Research Market strategy
By Swissquote Analysts
Published on 07.07.2021
Morning news

Pentagon Cancels JEDI Cloud Contract in Setback for Microsoft, Likely Win for Amazon

Topic of the day

Pentagon officials on Tuesday canceled the embattled JEDI cloud-computing project—which has been mired in litigation from Inc. and criticism from lawmakers—and said it would start anew with a revised cloud project. The decision is likely to open up the cloud project, known until now as the Joint Enterprise Defense Infrastructure, to Amazon and potentially other cloud vendors in addition to Microsoft Corp., which won the original competition outright in 2019. The new project will be known as Joint Warfighter Cloud Capability (JWCC). The decision represents a setback for Microsoft, which now will likely have to share the work with other companies. shares rallied $164.76, or 4.7%, to a record $3,675.74 as Andy Jassy took over as the e-commerce giant’s new CEO, replacing founder Jeff Bezos.

Swiss stocks

The Swiss stock market closed little changed on Tuesday. The mark of 12,000 points in the SMI was only temporarily recovered. However, the index remains in its sideways range just at the all-time high, which it has now held since mid-June. Participants spoke of a typical "summer slump", also in view of the low turnover. Now the stock exchange players are betting on the minutes of the U.S. Federal Reserve on Wednesday, which could possibly provide an impetus. In addition, the first quarterly reports of major companies are on the agenda next week, led by the U.S. banks. The SMI lost two points to 11,965. Among the 20 SMI stocks, 11 price losers and 9 winners faced each other. Turnover was 27.78 (previously: 19.05) million shares. On the reporting day, with the weak U.S. data, defensive stocks were in particular demand. Sika gained 0.6 percent and Lonza 1.6 percent. Swisscom gained 0.5 percent. Among the large caps in the SMI, Roche rose 0.9 percent and Novartis 0.4 percent. On the other hand, cyclically sensitive stocks were sold, such as Credit Suisse (-2.7%)and UBS (-2.3%). Holcim (-1.9%) were also not sought after. ABB was able to withstand the headwinds somewhat better, the share lost only 0.3%. Here, the upgrade of Deutsche Bank to "Hold" from previously "Sell" supported. On the capital goods sector as a whole, the bank said growth in the second half of the year should be further supported by the initial effects of the planned stimulus packages, inventory build-up and better price momentum.

International markets


Tough restrictions on people traveling from the U.K. and four other countries to Germany have been eased, opening up quarantine-free travel for fully vaccinated visitors and those with COVID-19 antibodies. Shares in European airlines, which are sensitive to developments in the COVID-19 picture in the region, lifted off on Tuesday. International Airlines Group - the owner of British Airways and other carriers - gained altitude alongside Lufthansa, Air France-KLM, and low-cost carriers Ryanair, easyJet, and Wizz Air. Airline stocks added lift to major European stock market indexes, which traded slightly lower on Tuesday but remained near all-time highs.The Stoxx Europe 600 index fell 0.5% to 456 points. In Paris, the CAC 40 and the SBF 120 gave up 0.9% and 0.8%, respectively. In Frankfurt, the DAX 30 lost 1%, while in London, the FTSE 100 was down 0.9%. Ocado stock rose more than 2%, after the grocery-delivery company and robotics-logistics group reported half-year revenue and earnings ahead of analysts' expectations. A key rival to online retailer Amazon in the British online grocery market, Ocado is also the high-tech logistics partner of U.S. retailer Kroger. Shares in Alstom fell near 7%, as the French train and railway manufacturing group updated investors in a capital markets day. The company said the financial year 2021/2022 will be a transition period as it stabilizes after acquiring Bombardier Transportation. Regarding the DAX, BMW fell by 3.8 percent, Daimler by 4 percent and VW by 3.9 percent. The industry had already suffered on Monday from concerns about an economic slowdown in China, its most important sales market. Continental was the biggest DAX loser, down 4.2 percent. In the SDAX, Schaeffler also came under pressure, down 6.6 percent. In contrast, Siemens Energy rose by 2.9 percent, Delivery Hero by 2.8 percent and Vonovia by 1.6 percent in the DAX. SAP rose 1.2 percent. Merck KGaA was unstoppable in its record course, rising 1.3 percent to a new all-time high of 165.55 euros.

United States

The S&P 500 and Dow Jones Industrial Average fell Tuesday, retreating from last week’s record highs. The S&P slipped 8.80 points, or 0.2%, to 4343.54, halting its recent winning streak. On Friday, the broad-based index closed at a record for the seventh consecutive trading session, its longest record-setting streak since 1997. The Dow slid 208.98, or 0.6%, to 34577.37. The technology-heavy Nasdaq Composite inched up 24.32, or 0.2%, to close at 14663.64, a new record. U.S. markets were closed Monday for the Independence Day holiday. Tuesday’s drop came during light summer trading volumes. Thin trading activity can exacerbate volatility, as many investors are on the sidelines. In company news, U.S.-listed shares of Didi Global slumped $3.04, or 20%, to $12.49 after China announced a cybersecurity probe of the ride-hailing company just days after it went public. Other large U.S.-listed Chinese companies also fell, with Baidu and Pinduoduo both shedding around 5%. Airlines were hurt by concerns surrounding Covid-19's Delta variant. United Airlines lost 2.5% and American Airlines 2.2%. Oil stocks also lost ground, like Exxon (-3%) and Chevron (-2%). Crude oil prices ended sharply lower in New York following the postponement sine die of the meeting of the Organization of Petroleum Exporting Countries (Opec) and its allies, led by Russia.


Asian markets were mixed on Wednesday. In Shanghai, the market barometer increases (+0.4%). In Tokyo, however, the Nikkei index loses 0.9 percent to 28,379 points. In Hong Kong, again the technology stocks slow down the HSI (-0.7%). The corresponding sub-index is down more than 1 percent, because China continues to watch the major companies from the sector with a wary eye regarding their market power. Alibaba, Tencent, Kuaishou and Meituan lose between 1 and 3 percent.


Investors are also keeping a close eye on the Federal Reserve, which on Wednesday is set to release minutes from last month’s rate-setting meeting. The minutes could give insight into how soon the U.S. central bank might begin to taper its asset purchases or raise interest rates.
Easy-money policy from the Fed has helped underpin the stock market’s rally in recent months. The yield on the 10-year U.S. Treasury note fell to 1.369%, from 1.434% on Friday.


MS lowers Prosiebensat1 to Equalw. (Underw.)/Target EUR 18 (12) - Trader
JPM raises Pernod-Ricard target to EUR 200 (190) - Neutral
Citi raises ABB target to CHF 36 (34) - Buy

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