Research Market strategy
By Swissquote Analysts
Published on 09.07.2021
Morning news

EU Commission imposes 875-million-euro fine on VW and BMW

Topic of the day

The European Commission has fined German carmakers BMW (-2.3% in Frankfurt) and Volkswagen (-3.8%) a total of 875 million euros for colluding on technologies to eliminate nitrogen oxide emissions from diesel cars. Brussels "found that Daimler, BMW and the Volkswagen group (Volkswagen, Audi and Porsche) had violated European Union rules on anti-competitive practices by colluding on technical development in the field of nitrogen oxide emission control," the Commission said in a statement. Volkswagen was fined 502.4 million euros while BMW was fined 372.8 million euros. Daimler, for its part acting as a whistleblower, escaped a fine of 727 million euros by receiving full immunity for having revealed the existence of the cartel.

Swiss stocks

After the record on the previous day, shares on the Swiss market fell significantly on Thursday. They were thus in line with neighboring European stock markets and Wall Street. Investors worried because a series of recent economic data in Europe, the U.S. and Asia missed expectations. Added to this is the delta variant of the covid virus, which could slow down the process of reopening the economy. The current skepticism is also reflected in the bond market, where quotations continue to climb to new heights. The SMI lost 1.3 percent to 11,925 points. All 20 SMI stocks closed in the red. 42.62 (previously: 30.48) million shares were traded. With bond market yields continuing to whiz downward, bank stocks were again under pressure. Low market interest rates are making business difficult for the financial sector. Credit Suisse lost 2.6 percent and UBS 3.6 percent. Swatch (-3.4%), which will have to leave the SMI benchmark index in September, also trended weakly. Instead, Logitech will move up, whose shares fell 0.3 percent. Swatch competitor Richemont lost 2.6 percent. Among the cyclically sensitive stocks, Holcim fell 2.5 percent. Defensive stocks such as Swisscom (-1%), Nestle (-0.9%), Novartis (-1%) and Roche (-0.6%) held up better. The latter were upgraded by Deutsche Bank to Buy from Hold.

International markets


Stocks in Europe slumped in early action Thursday while bonds continued to rally, as investors assessed central bank developments and anticipated how the economy will behave next year without as much stimulus. Miners including Rio Tinto and banks including HSBC Holdings led the downturn. The Stoxx Europe 600 index lost 1.7% to 451.6 points. In Paris, the CAC 40 and the SBF 120 lost 2% and 1.9%, respectively. In Frankfurt, the DAX 30 was down 1.7%, as was the FTSE 100 in London. "Market optimism about the strength of the global recovery is being challenged by the spread of the Delta variant, which is likely to disrupt economic activity, especially in countries where vaccine deployment is slow," commented Lee Hardman, analyst at MUFG Bank. In addition, the ECB raised its inflation target to 2% on Thursday after a review of its monetary policy strategy, suggesting a sustained accommodative monetary policy, and announced a new commitment to the climate. Stellantis (-3.2%) announced that its current operating margin in the first half of the year should have exceeded the 5.5% to 7.5% target range for the full year 2021. The automaker also announced that it would invest more than 30 billion euros by 2025 in electrification and software. The group also said it expects to achieve a double-digit operating margin in a "sustainable way" as early as 2026. "Stellantis now launched at full speed in its journey towards electrification," said Carlos Tavares, the group's chief executive, at "EV Day," the automaker's event dedicated to its electrification strategy. Shares in Iliad, parent company of telecom operator Free, gained 0.3% to 119.50 euros. HSBC raised its recommendation on the stock to "buy" from "hold". However, the financial intermediary left its target price unchanged at 150 euros. Software maker TeamViewer was the worst performer in the Stoxx 600, losing more than 13% after saying its second-quarter billings would come in below its target.

United States

U.S. stocks tumbled Thursday, while Treasury yields sank for a fourth day, as investors unwound bets on a spell of high growth and inflation.
All three major U.S. stock indexes suffered their worst daily performance in nearly three weeks as investors across the globe retreated from risky assets. The broad-based selloff across U.S. equities marked a sharp reversal from last week, when indexes drifted higher, notching repeated records. In contrast, the S&P 500 on Thursday lost 37.31 points, or 0.9%, to finish at 4320.82, the benchmark index’s worst performance since June 18. The Dow Jones Industrial Average fell 259.86 points, or about 0.7%, to close at 34421.93. The technology-heavy Nasdaq Composite, meanwhile, dropped 105.28 points, or 0.7%, to 14559.78. In a sign of jitters among investors, Thursday’s selloff was wide-ranging, with all 11 sectors of the S&P 500 finishing the day lower. Financials, industrials and materials companies were particularly hard hit, though investors also retreated from growth and technology stocks. Companies ranging from Twitter to PulteGroup to Morgan Stanley all pulled back about 2.7% or more. Cryptocurrencies fell across the board, alongside the broader selloff in riskier assets. Bitcoin fell 5.1% from its 5 p.m. ET Wednesday level to $32,788.32. Ether, the second-largest cryptocurrency by market value, and joke crypto dogecoin also sank. In addition to Thursday’s broad selloff, transportation companies also were among the hardest hit. Kansas City Southern fell $22.46, or 7.9%, to finish at $262.79, while CSX lost $2.03, or 6.2%, to close at $30.95. The Wall Street Journal reported Thursday that the Biden administration is expected to push regulators to combat consolidation and perceived anticompetitive pricing in railroad and ocean shipping industries. The S&P 500 Road and Rail Industry Group Index, comprised of six constituents, finished the day down 5.2%. Still, there were some pockets of gains in the market. Carver Bancorp jumped $11.31, or 107%, to close at $21.89. In a move reminiscent of GameStop Corp.’s rise earlier this year, individual investors piled into the stock, hoping to squeeze bearish investors who had bet against it.


Worries about the Corona pandemic spreading again and the associated lockdown measures and consequences for the economy have the stock markets in East Asia on Friday firmly in their grip. After the state of emergency was again declared in Tokyo to contain the pandemic and, as a result, the Olympic Games, which are to begin shortly and have been postponed for a year, are to be held without spectators, the Nikkei index loses 1.8 percent to 27,621 points, which means it is already losing ground for the third day in a row. In Shanghai, it goes down by 0.7 percent. A counter-reaction to the very strong losses of the previous days occurs in Hong Kong (+0.7%). In Seoul, the Kospi loses 1.6%.


U.S. government bonds extended their recent rally Thursday, pushing the 10-year yield below 1.3% while further declines in shorter-term yields suggested traders were scaling back bets on Federal Reserve interest-rate increases. The yield on the benchmark 10-year U.S. Treasury note settled at 1.287%, according to Tradeweb, compared with 1.321% Wednesday and 1.479% one week ago.


Dt. Bank raises Roche to Buy (Hold) - Target 425 (325) CHF
Jefferies lifts Holcim target to CHF 59.90 (58.40) - Hold
Jefferies raises L'Oreal target to EUR 340 (317) - Hold

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