Google Invests $1 Billion in Exchange Giant CME, Strikes Cloud Deal
Topic of the day
Alphabet Inc.’s Google has invested $1 billion in futures-exchange giant CME Group Inc. and struck a deal to move the company’s core trading systems to the cloud. The companies said Thursday that their 10-year partnership would allow CME to bring on new users faster, streamline operations and develop new tools with Google technology, such as artificial-intelligence software for monitoring market risks. The CME deal gives Google Cloud a prize client in the sector. With a market capitalization of $79.2 billion, CME is the world’s most valuable exchange operator, a title it recently reclaimed from Hong Kong Exchanges & Clearing Ltd. The Chicago-based company runs an array of markets, from crude oil to gold to stock-market futures. Google Cloud is the fourth-largest cloud provider, taking 6.1% of global cloud-infrastructure revenues last year, according to research firm Gartner Inc. The biggest player is Amazon, whose market share last year was more than 40%, followed by Microsoft and Alibaba Group Holding Ltd. , Gartner data shows. Alongside the cloud deal, Google made a $1 billion equity investment in nonvoting convertible preferred CME Group stock, the companies said. The transaction is the largest investment Google has ever made in the financial-services industry.
The Swiss stock market was unable to keep pace with the other stock exchanges in Europe on Thursday. The SMI gained 0.2 percent to 12,403 points. The Swiss stock market was burdened by rising exchange rates of the Swiss franc against the euro, but especially against the British pound. The monetary policy decision of the Bank of England weighed on the British currency. Contrary to the consensus opinion on the market, the Bank of England did not increase key interest rates. At the center of the action was a billion-dollar deal. The pharmaceutical giant Roche (+0.5%) wants to achieve full strategic independence and buys back from competitor Novartis (-0.2%) its Roche shares. The total volume of the buyback amounts to about 19 billion Swiss francs. Credit Suisse's business figures for the third quarter were described as "decent". Net profit was below the previous year, but still above analysts' expectations. Clearly in focus, however, were statements on corporate restructuring and strategy. As expected, a turn from the investment bank in the direction of asset management will be completed. This also entails an exit from the prime brokerage business. The share lost 4.8 percent. UBS fell by 1.5 percent. Nestle (+0.8%) marked another all-time high. In view of the transaction in the pharmaceutical sector, speculation had boiled up, the food group may sell the stake in L’Oreal.
European stocks rose after the Federal Reserve (Fed) launched its tapering of asset purchases. Its willingness to be patient before raising interest rates has reassured investors. The Stoxx Europe 600 index closed up 0.4%, at 483.21 points. In Paris, the CAC 40, gained 0.5% to 6,987.79 points. The SBF 120 ended up 0.6%. In Frankfurt, the DAX 40 gained 0.4% to 16,029.65 points. In London, the FTSE 100 rose 0.4%. Solutions 30 (-5.3%) reported a decline in sales and lower than Oddo BHF's forecasts for the third quarter, due in particular to the emergence of supply difficulties. Teleperformance (-1.5%) has raised its forecasts for 2021, expecting in particular an organic growth of 20% or more and an operating margin (current Ebita) of around 15%. The oil and gas services group CGG (+3.5%) saw its net loss reduced in the third quarter. Veolia (+4.2%) gained 4.2% after reporting nine-month results, including revenues of €20.36 billion, slightly above the consensus of €20.15 billion, according to Oddo BHF. Société Générale shares rose 1% after the bank posted profit ahead of expectations and replaced its chief financial officer, as it prepares to launch a buyback program. Shares in Deutsche Post traded up 3% after the German freight-and-logistics company reported full third-quarter figures and increased its guidance for 2021 and 2023. Deutsche Post raised full-year expectations for earnings before interest and taxes to more than EUR7.7 billion in 2021 from a previous target of more than EUR7.0 billion.
The S&P 500 and Nasdaq Composite extended their record-setting streaks on Thursday, while investors digested the Federal Reserve’s latest update on stimulus spending and interest rates. The S&P 500 rose 19.49 points, or 0.4%, to 4680.06. The tech-focused Nasdaq Composite gained 128.72 points, or 0.8%, to 15940.31. It was the sixth consecutive record close for both indexes. With the Fed news out of the way, equities investors have turned their attention back to corporate profits. A strong earnings season so far has shown that Americans are still eager to pay for companies’ products and services, curtailing worries about the effect of higher prices. Shares of Qualcomm gained $17.63, or 13%, to $156.11 after the mobile-phone chip company posted record quarterly sales and forecast further growth powered by surging demand for 5G smartphones. Tesla shares edged up $16.05, or 1.3%, to $1,229.91. The Wall Street Journal reported that the auto maker and Hertz are negotiating over how quickly the rental-car company will receive deliveries from a bulk order of 100,000 Tesla vehicles. Merck shares rose $1.86, or 2.1%, to $90.54 after U.K. health regulators cleared a Covid-19 drug it developed with partner Ridgeback Biotherapeutics. Moderna shares plunged $61.90, or 18%, to $284.02 after it cut its forecast for full-year 2021 Covid-19 vaccine deliveries, citing longer delivery lead times for international shipments.
The stock market in Hong Kong (-1.0%) declines, weighed down by the banking heavyweights HSBC (-5.0%) and Standard Chartered (-4.0%). Shanghai (-0.4%), Tokyo (-0.7%) and Seoul (-0.6%) display more moderate losses. After the problems around the real estate group Evergrande, the shares of Kaisa Holdings are suspended from trading, after it had gone down at the peak of the previous day by a good 14 percent. China Evergrande falls by 3.0, Shimao Property Holdings by 8.9 and Sunac China by 6.8 percent.
Long-dated U.S. government debt yields slipped on Thursday, with the 2-year rate posting its biggest one-day drop since March 2020, as the Bank of England held off on a widely anticipated interest rate increase and traders reassessed their expectations for global central bank policy. The BoE’s decision took some of the focus off the Federal Reserve’s announcement on Wednesday that it will begin tapering monthly bond purchases and remain patient about raising interest rates. The 10-year U.S. Treasury yield gave up 8 basis points to 1.528%, compared to 1.606% Wednesday night. The yield on the German Bund with the same maturity was -0.221%, down from -0.167% Wednesday night.
Dt. Bank increases BMW target to EUR 135 (125) - Buy
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