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Research Market strategy
by Swissquote Analysts
Morning News

NYSE Scraps Plans to Delist Chinese Telecom Stocks

Topic of the day

The New York Stock Exchange reversed its decision to delist China's three largest telecommunications companies, after consulting with regulatory authorities about a recent U.S. investment ban. In a statement released Monday night, the Big Board said "it no longer intends to move forward with the delisting action" on China Mobile Ltd., China Telecom Corp. and China Unicom (Hong Kong) Ltd. The Hong Kong-listed shares of the three telecom majors surged on the news. Shares of China Mobile, which is among the most valuable of China's listed state-owned enterprises, rose as much as 7.5% in late morning trade on Tuesday, while China Telecom and China Unicom jumped 8.1% and 11%, respectively. NYSE's earlier plan to delist the companies followed a U.S. government order, signed by President Trump in November, that prohibits Americans from investing in a list of companies the U.S. government says supply and support China's military, intelligence and security services. The trading ban was supposed to start on Jan. 11, and investors would have until November to shed their holdings.


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Swiss stocks

The SMI closed the first trading day of the new year 0.3 percent firmer on 10,738 points. After trending positively for most of the day, at one stage reaching a high of 10,812 points, the index shed some initial gains again in later trading. Driving the downturn was Wall Street, which after a choppy opening began a consistent downward trend – likely triggered by profit-taking. The top gainers on the SMI were stocks of companies which would profit from the economic recovery expected by many market participants in 2021. Sika climbed 2.9 percent, Givaudan 2.0 percent and Geberit 1.8 percent. ABB rose 1.5 percent. While UBS closed up 1.2 percent, Credit Suisse closed unchanged. The bank had announced it had concluded its 2020 share buyback programme after purchasing own shares for CHF 325 million. Bringing up the rear of the index was Swiss Re, down 1.1 percent. The defensive and less cyclical index heavyweights Nestle, Roche and Novartis had mixed fortunes within narrow price ranges.

International markets

Europe

European stocks remain mostly in positive territory but pare earlier gains as investors become more wary amid increasing coronavirus restrictions and US political uncertainty. The Stoxx Europe 600 and CAC-40 rise 0.7% apiece, the FTSE 100 is up 1.8% and the DAX edges 0.1% higher. The price of a barrel of Brent crude retreats 1.7% to $50.91 and gold and silver prices rise 2.6% and 3.5% respectively. "European indices have come off their earlier highs, while the US has fallen into the red, as risk appetite takes a hit thanks to new lockdowns and the impending Georgia election," IG's Chris Beauchamp says. Credit Agricole SA said Monday that it has signed an agreement to sell its Romanian subsidiary Credit Agricole Bank Romania SA to Romanian bank Vista Bank Romania SA. The French bank didn't disclose financial details, but said the transaction wouldn't have a "significant impact" on its solvency ratios. The deal is expected to be completed in the first half of 2021, subject to clearance from the National Bank of Romania and the Romanian Competition Council, Credit Agricole said. Fiat Chrysler Automobiles NV and Peugeot maker PSA Group are accelerating plans to complete their trans-Atlantic merger, saying Monday the tie-up of the two car companies should be complete mid-January.

United States

U.S. stocks tumbled on the first trading day of the year, retreating sharply from records set just days ago. The Dow Jones Industrial Average fell as many as 725 points before recovering a bit to trade 1.3% lower. The S&P 500 and the Nasdaq Composite both declined 1.5%. Investors are starting off the new year fixated on the same issue that dominated markets for much of 2020: the coronavirus pandemic. Many believe economic activity will be able to pick up later this year as more of the population is vaccinated and businesses are able to reopen. But they acknowledge the path to recovery will likely be long and uneven. News on the pandemic front has painted a grim picture in recent days. Hospitalizations in the U.S. jumped to a record Sunday. Meanwhile, governments across Europe are extending lockdowns to try to slow the spread of the virus. Health care insurer Centene Corp. (CNC) said Monday it has agreed to acquire Magellan Health Inc. (MGLN) for $95 a share, in a deal with an enterprise value of $2.2 billion. The deal "will broaden and deepen Centene's whole health capabilities and establish a leading behavioral health platform," the companies said in a joint statement. Magellan will add 5.5 million new members to Centene's government sponsored health plans, as well as 18 million third-party customers of specialty health services. The deal will also add 2 million pharmacy benefit manager members and 16 million medical pharmacy members.

Asia

Stock markets in East Asia and Australia are mixed on Tuesday. Participants speak of caution before the important run-off election for the US Senate in Georgia on the reporting day. This would have a considerable influence on the future policy of the US government of Joe Biden, because in the event of a victory for the Democrats, the newly elected US president could "govern through". The Shanghai Composite recovers from interim losses and improves by 0.3 per cent to 3,513 points, while the Hang Seng Index is down 0.2 per cent.

Bonds

U.S. Treasury yields edged higher in Asia after they pulled back from session highs Monday as stocks skidded to start 2021. The 10-year note yield was recently at 0.924%, up from Monday's 0.915%. Economic data will keep traders busy throughout the week. The official U.S. employment report and ISM surveys of manufacturing and service sector activity will provide a snapshot of the economy's health.

Analysis

BoA rises Delivery Hero target to 150 (130) EUR – Buy
Barclays rises Goldman Sachs to Overweight (Equalw.)
CS lowers the Software AG target to 36,70 (37) EUR/Neutral


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