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Research Market strategy
by Swissquote Analysts
Morning News

China's ByteDance to Keep Majority Tik-Tok Stake in Oracle Deal Under U.S. Consideration

Topic of the day

China's ByteDance Ltd. would retain a majority ownership stake in its TikTok app as part of a proposal to be reviewed by national-security regulators on Tuesday with an eye toward settling the high-profile deal by a deadline Sunday, according to a person familiar with the situation. The proposal includes Oracle Corp.'s bid to become TikTok's U.S. technology partner as part of an effort to address the administration's national-security concerns surrounding the Chinese-owned video-sharing app. A senior administration official said the Committee on Foreign Investment in the U.S., which includes officials from the Treasury, Commerce and Homeland Security departments, will review the TikTok deal at its regular meeting on Tuesday afternoon. The review is one of the final steps before officials present the proposed transaction to President Trump.


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Swiss stocks

The SMI climbed 0.6 percent to 10,520 points Tuesday, scaling 10,500 points for first time since the outbreak of the coronavirus pandemic. Market participants pointed to positive economic data out of China and the US indicating a global economic recovery. Sentiment was also buoyed by ongoing hopes that pharmaceutical companies will soon achieve a breakthrough in developing a coronavirus vaccine. News from Pfizer and Astrazeneca Monday about their vaccine candidates had helped drive up US markets, and pharmaceutical stocks led the SMI too. Roche gained 1.7 percent and Novartis 1.4 percent. Alcon rose 1.7 percent and Lonza 1.2 percent. Cyclical stocks were among the gainers, with temping company Adecco up 1.0 percent. After merger speculation had boosted Credit Suisse and UBS Monday, Credit Suisse crashed 2.8 percent and UBS 2.1 percent Tuesday following sceptical analyst comments, including the opinion that the complexity of such a fusion would entail considerable implementation risks.

International markets

Europe

European stocks edged higher Tuesday amid signs of an economic recovery across the globe, with the retail sector rallying on better-than-expected results. The Stoxx Europe 600 rose 0.6%. The U.K. FTSE 100 led the major national indexes with a 0.8% gain, while the pound remained under pressure as the U.K. government pushes through a law backtracking on last year's European Union withdrawal agreement that it admits would violate international law. U.K. exporters, which dominate the FTSE 100, benefit when the pound falls. H&M jumped 13% as the Swedish fashion retailer said its Aug. 31-ending quarter was stronger than expected, helped by well-received collections, more full-price sales and cost control. Rival Inditex added 3%. Ocado rose 5% after reporting a 52% revenue boost in the Aug. 31 ending quarter from its joint venture Ocado Retail, helped by a switch in venture partners from Waitrose to Marks & Spencer which jumped 4%.

United States

U.S. stocks rose as technology shares recouped some of their recent losses. The S&P 500 added 0.5%, and the tech-heavy Nasdaq Composite climbed 1.2% as of the 4 p.m. ET close of trading. The Dow Jones Industrial Average hovered around the flatlin. The U.S. Federal Reserve is expected to signal on Wednesday that its interest-rate policy will remain unchanged and close to zero through the end of 2023. The Fed will release a policy statement at 2 p.m. Eastern, and Chairman Jerome Powell will hold a press conference a half hour later. Shares of Caterpillar Inc. (CAT) dropped 1% in morning trading Tuesday, after the construction and mining equipment maker reported August total machines retail sales that fell in line with July's decline, while energy and transportation retail sales fell further. The company said 3-month rolling total machine retail sales through August fell 20% from a year ago, after falling 20% in July and 23% in June. Within machines sales, resource industries retail sales dropped 27%, after declining 19% in July, while construction industries retail sales declined 17% after falling 20% in July. Shares of Nvidia Corp. (NVDA) are up more than 3% in premarket trading Tuesday after Needham analyst Rajvindra Gill upped his price target on the stock to $700 from $600. His new target is the highest listed on FactSet. Gill is increasingly upbeat on Nvidia's prospects after the company announced over the weekend that it would be acquiring Arm from Softbank Group Corp. in a deal valued at $40 billion. "Strategically, we believe the Nvidia-Arm combination will create the leading AI computing platform in the semiconductor industry," Gill wrote in his note to clients.

Asia

In the middle of the week the stock markets in East Asia and Australia are more or less at a standstill. Market participants are talking of investor restraint ahead of the interest rate meetings of the U.S. Federal Reserve (Fed) on Wednesday and the Bank of Japan (BoJ) on Thursday. New data Wednesday showed Japan's exports plunged in 14.8% in August, but that was still better than the previous month and beat analysts' expectations. Exports to China grew 5.1% while exports to the U.S. sank 21.3%. Japan's Prime Minister Shinzo Abe and his cabinet officially resigned Wednesday, clearing the way for Yoshihide Suga to be confirmed as the country's next prime minister.

Bonds

U.S. Treasury yields rose Tuesday in line with the positive tone in risky asset markets, following a raft of economic data that showed the recovery in the two world's largest economies was continuing apace. The 10-year Treasury note yield rose 0.9 basis point to 0.678%, while the 2-year note rate edged 0.4 basis point up to 0.139%. The 30-year bond yield added 2.2 basis points to 1.431%.

Analysis

IR lowers the Tui target to 3,50 (4,50) EUR – Sell
BoA rises the Prosieben target to 12 EUR – Neutral
HSBC lowers the Inditex target to 28 (30) 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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