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Research Market strategy
by Swissquote Analysts
Morning News

Microsoft to Buy Video-Game Maker ZeniMax Media for $7.5B

Topic of the day

Microsoft Corp. plans to acquire the owner of the popular Doom videogame franchise for $7.5 billion in its biggest gaming acquisition after the software company lost out on buying video-sharing app TikTok. The proposed cash deal for ZeniMax Media Inc., the owner of popular game developer Bethesda Softworks, comes amid a pandemic-fueled surge for home entertainment and as Microsoft gears up to release its next generation of Xbox consoles in competition with Sony Corp.'s new PlayStation 5 system. Microsoft said it would acquire ZeniMax's offices and more than 2,300 employees. In addition to Doom, Bethesda is known for publishing hit franchises such as The Elder Scrolls and Fallout. Other ZeniMax subsidiaries include id Software, MachineGames and Tango Gameworks. In recent years Microsoft has been bolstering its gaming business with acquisitions of studios such as Ninja Theory and Obsidian Entertainment in a bid to offer more exclusives so it can better compete with Sony in console sales. The ZeniMax deal would expand Microsoft‘s portfolio to 23 gaming studios from 15. It also would add ZeniMax's videogame franchises to Microsoft‘s Xbox Game Pass, a subscription service with 15 million subscribers that runs on Xbox consoles, Windows PCs and Android devices.

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Swiss stocks

The SMI closed down 2 percent on 10,325 points Monday. Rising coronavirus infection figures worldwidestoked fears of stricter measures to combat the pandemic and ensuing economic paralysis. Bank stocksCS Group fell 6.3 percent and UBS 6.1 percent. Leaked documents from FinCEN, the US Financial CrimesEnforcement Network at the US Treasury, showed banks’ weaknesses in combating money laundering.Among cyclical stocks, ABB fell 3.8 percent and Lafargeholcim 4.4 percent. Luxury goods makersRichemont lost 3.7 percent and Swatch 2.3 percent. Travel stocks came under pressure after Lufthansaconceded that the aviation sector was recovering more slowly than expected and announced a furthercost-cutting package. Duty free shop operator Dufry crashed 9.3 percent. Defensive heavyweight Nestle,along with Lonza and telecoms company Swisscom closed unchanged or minimally lower. At the start oftrading Monday, Adecco (-7.0 percent) left the SMI and was replaced by Partners Group (-2.4 percent).

International markets

Europe

European stocks stay firmly in negative territory in late-afternoon trading after a downbeat open on Wall Street as fresh coronavirus lockdown worries weigh. The Stoxx Europe 600 drops more than 3%, the FTSE 100 is down 3.4%, the CAC-40 retreats 3.5% and the DAX backtracks 4.1%. Shares in Europe's biggest banks fell on Monday, after leaked documents seemingly showed that some $2 trillion worth of illicit funds were moved and laundered through the global financial systems over a two-decade period. Five global banks - JPMorgan Chase, HSBC, Standard Chartered, Deutsche Bank and Bank of New York Mellon - kept profiting from "powerful and dangerous players" even after U.S. authorities fined them for earlier failures to curb flows of illicit money, the ICIJ reported. Shares in HSBC, Standard Chartered and Deutsche Bank, fell 5.2%, 5.7% and 8.8% respectively, while the wider sector was dragged down as a number of other banks' suspicious activity reports were leaked in the report.

United States

The Dow Jones Industrial Average dropped about 500 points, falling in tandem with oil and gold prices and sparking worry among some investors of further turbulence ahead. Monday's losses were broad. Economically sensitive sectors like materials and industrials led the declines. Meanwhile, U.S. oil prices tumbled 5%, and gold, a traditional haven, fell 2.6%. The simultaneous declines across various asset classes spurred anxiety for some investors and traders who fear a repeat of March's market turmoil. The Dow dropped 1.9%, while the S&P 500 fell 1.2%. The technology-laden Nasdaq Composite lost 0.1% All three indexes recovered somewhat from their lows earlier in the day. Shares of airlines, retailers and energy companies - which have been battered this year during the pandemic - were among the market's biggest losers. Delta Air Lines dropped 8.2%, while Kohl's fell 7.2% and Halliburton declined 9.6%. Bank stocks, whose profits are particularly sensitive to the economy, were also down. Wells Fargo dropped 5.1%, while JPMorgan Chase and Bank of America fell more than 4%. Nikola collapsed by 19.3 percent. The founder and chairman of the US electric truck manufacturer is taking the consequences of fraud allegations against the company. The short seller Hindenburg Research had accused Nikola of fraud shortly after the company announced a billion-dollar cooperation with General Motors.

Asia

On Tuesday, the stock markets in Asia went down for the second day in a row. In Japan, there is again no trading. The markets in Europe and the USA are weak. The mood worldwide is being weighed down by the rising number of new corona infections, which can be observed above all in European countries.

Bonds

U.S. Treasury yields fell Monday as a stock-market selloff bolstered demand for safe-haven assets such as government bonds. The 10-year Treasury note yield fell 2.4 basis points to 0.670%, while the 2-year note rate was steady at 0.135%. The 30-year bond yield slipped 2.7 basis points to 1.426%.

Analysis

Mainfirst downgrades Instone target to 36 (37) EUR - Buy
Metzler downgrades United Internet to Hold - Target 37 (44) EUR
Warburg: Grenke reacts quite well to Viceroy accusations
IR starts Adyen with Hold - Target 1.600 EUR

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