracle's cloud effort as it tries to catch up with market leaders Amazon.com Inc. and Microsoft Corp., which is also vying for TikTok.


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Swiss stocks

The SMI put up a good show among its European peers Friday, rising 0.5 percent to 10,440 points on a slow news day. Market participants said the defensive heavyweights’ increases of 0.9 percent for Novartis, 0.6 percent for Roche and 0.3 percent for Nestle showed investors’ defensive and cautious positioning. Roche had announced positive study results for subsidiary Genentech. Bank stocks Europe-wide were sold off: UBS slid 0.8 percent and Credit Suisse 0.7 percent. Luxury goods stock Richemont surged 2.9 percent amid vague takeover speculation regarding the dispute between LVMH and US jewellery retailer Tiffany due to LVMH’s failed takeover bid. Swatch rose 2.5 percent in its competitor’s wake. Among second-tier stocks, Kuros crashed 7.6 percent on announcing plans to request a capital increase at an extraordinary general meeting. Aryzta climbed 12.4 percent after investment company Elliott Advisors confirmed takeover talks, despite adding it was not certain an offer would be made.

International markets

Europe

European stocks trade mostly higher as US equities rebound from Thursday's technology-led sell-off. "In the past week, traders in this part of the world took their cues from the US, in particular the tech sector, and seeing as that has calmed down, things have cooled-off here too," CMC Markets analyst David Madden says. The Stoxx Europe 600 edges up 0.1%, the FTSE 100 gains 0.5% and the CAC-40 climbs 0.2%, while the DAX is just about unchanged. Knorr-Bremse declines 7% after majority investor Heinz Hermann Thiele sold 10M shares in the German brakes make. Altice Europe NV (+24%) said Friday that it agreed on an approximately 2.5 billion euros ($2.95 billion) takeover offer with Patrick Drahi, its founder and majority shareholder. Under the agreement, Mr. Drahi’s company Next Private BV offers EUR4.11 in cash a share for all common shares A and common shares B, equaling a premium of almost 24% over the closing price on Sept. 10. Mr. Drahi, who already owns around 77.58% of Altice, plans to delist the Amsterdam-listed telecom company following the offer, the company said. Tiffany & Co. said it got regulatory approvals needed from Japan and Mexico for its takeover by LVMH Moët Hennessy Louis Vuitton SE, which on Wednesday said it was backing out of its $16.2 billion bid. LVMH has blamed Tiffany for the unraveling of its proposed takeover, saying the deal was no longer valid because the jeweler had been mismanaged during the Covid-19 pandemic. LVMH, owner of Louis Vuitton, Dior and dozens of other luxury brands, said it was abandoning the deal because of trade tensions between France and the Trump administration. The company said it received a letter from France's foreign minister that LVMH considered a legally binding order to delay the acquisition past the merger's completion date.

United States

U.S. stocks on Friday capped off a topsy-turvy trading session with a second straight week of declines, continuing a stretch of volatility that many say is a bellwether for the autumn months. Gyrations in highflying tech stocks have injected volatility into the broader market, a rapid about-face after a summer where U.S. shares marched steadily higher. Shares of Apple, Facebook, Amazon.com, Microsoft and Alphabet fell 4% or more this week, weighing on the broader market. The S&P 500 rose 1.78 points, or less than 0.1%, to 3340.97 Friday. The Dow Jones Industrial Average rose 131.06 points, or 0.5%, to 27665.64. The Nasdaq Composite fell 66.05 points, or 0.6%, to 10853.55, lagging behind its peers. EBay Inc. founder Pierre Omidyar stepped down from the company's board as part of a broader overhaul that also has Elliott Management Corp. partner Jesse Cohn leaving the board. Mr. Cohn, one of billionaire Paul Singer's top lieutenants at the activist hedge fund, joined eBay's board last year as part of an agreement with Elliott. Mr. Omidyar, who founded what was then AuctionWeb in 1995, technically retired from the board, the company said, but will remain director emeritus, an honorary title. As such, eBay said, he may attend board meetings or board committee meetings when invited by the board or the committee chair. He won't have voting rights. Apple Inc. (AAPL)(+1,3%) on Friday imposed changes to its App Store that could severely hamper game-streaming services from Alphabet Inc.'s Google Stadia and Microsoft Corp.'s (MSFT) xCloud. Among the revisions to iOS 14, the latest version of the iPhone operating system expected later this month, one would require games offered in the service to be downloaded directly from App Store -- not from an all-in-one app

Asia

Japanese stocks rose, led by SoftBank Group, transportation and electronics stocks, due partly to continuing hopes for an economic recovery from the Covid-19 pandemic. SoftBank Group was up 8.1% following the Arm Holdings sale plan and a report of talks that the company could be taken private. China stocks were higher at the start of the week.

Bonds

The European Central Bank is vacuuming up sovereign bonds faster than governments can pump them out, keeping a tight lid on borrowing costs as the region spends on coronavirus relief measures. The strong appetite from the ECB has kept yields on government debt in the region pinned extremely low. On Friday, yields on benchmark 10-year German bunds edged down to minus 0.484% from minus 0.427% on Thursday. But the real beneficiaries have been Europe's riskier borrowers. Italy's 10-year bond yield has stayed close to 1% since the end of July and dropped as low as 0.976% Friday.

Analysis

UBS rises the Tesla target to 325 (160) USD – Neutral
CS lowers Siemens Gamesa to Neutral (Outperform)
CS lowers Evonik to Underperf. (Neutral) – Target 22,50 (21,50) EUR


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