U.S. and EU Agree to Suspend Airbus-Boeing Trade Fight
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The U.S. and the European Union agreed to suspend their trade dispute over government subsidies to Boeing Co. and Airbus SE, significantly easing trade tensions amid a broader effort to improve trans-Atlantic relations. The agreement would suspend for five years tariffs that have been authorized by the World Trade Organization, U.S. Trade Rep. Katherine Tai told reporters. The tariffs had been temporarily suspended in March. "We have resolved these disputes because we are putting away our litigation briefcases," said Ms. Tai. The U.S. and EU are now focused on "what is going to be best for competition between us in the context of a world where our industries and workers will be facing competition like we've never seen before," she said. The 17-year trade fight is the longest and most costly in the history of the WTO. U.S. importers have paid more than $1.1 billion of tariffs since the duties in the dispute took effect in 2019, according to data from U.S. Customs and Border Protection.
The Swiss stock market continued its upward trend on Tuesday. The SMI marked a new all-time high at 11,964 points. However, participants continued to speak of increased caution ahead of the outcome of the US Federal Reserve's meeting on Wednesday. The SMI gained 0.5 per cent to 11,922 points. Among the 20 SMI stocks, there were a total of 17 gainers and three losers. 29.61 (previously: 24.01) million shares were traded. The upswing was driven, among others, by the index heavyweights Novartis, Nestle and Roche, which gained between 0.5 and 0.7 per cent. The shares of Clariant improved by 1.6 per cent and completely recovered the previous day's losses. The specialty chemicals company had sold its pigments business at the beginning of the week. The shares of Sulzer went up by 3.9 per cent. The industrial corporation is becoming more optimistic for the current year and has raised its financial targets for the financial year. Order intake is now expected to increase by 4 to 6 per cent and sales by 8 to 10 per cent.
European equity markets rose for a third consecutive session on Tuesday. The Stoxx Europe 600 index gained 0.1% to 458.8 points. The CAC 40 and the SBF 120 rose by 0.4% and 0.3%, respectively. In Frankfurt, the DAX 30 gained 0.4%, as did the FTSE 100 in London. Deutsche Lufthansa AG has presented its 2024 targets and revealed plans for a possible capital increase, as it sees growing bookings and prepares for a rebound in passenger demand. The new targets come as the company and the industry expect a business recovery thanks to a gathering pace of vaccination plans and the progressive lifting of travel restrictions. Lufthansa forecasts a positive operating cash flow in the second quarter. The German carrier said late Monday that it is targeting an adjusted earnings before interest and taxes margin of at least 8% by 2024. By the same year, it aims to achieve an adjusted return on capital employed, or ROCE—excluding cash—of at least 10%. H&M stock fell near 2%, after blowout second-quarter sales at the fashion retail giant fell short of expectations. Sales in local currency jumped 75% from March to the end of May compared with the same period in the year prior, to 46.51 billion Swedish kroner, which fell short of analysts' expectations of SEK 48.09 billion. The company said that by June 13, 180 of its stores remained closed due to COVID-19 restrictions.
U.S. stocks fell on Tuesday after fresh data showed Americans slowed their spending last month. The Dow Jones Industrial Average dropped 94.42 points, or 0.3%, to 34299.33, while the S&P 500 lost 8.56 points, or 0.2%, to 4246.59. The Nasdaq Composite slid 101.29 points, or 0.7%, to 14072.86. The latter two set record closes on Monday. The market is watching a two-day Federal Reserve policy meeting for any signs that the central bank is thinking about altering its monetary policy as the economy recovers from the pandemic-induced recession.General Motors will supply Ultium battery cells & hydrogen fuel cells for joint development of green locomotives with freight company Wabtec. The companies said they signed a nonbinding MOU but didn't disclose terms or production time frame. GM is seeking to commercialize its batteries & fuel cells to drive scale by supplying other auto makers & expanding outside the car business. Oracle Corp. reported an 8% revenue increase in the latest period, ending the year with a record $40.48 billion in revenue. The business software giant also reported a record $13.75 billion profit for the year ended May 31 and pointed to accelerating growth rates of both its applications and infrastructure cloud businesses.
A similar picture to the previous day was seen on the stock exchanges in East Asia and Australia on Wednesday: new records in Sydney and Seoul and losses in Hong Kong and Shanghai. In Tokyo, however, this time the market is going down, following the negative trend on Wall Street, where new economic data was not convincing - especially retail sales. The Nikkei index fell by 0.4 per cent to 29,315 points.
Treasury yields mostly held firm in Asia as the Fed meeting loomed. On Tuesday, short-term yields extended their climb to monthly highs, but long-dated bonds were subdued, as investors diverged about how major central banks will react to inflation.
IR rises the Lufthansa target to 10,30 (9,90) EUR – Sell
Bryan Garnier rises the Swatch target to 340 (295) CHF – Buy
IR lowers the Henkel target to 97 (99) EUR – Hold
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