Tesla celebrates its first European factory in Berlin
Topic of the day
Tesla's chief executive (-1.2% on Wall Street), Elon Musk, ruled out paying a dividend in the near future on Thursday. "We are not short of things to invest in internally, far from it," said the head of the American manufacturer of electric cars, who also confirmed his plan to move his headquarters in Austin. Tesla's future "gigafactory", the first in Europe, was inaugurated on Saturday, hoping to deliver its first electric cars in December. Tesla has benefited from an exceptional and controversial procedure of prior authorisation, which allowed it to start work in 2019, before having a building permit. No final approval has since been issued by the local authorities, who are still assessing the environmental impact of the factory. However, the work is almost complete. The factory, which was announced with great fanfare in November 2019, will cover 300 hectares and will produce 500,000 electric vehicles per year. Elon Musk also plans to build "the largest battery factory in the world". But "building modifications" may be required, delaying the opening. The opening was originally planned for July.
After the strong gains of the previous day, consolidation was the order of the day on the Swiss stock exchange on Friday. The SMI trended almost unchanged, gaining 1 point to 11,765 points. Among the 20 SMI stocks, there were 11 price losers and 9 price gainers. 30.79 (previously: 38.3) million shares were traded. Rising market interest rates helped bank stocks to make further gains. UBS rose by 1.3 per cent and Credit Suisse by 1.2 per cent. In contrast, profits were taken in Partners Group. The share is up more than 40 per cent since the beginning of the year, now it gave up 1.6 per cent. The recent problems in China, where demand is being dampened by new pandemic-related restrictions, are likely to have hit Swatch harder than other companies in the luxury sector, analysts at UBS said. The group is among the sector's most exposed companies in China and will be hit by the slowdown in Swiss watch exports in August, UBS said. The stock lost 0.3 per cent, while rival Richemont fell 1 per cent. Zur Rose fell 6.2 per cent. It has been apparent for some time that the introduction of e-prescriptions in Germany will be delayed. Now the Berenberg analysts have also addressed this. The later market launch is likely to have a negative impact on profits in the short term. The long-term growth prospects, however, are intact.
Most European stocks eased lower Friday, although energy majors gained following the rise in crude prices, helping support London's FTSE 100. Investors remained cautious ahead of fresh U.S. data on job growth that is expected to provide insight into the recovery of the labor market and economy. Economists are projecting solid growth, expecting the end to federal Covid-related jobless benefits and reopened schools to have driven more workers back into the labor force. The Stoxx Europe 600 index fell 0.3% to 457.3 points. In Paris, the CAC 40 and SBF 120 were down 0.6% and 0.5%, respectively. In Frankfurt, the DAX 40 dropped 0.3% while the FTSE 100 in London gained 0.3%. For the week as a whole, the Stoxx Europe 600 index rose by 1%. Daimler rose 2.6% after analysts at UBS upgraded the stock to buy from neutral, citing catalysts ahead, even as the company reported a fall in Mercedes-Benz deliveries and impacts from the global chip shortage. UBS said Mercedes-Benz is expected to see strong revenue and earnings momentum in 2022 thanks to customer demand that hasn't been met yet and production beginning to recover from lows caused by the chip supply shortage. "While we factor in margin headwinds from a higher EV share, lower residual value gains and higher raw mats, we are very confident that consensus is too cautious for next year," said UBS. Vivendi rose 0.8% but Citi said the company doesn't look too exciting in operational terms after spinning off Universal Music Group, leaving the remaining parent smaller and growing slower with an asset range that isn't inspiring. "That said, as the value of UMG rose at the time of the distribution in September, so the value of Vivendi has fallen, creating an extraordinary opportunity," Citi said. It added that in risk-reward terms, the French media company's stock looks attractive, upgrading it to buy from neutral, and lifting the price target to EUR16 from EUR14.50
The Dow Jones Industrial Average hovered around the flatline Friday but finished a volatile week with its strongest gains since June. Volatility has returned to markets in recent sessions, with both the S&P 500 and Nasdaq Composite recording back-to-back swings of at least 1% and other assets from bonds to commodities recording large moves. Throughout the week, investors have remained focused on surging energy prices, concerns about inflation and negotiations on the debt ceiling. Lawmakers struck a deal for a short-term extension to the debt limit in the Senate on Thursday, stoking a rally in the stock market after several days of uncertainty. Oil prices jumped to a seven-year high this week, while cotton prices have been trading at their highest levels in about a decade. Bitcoin prices have been rallying again, hovering around $54,000 on Friday. To end the week, the Dow slipped 8.69 points, or less than 0.1%, to 34746.25. The S&P 500 edged lower 8.42 points, or 0.2%, to 4391.34. The Nasdaq Composite fell 74.48 points, or 0.5%, to 14579.54. All three indexes held on to weekly gains. The S&P 500 and Dow advanced 0.8% and 1.2%, respectively, this week. It was the S&P 500’s best week since August. The Nasdaq added 0.1% for the week. There have also been huge moves among groups of stocks within the broader market. On Friday, energy stocks continued their historic rally—the S&P 500’s energy group jumped 3.1% and soared past the broader benchmark—while tech continued to stumble. The S&P 500’s energy sector closed at its highest level since at least early 2020, according to Dow Jones Market Data. Still, the latest jobs report highlighted how the economic recovery remains uneven. The U.S. added 194,000 jobs in September, data showed Friday, substantially less than expected and down from August. Economists had forecast a gain of 500,000 jobs. Vaxart lost 1.4 per cent despite the company's Covid 19 oral vaccine reducing airborne transmission of coronavirus in animal trials. An acquisition supported shares of Chubb (+2.5%). The company is buying Cigna's Asia-Pacific insurance business (+0.2%) for $5.75 billion (€4.98 billion), following its own expansion strategy in the region.
The recent recovery movement on the stock exchanges in East Asia continues at the beginning of the new trading week. There is no trading in Seoul due to a public holiday. The Hang Seng Index in Hong Kong recorded a gain of 2.2 per cent. The Shanghai Composite is up 0.4 per cent. The Nikkei-225 in Tokyo recovers from initial losses and gains 1.6 per cent.
While investors led stocks to weekly gains, they fled treasurys. The yield on the 10-year treasury note finished its seventh consecutive week of gains, rising to 1.604% on Friday, its highest settle since June, as bond prices fell. The bond market is closed on Monday for Columbus Day, while the stock market will be open.
Credit Suisse lowers Hellofresh target to EUR 93 (96) - Outperform
Warburg raises Aareal target to EUR 32.30 (28) - Buy
BoA increases Relx target to 2,460 (2,350) p - Buy
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