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Research Market strategy
by Swissquote Analysts
Morning News

Thyssenkrupp Sees Better 2021 as Losses Widen

Topic of the day

Thyssenkrupp AG said Thursday that net operating loss in fiscal 2020 widened but expects better earnings next year. The German industrial conglomerate posted a net loss from continuing operations of 5.55 billion euros ($6.52 billion) for the fiscal year ended Sept. 30, compared with a loss of EUR1.15 billion a year earlier. Including discontinuing operations such as the company’s elevator business that was sold, net profit was EUR9.59 billion. Thyssenkrupp booked an adjusted loss before interests and taxes from continuing operations of EUR1.63 billion, compared with a loss of EUR110 million in its previous financial year. Operating sales fell to EUR28.9 billion from EUR34.04 billion, the company said. The company expects sales from continuing operations in its fiscal year 2021 to grow in the low- to mid-single-digit percentage range, it said. Adjusted EBIT – although still negative – should significantly improve compared with fiscal 2020 to a loss in the mid-three-digit million euro range.


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Swiss stocks

After moving sideways during the last two days, the SMI leading index slid 0.7 percent to 10,491 points Thursday. For lack of other direction, investors focused on the coronavirus pandemic as infection figures continue to rise worldwide. Wednesday’s news that schools in New York are to close again sent Wall Street down, which had a knock-on effect on European markets. The Swiss government said it plans to extend military support for overloaded clinics, double aid to companies to CHF 1 billion and expand furlough payments because of the pandemic’s economic effects. After rising on previous days, ABB fell 3 percent to bring up the rear of the index. At its capital market day, it announced that after reviewing its portfolio, it is considering the sale of three divisions with turnover of USD 1.75 billion with the aim of finding “the most value-enhancing solution for ABB and the divisions”. Sika held a midfield position, falling 0.5 percent despite news it is expanding capacity in the UAE.

International markets

Europe

European stocks fall as worries about the economic effect of fresh lockdowns to stem rising coronavirus cases outweigh positive vaccine news. The Stoxx Europe 600 and FTSE 100 fall 0.8%, the DAX drops 0.9% and the CAC-40 declines 0.7%. Kion declines 6.7% after the German forklift maker said it would issue 11% more shares. Johnson Matthey drops 5.6% after the speciality chemicals group trimmed its interim dividend as 1H profits plunged. AstraZeneca edges down 0.7%, having risen earlier after a potential vaccine developed by the company and the University of Oxford prompted an immune response in tests. The pandemic emergency purchase program and targeted longer-term refinancing operations are likely to remain the main tools for adjusting European Central Bank policy, said ECB President Christine Lagarde on Thursday. Lagarde reiterated the ECB would "recalibrate its instruments" as appropriate at its December meeting. After the close, European leaders will discuss the EUR750 billion recovery fund, and whether Hungary and Poland will relinquish their veto of it. Vallourec's 3Q Ebitda was a beat but the French manufacturing company has a subdued view on near-term demand, Jefferies says. "While Brazilian demand is improving and North America likely found a floor in mid-August, Vallourec doesn't anticipate any material pickup in their volumes in the quarters to come," the brokerage says. Net debt of EUR2.3 billion was in line with market expectations, it says. Knorr-Bremse AG said Thursday that revenue and earnings fell in the third quarter compared with the previous year and confirmed its full-year outlook. The German manufacturer of rail-braking systems said revenue came to 1.53 billion euros ($1.81 billion) in the third quarter, down 10% from EUR1.71 billion in the same period of 2019. Earnings before interest and taxes stood at EUR194.6 million, a 22% decrease from EUR249.8 million previously

United States

U.S. stocks reversed early losses to end the day slightly higher, powered by the big technology stocks that have driven much of the market's rally this year. The S&P 500 ticked up 0.4% as of the 4 p.m. close of trading in New York, while the Dow Jones Industrial Average gained 0.2%. The technology-heavy Nasdaq Composite rose 0.9%. Uncertainty dominated markets after U.S. Treasury Secretary Steven Mnuchin pulled the plug on some coronavirus emergency lending programs. Mr. Mnuchin said he would allow several Federal Reserve lending facilities to expire, opening a divide with the central bank, which had pressed for an extension. As a result, on Dec. 31 several novel Fed programs that have backed corporate credit and municipal-borrowing markets and that have provided loans to small and midsize businesses and nonprofits during the coronavirus pandemic will end.Coca-Cola Co. placed too much of its profit in its foreign operations instead of its higher-taxed domestic parent company, a U.S. Tax Court judge ruled Wednesday. The court adopted most of the U.S. government's main arguments, and the ruling marks a setback for the beverage giant's international tax strategy. The Internal Revenue Service had been seeking more than $3.3 billion for the tax years 2007 through 2009. The cost to Coca-Cola could be more if the government applies the same successful rationale to subsequent tax years. Macy's Inc.'s net sales fell more than 20% in the third quarter and the company reported its third quarterly loss in a row, as the Covid-19 pandemic continues to ding retailers' financial results. Net sales were $3.99 billion for the quarter, a fall of 23% from $5.17 billion a year earlier. Analysts polled by FactSet expected sales of $3.91 billion. Comparable sales – which tend to measure sales at stores open at least a year at retailers – fell about 20% during the quarter that ended Oct. 31

Asia

Asian stock markets did not show a uniform trend on Friday. The day is dominated by the Corona crisis. The Prime Ministers of Japan and South Korea called for vigilance to stem the spread of the virus. Traders therefore describe trade as being characterized by short-term concerns and long-term opportunities.

Bonds

Treasury yields continued to fall in Asia, in a cautious trading session, with the end of several Fed emergency lending programs seen as a negative surprise.

Analysis

CS lowers the IAG target to 228 (287) p – Outperform
IR rises the Bauer target to 10,10 (9,90) EUR – Hold
JPM rises the Renault target to 37 (35) EUR – Overw.


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