Research Market strategy
By Swissquote Analysts
Published on 11.03.2021
Morning news

Oracle Beats Expectations in 3Q and Increases Share Buyback

Topic of the day

Oracle turned over and earned more than expected in the third business quarter. In addition, the board of the SAP competitor increased the share buyback programme by 20 billion dollars. Investors are to participate in the company's success with an increased quarterly dividend of 32 from 24 US cents. Oracle's share price slumped by more than 6 per cent after trading hours, although it had risen by a good 60 per cent in the past year. As the software company announced on Wednesday after the close of the US stock exchange, turnover in the quarter rose to 10.09 billion dollars from 9.8 billion dollars in the comparable period of the previous year. This development was not least due to the pandemic, it said. Demand for the second-generation cloud infrastructure (Gen2) exceeded the company's own expectations. Sales of Gen2 more than doubled compared to the previous year, Oracle Chairman and CTO Larry Ellison announced. Oracle therefore wants to accelerate its expansion into new areas. The profit improved to 5.02 (previous year: 2.57) billion dollars.

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Swiss stocks

Swiss equities ended Wednesday's trading session somewhat firmer. The SMI gained 0.5 per cent to 10,910 points. Among the 20 SMI stocks, there were eleven gainers and eight losers, and one share closed unchanged. 39.3 (previously: 44.24) million shares were traded. Rather defensive shares such as Givaudan (+1.3%), SGS (1.3%) or Swisscom (+1.2%) were in demand. Nestle, which is also considered a defensive index heavyweight, rose by 0.2 per cent. In the pharmaceutical sector, Roche improved by 2.2 per cent. The Novartis share (+0.2 per cent) lagged somewhat after being downgraded to Hold from Buy by US investment research firm Argus Research. Geberit's (-1.1) financial statement contained no surprises, according to analysts at Baader Helvea. However, investors may have been disgruntled that the sanitary technology provider did not provide an outlook for the current year. The slightly higher dividend proposal compared to the previous year was unable to turn the mood around. Among the second-line stocks, Medartis gained 4.2 per cent after presenting its figures. Idorsia (+1.7%) benefited from the fact that the US Food and Drug Administration (FDA) is reviewing the approval of the drug daridorexant for sleep disorders in adults.

International markets

Europe

European equity markets generally continued to rise on Wednesday, buoyed by subdued inflation in the United States in February, while awaiting the latest vote in Congress on the stimulus package proposed by US President Joe Biden and the European Central Bank (ECB) meeting on Thursday. The Stoxx Europe 600 index rose 0.4% to 422.1 points. In Paris, the CAC 40 finished close to 6,000 points, closing up 1.1% at 5,990.6 points while the SBF 120 gained 0.9%. In Frankfurt, the DAX 30 gained 0.7%, while London was down 0.1%. Stellantis (+2.1%) announced that the distribution of its approximately 39% stake in equipment manufacturer Faurecia (-2.5%) to its shareholders had become unconditional. Maisons du Monde (-5.8%) said it expects sales growth to resume and profitability and cash generation to strengthen this year, after reporting better-than-expected full-year results. Spanish clothing group Inditex (+1.2% in Madrid) on Wednesday reported lower net profit and revenue for the year to 31 January 2021, but its online sales rose sharply. The owner of the Zara chain also said it would pay a dividend of 0.70 euros per share for the past year.

United States

The New York Stock Exchange finished higher on Wednesday, allowing the Dow Jones index to set a new record after Congress passed a stimulus package and reassuring inflation figures eased bond yields. At the close, the Dow Jones Industrial Average (DJIA) gained 1.5% to a new high of 32,297.02 points. The S&P 500 index rose 0.6% to 3,898.81 points. In the meantime, the index, which is rich in technology stocks, finished almost stable (-0.04%), at 13,068.83 points, held back in particular by the decline of Apple. The US industrial conglomerate General Electric (-5.4% to $13.25) reached an agreement to merge its aircraft leasing division, Gecas, with Irish company AerCap Holdings (+3.8%), a deal worth more than $30bn. Roblox, the video game platform popular with young children and tweens, started Wednesday's trading on the New York Stock Exchange (NYSE) with a 54.5% gain to $69.47. Based on the closing price, Roblox has a market capitalisation of over $45 billion. Campbell Soup (+1.9%) said on Wednesday it expects sales to fall between 2.5% and 3.5% in fiscal 2021. Apple (-0.9%) has decided to cut production of the iPhone 12 mini due to weak demand for the entry-level model of its 5G smartphones, the weekly Nikkei Asia reported, citing sources close to the matter.

Asia

The further decline in yields, especially on the US bond market, after the recent highs, led to a willingness to buy on the stock markets in East Asia on Thursday. On the Chinese stock exchanges, the indices rise particularly strongly after a restrained start, as does the South Korean Kospi (+1.9%), after it had also fallen on the previous five days. In Tokyo, the Nikkei index rises less strongly by 0.5 per cent to 29,160 points, held back somewhat by the strengthening yen against the dollar.

Bonds

The 10-year US Treasury bond yield eased to 1.52%, from almost 1.55% the previous day. The yield on the 30-year bond also fell by 2 basis points to 2.243%. At the beginning of the year, the yield on the 10-year bond was 0.915%.

Analysis

Quirin raises Nexus to Buy (Hold) - Target EUR 61 (33.50)
BoA raises target Telecom Italia to EUR 0.92 (0.85) - Buy
JPM raises target Lloyds Banking to GBP 42 (37) – Neutral

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