Research Market strategy
By Swissquote Analysts
Published on 01.07.2021
Morning news

Exxon Mobil Selling Santoprene Unit to Celanese

Topic of the day

Exxon Mobil Corp. has agreed to sell its Santoprene business to Celanese Corp. Chemicals-and-specialty-materials company Celanese said it will acquire the unit for $1.15 billion and finance the transaction using excess cash and liquidity available on its balance sheet. Santoprene is an Exxon brand name for a material that behaves like a rubber but can be processed similar to a thermoplastic, Exxon says on a website about the product. It has applications in the automotive sector, in industrial and consumer products and other end markets. "Reaching this agreement with Celanese is consistent with our strategy and allows us to focus on serving the growing market for primary olefin derivatives," Jack Williams, senior vice president at Exxon, said in a statement. Celanese will acquire production facilities in Florida and the U.K., trademarks and intellectual property and other assets as part of the deal.

Swiss stocks

Profit-taking dominated trading on the Swiss stock market in midweek. Observers blamed this on the end of the first half of the year on the one hand, and on the other hand on the Corona fears. This is because the more infectious delta variant is on the rise worldwide, and new restrictions are being reported from various regions of the world. The SMI lost 0.7 per cent to 11,943 points. Of the 20 SMI stocks, 19 recorded price losses. The only winner was Swisscom, which is considered defensive, with a marginal gain of 0.04 per cent. 32.89 (previously: 29.88) million shares were traded. Investors parted with defensive stocks such as Nestle (-0.9%) as well as cyclicals such as ABB (-1.3%) or Sika (-1.8%). News on individual stocks was scarce. Zur Rose (-3.4%) was weighed down by an expected delay in the introduction of e-prescription in Germany. The Gematik GmbH, which is responsible for the digitalisation of the healthcare system, responded to an enquiry from "Apotheke adhoc" by saying that the necessary prerequisites were apparently not yet in place for the planned launch on 1 July. Currently, selected partners are simulating test scenarios.

International markets

Europe

Europe's main equity indices fell on Wednesday as investors monitored the Delta variant's progress and assessed its impact on the tourism sector. The Stoxx Europe 600 index fell 0.8% to 452.8 points. In Paris, the CAC 40 and SBF 120 lost 0.9% and 0.8%, respectively. In Frankfurt, the DAX 30 gave up 1% and in London the FTSE 100 fell by 0.7%. Travel-related stocks also slipped with shares of International Consolidated Airlines down 1.5% and cruise group Carnival off 2%. Acciona Energia set its initial public offering at the lower end of an expected range, seeking a market capitalization of around 8.8 billion euros ($10.47 billion). The renewable energy company, which is owned by Spain's Acciona said the IPO would be priced at EUR26.73 per ordinary share. Acciona shares fell 0.5%. Renault (-2.9%) plans to invest 10 billion euros over the next five years in the electrification of its vehicles, and is aiming to produce one million electric vehicles by 2030 in partnership with Nissan, said its CEO, Luca de Meo, on Wednesday during a day devoted to the manufacturer's electric strategy. Sanofi SA said it plans to build a messenger RNA vaccine business, the latest big drugmaker to embrace the technology. The French pharmaceutical company, one of the world's biggest vaccine makers by sales, said that it would invest EUR400 million, equivalent to $477 million, a year in mRNA vaccine research, starting immediately. The drugmaker said it expects the investment to produce at least six new candidate vaccines in human testing by 2025.

United States

U.S. stocks traded in a narrow range, with the major indexes closing out the quarter at record highs following a June rally powered by technology stocks. The S&P 500 rose 0.1%, marking the benchmark index's 34th record close of the year. The index is now up 14.4% in 2021, representing the largest first half gain in a year since the first half of 2019. Meanwhile, the Dow Jones Industrial Average added 0.6%. The tech-heavy Nasdaq Composite edged back from Tuesday's record close, declining 0.2%. The index still rose for the fifth consecutive quarter. Late Tuesday, Federal Reserve Gov. Christopher Waller told Bloomberg TV that the "unemployment rate would have to drop fairly substantially, or inflation would have to really continue at a very high rate, before we would take seriously a rate hike in 2022," but added that he is not ruling out such a move, noting that it is appropriate to think about scaling back the Fed's monthly purchases of $120 billion in assets, starting with a reduction of $40 billion in mortgage-backed securities. Didi Global Inc.'s stock jumped on the first day of trading after its IPO, as investors gobbled up shares of the Beijing-based ride-sharing company. Didi's American depositary shares opened trading at $16.65 on Wednesday afternoon, 19% above their $14 IPO price. At the open, Didi's market capitalization was roughly $80 billion. The gains bucked the trend of poor performance that has plagued several other Chinese companies' IPOs in recent weeks, signaling that investors are willing to overlook some risks for the promise of high growth, and that Didi and its underwriters were wise in conservatively pricing the deal.

Asia

The stock exchanges in East Asia and Australia were down on Thursday. Initial slight gains could not be defended. Worries about a further spread of the delta variant of the coronavirus are increasingly weighing on sentiment, according to reports. New restrictions are being imposed in more and more countries. However, after the recent upward trend at the beginning of the new half-year, there is also profit-taking. The Nikkei-225 is down 0.4 per cent to 28,674 points. The losses in technology stocks weighed on the index.

Bonds

U.S. government bond yields were mostly unchanged, after they fell across the board on Wednesday despite a report on private-sector employment showing the labor market slowly recovering from the coronavirus pandemic. However, the conclusion of the session saw short-dated 2-year notes register their steepest quarterly yield gain since 2018, while long-dated bonds experienced their biggest quarterly yield drop since the period ended March of 2020.

Analysis

Citi rises Shell to Neutral (Sell)
JP Morgan rises Generali to Overweight (Neutral) – Target 21 EUR
Deutsche Bank rises Essilorluxottica target to 175 (170) EUR – Hold

Produced by MBI Martin Brückner Infosource GmbH & Co. KG on behalf of Swissquote. All news is acquired with journalistic accuracy. No liability is assumed for delays or errors.