Research Market strategy
By Swissquote Analysts
Published on 14.06.2021
Morning news

BP Considering Plan to Spin Off Iraq Operations Into New Company

Topic of the day

BP PLC is working on a plan to spin off its operations in Iraq into a stand-alone company, according to people familiar with the matter, as the oil giant shuffles its assets and investment plans in its pivot toward lower-carbon energy. The new company would hold BP's interest in Iraq's giant Rumaila oil field -- one of the world's largest -- and be jointly owned by China National Petroleum Corp., one of the British company's partners at the site, the people said. The new entity would hold its own debt, separate from BP, and distribute profits via dividends, the people added. The plan aims to give BP more flexibility to invest in low-carbon energy by enabling it to reduce its spending on oil and gas, the people said. Such a move would underscore how some European oil companies are backing away from decades of pioneering exploration in sometimes challenging locations to refocus on where future energy demand is expected to grow: low-carbon fuels and electricity. The potential shift would have particular significance for BP because of its history in Iraq, dating to the 1920s. In 2009, BP was the first international oil business to return to Iraq after the U.S.-led invasion.

Swiss stocks

The Swiss stock market went into the weekend with slight gains on Friday. The SMI once again marked a record high in the course. The index gained 0.3 percent to 11,841 points. Among the 20 SMI stocks, there were 16 price gainers and four losers. 29.68 (previously: 31.08) million shares were traded. The positive trend among pharmaceutical and healthcare stocks continued at the end of the trading week. Lonza shares, which were pulled up last week by the US approval of Biogen's Alzheimer's drug, posted further gains of 1.3 percent. Alcon gained 1.4 percent, leading the day. Roche (+0.4%) and Novartis (-0.3), meanwhile, lagged. Otherwise, there were no clear preferences among investors.

International markets


European stocks rise, with gains for miners on the back of rising metal prices outstripping losses for financial stocks. The Stoxx Europe 600 is up 0.7%, the DAX advances 0.8%, the CAC 40 increases 0.8% and the FTSE 100 climbs 0.7%. German insurer Allianz's investments are diversified with 21% of its total investments in alternative assets—which exclude stocks, bonds, and cash—a strategy that drives its dividend growth, Berenberg says. Allianz "is becoming increasingly comfortable [with alternative investments], as it is only weakly correlated with its listed investments; is mainly unlisted and so does not add market volatility to reported earnings; and provides good returns of around 4%," the brokerage says. Allianz had EUR176 billion in this kind of relatively illiquid assets in 2020, up from EUR73 billion in 2014, Berenberg says. The takeover of Dutch optical retailer GrandVision by Franco-Italian eyewear giant EssilorLuxottica appears to be closer to completion after the companies said late Thursday that the deal received approval from Turkish authorities, and that the arbitration process between them should be settled by the second half of June, Royal Bank of Canada says. "We believe this increases the likelihood of the transaction completing before the 31 July 2021 long-stop date, which should be received positively by the market," the bank says. With the green light from Turkey, the companies said they now have all necessary regulatory approvals to close the deal.

United States

The S&P 500 edged higher Friday and notched a fresh high, capping its third consecutive week of gains. The broad stock-market gauge hugged the flatline for most of the trading session before edging up 8.26 points, or 0.2%, to 4247.44. The Dow Jones Industrial Average added 13.36 points, or less than 0.1%, to 34479.60. The Nasdaq Composite gained 49.09 points, or 0.4%, to 14069.42. The S&P 500 and Nasdaq finished with modest weekly gains, while the Dow logged a slim loss.Eli Lilly plans to ask the FDA whether its thinking has changed on the timeline for Lilly to seek FDA approval of its experimental Alzheimer's disease drug donanemab. This comes in the wake of the FDA's approval Monday of an Alzheimer's drug from Biogen, with the agency basing its approval on that drug's ability to reduce a substance called amyloid plaque in the brain. Lilly's drug also reduced plaque levels in patients in a small, midstage study released earlier this year. At that time, Lilly said that based on FDA feedback it was unlikely to seek the agency's approval of the drug in the near term, and the company would continue to run a late-stage trial that could yield more data in 2023 to support a regulatory filing. But Lilly says today that in light of the Biogen approval, Lilly "will seek to understand from the FDA whether that has changed." Vertex says it will stop developing its experimental drug VX-864 after it was shown in a midstage study to be unlikely to provide a clinical benefit to people with a rare genetic disease affecting the liver and lungs called AAT deficiency. Vertex says it's encouraged that the drug helped raise levels of the deficient protein causing the disease, albeit not enough to provide a substantial benefit to patients. The company says it will start advancing other pipeline drugs designed to treat the disease next year. It is the latest setback for Vertex as it looks to expand its revenue base beyond its dominant franchise of cystic fibrosis medicines. Vertex plummets 13% after hours; shares were down 8.3% so far this year through today's close.


Public holidays on the Chinese stock exchanges - including those in Hong Kong – and in Australia make for thin business on the regular East Asian stock markets on Monday. In Tokyo, the Nikkei index is up 0.6 per cent to 29,120 points after rising slightly more in early trading. Support comes from the currency side, where the dollar has gained a little more since Friday, which is favourable for Japanese exporters.


U.S. treasury yields traded in line with Friday's close of 1.462%, with inflation remaining in the center of the debate. Bank of America worries that temporary inflation could last long enough to have lasting effects.


JP Morgan rises the Lloyds Banking target to 59 (54) p – Overweight
Credit Suisse rises the Valiant target to 100 (93) CHF – Neutral
UBS rises the OC Oerlikon target to 12,80 (11,70) CHF – Buy

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