Research Market strategy
By Swissquote Analysts
Published on 10.11.2021
Morning news

General Electric to Split into Three Public Companies

Topic of the day

General Electric Co. said it would split into three public companies, breaking apart the more than century-old company that was once a symbol of American manufacturing might and has struggled in recent years. The plan is being unveiled three years after Larry Culp took over the troubled company and tried to stabilize its operations by selling off business units and paying down the company’s debt load. But GE’s stock price, despite a 1-for-8 reverse split, has lagged behind the S&P 500 and rivals. The move is the culmination of a yearslong process of shrinking the company. GE has already sold off its locomotive and home appliances business. It spun off its oil-and-gas business operations. It has also sold most of its once massive financial services arm, which hobbled the company after the 2008 financial crisis. It also slashed its quarterly dividend to a token penny per share. What remains today are three businesses - aviation, healthcare and power. The company will now spin them off into separate publicly traded companies.

Swiss stocks

The Swiss stock market continued its climb on Tuesday. The gains in the SMI melted away somewhat in late trading due to Wall Street, where profit-taking caused a somewhat lighter initial trend. Daily gainers were Swisscom (+1.7%) and Lonza (+1.6%). The SMI gained 0.1 per cent to 12,368 points, exiting trading roughly in the middle of the day's roughly 100-point range. Among the 20 SMI stocks, there were ten losers and no winners, with Givaudan closing unchanged. 28.87 (Monday: 28.7) million shares were traded. Credit Suisse (-1.3%) was at the bottom of the SMI list. Alcon also fell, by 0.7 per cent, in the run-up to the third-quarter report due after the close of the US stock market this evening. Swiss Life (+0.1%) did little in terms of share price. The life insurer and wealth manager generated higher fee income in all divisions in the first nine months.

International markets

Europe

European equity markets failed to string together a ninth consecutive gain on Tuesday, ending the session slightly lower as investors remained wary of rising Covid-19 cases in Europe. The Stoxx Europe 600 index fell 0.2 percent to 482.7 points. In Paris, the CAC 40 and SBF 120 lost 0.1% each. In Frankfurt, the DAX 40 finished close to balance, while the FTSE 100 in London gave up 0.4%. German pharmaceutical-and-agricultural conglomerate Bayer AG on Tuesday swung to a profit for the third quarter and said sales rose, driven by a recovery in its agriculture business. The company posted net profit of 85 million euros ($98.5 million), compared with a net loss of EUR2.74 billion a year earlier, when it experienced headwinds in the agriculture division. Earnings before interest, taxes, depreciation and amortization before special items came in at EUR2.09 billion, up from EUR1.80 billion the year prior. Earnings before interest and taxes were EUR530 million, compared with a loss before interest and taxes of EUR9.40 billion, the company said. Associated British Foods PLC said on Tuesday that it will accelerate the expansion of its Primark clothing chain in the U.S. and Europe and that it has enough stock to cover the important Christmas trading period. The British conglomerate expects to grow its retail-store estate from the 398 sites it had in September to 530 over the next five years. The company plans to increase its selling space by 0.5 million square feet in the current fiscal year, with eleven store openings confirmed, mostly in Europe. ABF said it also sees considerable growth potential in the U.S.

United States

U.S. stocks retreated from record levels, breaking an eight-day winning streak for the S&P 500. The S&P 500 fell 0.4%. On Monday, it notched its eighth consecutive winning session and eighth straight all-time closing high, the longest streak of records since 1997. The Dow Jones Industrial Average ticked down 0.3% after the blue-chip index closed at a record for the 44th time in 2021. The technology-focused Nasdaq Composite fell 0.6%. Some investors view the pullback as a breather after the rally. Propelled by strong third-quarter earnings, stocks have continued to trend upward against the backdrop of supply-chain issues and concerns about inflation. ADT Inc. has struck a deal to buy a top solar-panel-installation company in a push to offer more products and services to its residential customers, the companies said. The home-security company is buying Sunpro Solar for about $825 million, including debt, using $160 million in cash and 77.8 million shares of ADT stock. ADT’s stock closed Monday at $9, giving the company a market value of about $7.4 billion. The Wall Street Journal earlier reported that ADT had agreed to buy Sunpro. Founded by Marc Jones in 2008, Sunpro designs, installs and maintains solar panels on residential and commercial properties. The company, which is based in Mandeville, La., employs 3,600 people in 22 states and has been growing quickly. AMC Entertainment Holdings Inc. reported a sharply narrowed loss as moviegoers returned to theaters during the September quarter, but the company’s chief executive said AMC is far from out of the woods. The world’s biggest movie-theater company reported nearly 40 million attendees during the quarter, up from about 22 million in the June quarter but still behind pre-pandemic levels. “We’d not normally be smiling at an attendance level that is half what it was two years ago,” said AMC CEO Adam Aron.

Asia

The Asian stock markets went down in late trading on Wednesday, driven by fears of inflation. The stock exchanges in Shanghai and Hong Kong lead the region's losers, each down more than 1 per cent.

Bonds

Treasurys were lower in Asia after they rallied across the board on Tuesday, with the 10- and 30-year yields slipping to the lowest level in months, as traders brushed aside data showing U.S. wholesale inflation surged in October.

Analysis

UBS rises Voestalpine to Neutral (Sell) – Target 33 (34) EUR
UBS rises Siemens Healthineers target to 59 (54) EUR – Neutral
BoA rises Telefonica target to 5,20 (5,10) EUR – Buy

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