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Research Market strategy
by Swissquote Analysts
Morning News

U.S. Business Activity Expansion Pace Steadies in September

Topic of the day

The expansion pace of overall business activity in the U.S. private sector was largely unchanged in September, with services sector slightly easing and manufacturing sector remaining strong, preliminary data from HIS Markit showed. The flash reading for the U.S. Composite Output Index stood at 54.4 in September, fractionally down from the 54.6 registered in August. The reading fell for the first time in five months, suggesting the pace of the economic recovery steadied after strong rebounds due to the reopening of the economy. The indicator is based on data from the firm's PMI surveys for manufacturing and services sectors. An index reading above 50 indicates expansion, while below 50 it signals contraction. U.S. companies signaled a further solid rise in business activity during September, albeit one that was slightly weaker than seen in August, IHS Markit said. Manufacturers and service providers alike noted strong expansions in output, with goods producers registering a faster rise in production. The survey data add to signs that the economy will have enjoyed a solid rebound in the third quarter, said Chris Williamson, chief business economist at IHS Markit. "U.S. businesses reported a solid end to the third quarter, with demand growing at a steepening rate to fuel a further recovery of output and employment," he said.

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Swiss stocks

The SMI closed down 0.2 percent on 10,330 points Wednesday as investors used an initial recovery for profit-taking. Disappointing US purchasing managers’ indices added to fears of more economic fallout from rising coronavirus infection figures, uncertainty before the US presidential election, political wrangling about a new US coronavirus aid package and the US-China trade conflict. Heavyweight Roche slumped 1.8 percent after subsidiary Genentech reported a setback in developing an Alzheimer’s drug. Roche competitor Novartis fell 0.4 percent, fellow heavyweight Nestle slid 0.1 percent. Sika gained 2.5 percent and Geberit 1.5 percent. ABB rose 0.7 percent on the news it had been contracted by Guangzhou Shipyard International to fit two P&O Ferries ships with hybrid propulsion systems. Second-tier AMS 2.2 percent rose on the news it had signed a profit transfer and controlling agreement with subsidiary Osram, which also issued an outlook Tuesday for profits to recover in fiscal 2020/21.

International markets


European stocks rose on Wednesday, as investors brushed off a mixed batch of purchasing managers data and shares of sportswear makers and automobile makers rose. The Stoxx Europe 600 index rose 1.1% to 361.58, after rising 0.2% on Tuesday. The German DAX climbed 1.4%, the French CAC rose 1.6% and FTSE 100 index gained 1.7%. The euro fell 0.1% against the dollar, while the pound was even weaker , dropping 0.3%. Dollar strength can help European and U.K. exporters by making their prices more competitive overseas. Elsewhere, data from market-research group GfK showed German consumer sentiment is set to stabilize in October, after a sharp fall in September. Auto makers are also climbing, with shares of Peugeot rising over 3%. The company said it would buy back 10 million of its own shares from Dongfeng Motors. Elsewhere, Renault rose over 3%. Sports-clothing brands Adidas and Puma and retailer JD Sports Fashion advance after Nike reported higher online sales.

United States

U.S. stocks fell sharply Wednesday, extending their turbulent run as hopes for additional fiscal stimulus dimmed, coronavirus cases rose and investors continued to question the valuations of tech stocks. The S&P 500 was recently down 2.3%, following a rally of more than 1% Tuesday. The Dow Jones Industrial Average fell around 2%, while the tech-heavy Nasdaq Composite dropped 2.9%. Stocks have whipsawed this week: the S&P 500 briefly neared correction territory Monday -- defined as a retreat of 10% from a recent high -- only to rebound Tuesday. One bright spot on both days was the technology sector, which showed signs of stabilizing after dragging down indexes in previous weeks. But traders were back in selling mode Wednesday, continuing to lighten up on large tech stocks -- such as Apple, Google parent Alphabet and Amazon.com -- that had powered the market higher over much of the summer. Among individual companies, shares of Tesla fell 10% after Chief Executive Elon Musk said it could take three years to fully realize large reductions in battery costs, disappointing some investors. Shares of Nike surged 7.5% after the sportswear company said sales rebounded over the summer. Shares of General Mills gave up early gains to fall 0.5% after the Cheerios and Bisquick maker reported stronger sales for its most recent quarter.


The Asian stock markets will see a strong downward trend on Thursday. Investors are taking an example from Wall Street, where the indices came under pressure on Wednesday.


U.S. Treasury yields rose slightly Wednesday after bond traders sifted through speeches from senior Fed officials, looking past the sharp selloff in stocks. The 10-year Treasury note yield rose 1.3 basis points to 0.676%, while the 2-year note rate was up 0.6 basis point to 0.139%. The 30-year bond yield added 1.3 basis points to 1.426%.


Mainfirst starts Evotec with Buy - Target 36 EUR
IR upgrades Osram to Buy (Sell) - Target 65 (42,20) EUR
MS raises Ryanair target to 16 (15) EUR - Overweight
Warburg upgrades Wacker Chemie to Buy (Hold) - Target 89 (87) EUR

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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