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Research Market strategy
by Swissquote Analysts
Morning News

Home Depot Posts 3Q Profit as Sales Rise

Topic of the day

Home Depot Inc. logged a larger third-quarter profit and higher revenue as continued home-improvement demand during the Covid-19 pandemic pushed sales metrics higher. The Atlanta-based home-improvement retailer logged a third-quarter profit of $3.43 billion, or $3.18 a share, compared with a profit of $2.77 billion, or $2.53 a share, in the same three-month period a year earlier. Analysts surveyed by FactSet had estimated the company’s profit would be $3.13 a share. Home Depot’s revenue rose 23.2% to $33.54 billion. Analysts were forecasting revenue of $31.83 billion. Comparable sales grew by 24.1%, and by 24.6% in the U.S., as the high demand that set in during the coronavirus pandemic was sustained, Chief Executive Craig Menear said. The number of customer transactions rose 13% to 453.2 million. Average ticket size grew 10% to $72.98. Sales per retail square foot improved 23.1% to $552.85.


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Swiss stocks

The SMI slid 0.2 percent to 10,565 points Tuesday. After recent gains buoyed by hopes that a coronavirus vaccine could soon be available, many investors did some profit-taking. ABB rose 1.2 percent, as it did on Monday with news of a major order, this time worth USD 150 million, to equip five Fincantieri ships with electric propulsion systems. Online chemist Zur Rose, which had gained 6 percent Monday, crashed 5.6 percent on the news that retail giant Amazon is entering the online chemist market with a new online shop selling prescription drugs. Lonza slid 5.1 percent. The stock had gained almost 3 percent Monday on the news that its collaborator Moderna had achieved very promising test results with its coronavirus vaccine candidate. A more sobering estimate of short-term success prospects Tuesday also sent Moderna’s stock down on Wall Street. Second-tier Valora fell 4.4 percent to CHF 160.20 after completing a 440,000-share placement at CHF 158 per share by accelerated bookbuilding.

International markets

Europe

European stocks are mixed as optimism over potential coronavirus vaccines is offset by worries about the economic impact of new lockdown measures. The Stoxx Europe 600 falls 0.2%, the FTSE 100 drops 0.9%, the DAX is flat and the CAC-40 rises 0.2%. EasyJet PLC on Tuesday reported its first annual loss since the company was founded 25 years ago, and said it is working to minimize losses during winter months as the coronavirus pandemic continues to hit travel demand. The U.K. budget airline said it is refinancing debt, thinning routes and cutting costs to conserve cash over the winter, as it plans to fly at no more than a fifth of its capacity until December, to be able to ramp up when demand returns. For the year ended Sept. 30, easyJet reported a pretax loss of 1.27 billion pounds ($1.68 billion) compared with a profit of GBP430 million for fiscal 2019. Analysts expected a loss of GBP1.16 billion, according to a consensus based on forecasts by eight analysts taken from FactSet. BBVA, Spain's second biggest bank, said late on Monday that it is in talks with its smaller rival, as negative rates in Europe accelerate the pace of deal making among lenders in the region. The talks come just hours after BBVA (BBVA.MC) struck a deal to sell its U.S. business to PNC Financial Services Group (PNC) for $11.6 billion in cash, triggering speculation that it would use the cash to buy a smaller rival.

United States

U.S. stocks fell as the major benchmarks pared back gains a day after they closed at record highs. The Dow Jones Industrial Average clawed back from heavy losses to finish 0.6% lower. The S&P 500 slipped 0.5%, while the Nasdaq Composite was down about 0.2%. Jerome Powell's warning that the American economy has a "long way to go" before it returns to pre-pandemic levels will likely add to investors' worries. The Federal Reserve chairman said on Tuesday the increased spread of the coronavirus posed an important risk to the economy in the months ahead and said it was too soon to say how a potential vaccine would change the outlook. Warren Buffett's Berkshire Hathaway is betting on some of the largest firms chasing a Covid-19 vaccine. The Omaha, Neb., conglomerate recently made new investments in large pharmaceutical companies Merck, Bristol Myers Squibb and AbbVie investing between $1.8 and $1.9 billion in each, according to public filings. Berkshire also made a new, smaller investment in Pfizer of $136 million. Berkshire made these investments sometime in the quarter ended Sept. 30, well before Pfizer, BioNTech and Moderna reported positive results from late-stage trials of potential vaccines. Tesla will replace yet-to-be-named company. Tesla Inc. stock rallied 12% in premarket trading Tuesday, after S&P Dow Jones Indices said it will add the electric-car maker to the S&P 500 at the start of trading on Dec. 21. Joining the benchmark index for U.S. equities puts the stock in the portfolios of countless index-tracking funds, and the many managed funds that would follow suit to balance their holdings. The late-Monday announcement was months in the works after Tesla (TSLA) reported several consecutive quarters of GAAP profits, although Tesla's hopes for a S&P addition had been foiled in September.

Asia

Asian equity markets showed a positive trend in late trading on Wednesday. Traders described the mood as surprisingly robust. Rising concerns about the corona pandemic, which is spreading uncontrollably in large parts of the world, would be countered by somewhat more critical vaccine hopes.

Bonds

U.S. Treasury yields extended their falls in Asia as attention shifted away from positive vaccine developments and toward the prospect of a more active Federal Reserve. The 10-year Treasury note yield was recently at 0.848%, down from Tuesday's 0.882%.

Analysis

IR rises the Volkswagen target to 168 (148) EUR – Buy
UBS rises the Richemont target to 73,30 (59,70) CHF – Neutral
UBS lowers the National Grid to Neutral (Buy) – Target 975 (920) p


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