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By Swissquote Analysts
Published on 22.02.2021
Morning news

Boeing Backs Grounding Some 777 Jets

Topic of the day

Boeing Co. told airlines to stop flying its wide-body 777 aircraft equipped with a type of engine that broke apart during a flight over the weekend near Denver, as the Federal Aviation Administration said it would order immediate inspections of those jets. Boeing's recommendation followed action by regulators in the U.S. and Japan aimed at the Pratt & Whitney engines found on 128 of its 777s. The United Airlines Holdings Inc. flight Saturday was the third failure involving that model plane with those engines in recent years. Safety investigators in the U.S. are trying to determine why the engine failed shortly after the Honolulu-bound plane took off, forcing it to return to Denver International Airport and leaving a trail of debris scattered over a nearby town. United, the only airline in the U.S. that uses that engine type, said earlier Sunday evening that it had taken two dozen planes out of service. Regulators in Japan had already ordered airlines to stop flying aircraft with the same engine type until further notice. Those include 13 Boeing 777s flown by Japan Airlines Co. and 19 such planes operated by All Nippon Airways Co.

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Swiss stocks

In an environment with mixed specifications, the leading index on the Swiss stock market was slowed down by the index heavyweights. The SMI lost 0.1 per cent to 10,705 points. Swiss Re posted a large loss last year due to claims caused by the coronavirus pandemic. Excluding Covid 19 claims and provisions, however, the profit for 2020 was significantly above the previous year. The share's losses were limited to 0.1 per cent. Nestle lost 1 per cent. On the day after the figures were published, various banks slightly lowered their target prices. Deutsche Bank continues to recommend holding the share. In the conference call, Nestle's board of directors expressed optimism for the current year and set a target of more than 4 per cent growth. However, the operating margin will not grow as strongly as in the past years. The other two index heavyweights also weighed on the overall market. Novartis fell by 0.9 per cent and Roche by 1.1 per cent.

International markets


European equity markets closed in the green on Friday as investors found reason for optimism in indicators released on both sides of the Atlantic. The Stoxx Europe 600 Index rose 0.5% to 414.9 points. In Paris, the CAC 40 and the SBF 120 rose 0.8% and 0.7% respectively. In Frankfurt, the DAX 30 gained 0.8%, while the FTSE 100 in London rose 0.1%. Support was provided mainly by the encouragingly robust purchasing managers' indices from the eurozone. According to Citigroup, Renault's business figures were mixed. Analysts highlighted the positive earnings development, but criticised the disappointing cash flow development. Cash outflows were also reflected in net liquidity, which at minus 3.6 billion euros was much worse than the minus 2.9 billion euros expected by consensus. Renault lost 4.4 per cent. Shares in the Italian aerospace and defence company Leonardo rose 10 per cent on the Milan stock exchange. Support came from a report in Il Messaggero that the pace of the planned US IPO of the US subsidiary DRS is accelerating. Hermes shares rose 3.1 per cent on the Paris stock exchange after "excellent" figures. Organic growth in the fourth quarter was an impressive 15.6 per cent. Hermes products are in high demand from consumers across all borders, Bernstein said. The waiting list for the French company's "iconic products" is long, he said.

United States

The New York Stock Exchange finished in scattered order on Friday despite favourable economic indicators, the rise in bond rates continues to arouse investor mistrust. The Dow Jones Industrial Average (DJIA) ended almost stable at 31,494.32 points. The S&P 500 index fell 0.2% to 3,906.74 points. The Nasdaq Composite, which is mainly technology-based, rose by less than 0.1% to 13,874.46 points. After their strong progression at the beginning of the year, US equity markets took a pause this week, as investors were hesitant in the face of the high valuations reached in the technology sector and the rise in bond yields, likely to tighten corporate financing conditions. Uber lost 1% after a legal setback in the UK. The British Supreme Court ruled Friday in a long-awaited decision that Uber drivers could be considered employees, dismissing the appeal by the US car booking giant. The agricultural and construction equipment manufacturer Deere (+9.6%) benefited from the publication of strongly improving results that were better than expected in the first quarter of its postponed fiscal year. Pfizer's vaccine (-0.3%) against Covid-19 would be 85% effective from the first dose to prevent the appearance of symptoms of the disease, according to a study carried out in Israel. GameStop (stable) has stabilised after falling by 22% over the last three sessions.


No consistent trend emerged on the stock markets in East Asia and Australia on Monday. On the Japanese market, the Nikkei-225 rose by 0.8 per cent to 30,243 points. The market in Shanghai recorded minimal losses. The Hong Kong market continues its rally from the beginning of the month, with the HSI gaining 0.5 per cent. On the Korean market, the index turned relatively slightly negative after opening gains.


On the bond market, the yield of the 10-year US Treasury bond has again tightened by 6 basis points to 1.345%, against 1.286% on Thursday. The rise in market rates has led investors to be more cautious about risky assets such as equities, which have become less attractive, said Kiran Ganesh, multi-asset strategist at UBS Global Wealth Management.


DZ raises Infineon target to EUR 42 (40) - Buy
LBBW raises target Credit Suisse to 12.20 (9.30) CHF - Hold
CS lowers Orange target to EUR 13 (13.50) - Outperform

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