Research Market strategy
By Swissquote Analysts
Published on 07.10.2021
Morning news

GM Sets Ambitious Revenue Target, Challenges Tesla

Topic of the day

General Motors Co., riding a wave of investor enthusiasm for its electric-vehicle plans, set one of its most ambitious financial targets in years Wednesday, telling investors it aims to more than double revenue by 2030. The Detroit auto maker also took direct aim at Tesla Inc., saying it plans to take the lead in electric-vehicle sales in the U.S., without pegging a timetable. GM executives outlined their longer-term goals ahead of a daylong event for investors and analysts at GM’s research center in suburban Detroit. GM said it additionally plans to boost operating margins beyond the 7.9% posted last year by rolling out new models and services that can help it further grow its bottom line. In 2020, GM had global revenue of $122.5 billion. Declaring such long-range financial goals is an unusual step for the car company and underscores GM’s bid to convince investors to value it more like a tech-oriented firm than a manufacturer. GM executives have been trying to make the case that it is evolving into a technology company and can boost revenue and profit by not only churning out cars but also offering services that generate recurring revenue streams.

Swiss stocks

The Swiss stock market recorded small losses on Wednesday. The SMI lost 0.2 per cent to 11,569 points. Among the 20 SMI stocks, there were 13 price losers and five price winners, and two shares closed unchanged. 33.35 (previously: 28.08) million shares were traded. The downward movement in the SMI was slowed by the heavyweights Nestle and Roche. While Nestle closed unchanged, Roche was up 0.9 per cent. In contrast, cyclicals were under pressure. ABB fell by 1.5 per cent and Holcim by 1.3 per cent. After gains the previous day, banking stocks were now lighter. Credit Suisse lost 1.1 per cent and UBS 1.3 per cent. Luxury goods stocks were also under pressure. Richemont and Swatch each fell 2 per cent. Logitech fell 1.3 per cent. Morgan Stanley analysts continue to recommend underweighting the stock and have slightly lowered the price target.

International markets

Europe

European equity markets fell sharply on Wednesday, weighed down by fears about inflation amid volatile energy prices, disrupted supply chains and high demand after many economies reopened. The Stoxx Europe 600 index lost 1% to 451.3 points. In Paris, the CAC 40 and the SBF 120 each gave up 1.3%. In Frankfurt, the DAX 40 was down 1.5%, and the FTSE 100 in London lost 1.2%. Tesco PLC on Wednesday raised guidance for the fiscal year after a strong first half, and said that it is starting a share-buyback program. The company said that its sales and profit increased ahead of expectations in the first half ended Aug. 28, outperforming the market, and upgraded its adjusted retail operating profit guidance to 2.5 billion pounds-2.6 billion pounds ($3.41 billion-$3.54 billion) for the year ending in February 2022. The Tesco Bank business is expected to deliver an adjusted operating profit of at least GBP120 million. TUI AG said Wednesday that revenue for the third quarter of fiscal 2021 rose significantly when compared with the previous quarter, and added that it intends to raise proceeds of around 1.1 billion euros ($1.28 billion) via a discounted share placing to reduce its debt position. The London-listed company said that third-quarter revenue rose to EUR650 million from EUR248 million for the previous quarter, driven by higher levels of markets and airline passengers. Tesco, the U.K.’s biggest grocer by market share, made a pretax profit of GBP1.14 billion in the first half of the fiscal year, more than doubling from GBP551 million a year earlier.

United States

U.S. stocks rose, erasing losses after a morning marked by broad pullbacks across sectors. The S&P 500 rose 0.4% as of the 4 p.m. close of trading in New York. The Dow Jones Industrial Average gained about 0.3%. The tech-focused Nasdaq Composite Index advanced 0.5%. Stock trading has been bumpy lately as investors have grappled with soaring energy prices and a general shift higher in government bond yields. On Tuesday, the S&P 500 logged its 25th gain of at least 1% for the year. The market's momentum looked like it was fading earlier in the day when stocks opened lower, but major indexes managed to break into positive territory in the final few hours of trading. BlackRock Inc. is putting annuities in American workers’ 401(k)s. Facebook Inc. has delayed the rollout of new products in recent days, people familiar with the matter said, amid media reports and congressional hearings related to a trove of internal documents showing harms from its platforms. Executives at the social-media company also have put a hold on some work on new and existing products while more than a dozen people are involved in conducting “reputational reviews” to examine how Facebook may be criticized and to ensure products don’t adversely impact children, the people said. The investment giant said five employers have signed up for a new retirement product that will allow workers to receive a stream of payments for the rest of their lives. A small number of 401(k) plans currently incorporate annuities. Employers who offer retirement plans worry about annuities’ complexity and their cost—and about being sued if the insurer that stands behind the annuity fails to make payments. A 2019 law now protects many employers from legal liability.

Asia

After the poor mood of the past few days, the stock markets in East Asia and Australia are on a firm recovery course on Thursday. The strongest recovery in share prices is in Hong Kong with a gain of 2.4 per cent, followed by Seoul in Korea (+1.7 per cent). In Seoul, participants also report solid August current account figures for the country. In Tokyo, the Nikkei index gains 1.0 per cent to 27,795 points, while in Shanghai there is no trading for the last time as part of the so-called Golden Week.

Bonds

The 10-year U.S. Treasury yield was little changed on Wednesday after briefly touching the highest level since June, with its early advance attributed to intensifying inflation fears. The inflation worries were centered on supply-chain problems that are amplifying pricing pressures in everything from energy to goods and services.

Analysis

IR rises MLP target to 9,50 (8,40) EUR – Buy
UBS rises HSBC to Buy (Neutral) – Target 485 (450) p
CS lowers AB Inbev target to 53 (56) EUR – Neutral

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