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By Swissquote Analysts
Published on 17.02.2022
Morning news

Ericsson Shares Sink After Company Says It May Have Made Payments to ISIS

Topic of the day

Ericsson shares traded 14.4% lower in Stockholm after the Swedish telecom equipment maker said that a 2019 internal probe found "serious breaches of compliance rules" in Iraq between 2011 and 2019. These included using suppliers to make cash payments; funding inappropriate travel and expenses; and improper use of sales agents and consultants. “The investigating team also identified payments to intermediaries and the use of alternate transport routes in connection with circumventing Iraqi Customs, at a time when terrorist organizations, including ISIS, controlled some transport routes”, Ericsson said. Ericsson said it could not determine who the final recipient of the money was, or whether any of its employees were directly involved in financing terrorist groups. On Tuesday, Ericsson said it was reviewing its investigation as a result of media inquiries raised by Swedish and international news outlets. Several employees had left the company because of the investigation, Ericsson said, and that it had stopped working with a few third parties. It said it had also closed gaps in its internal processes in the region and incorporated lessons from the investigation into its ethics and compliance program.

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Swiss stocks

Wednesday, the SMI finished 0.1 per cent higher at 12,192 points. Among the 20 SMI stocks, there were twelve price winners and eight price losers. 31.16 (previously: 38.05) million shares were traded. After positive business figures and an increased dividend, the shares of the eye care company Alcon gained 2.1 per cent. The heavily weighted shares of food company Nestle lost 0.4 per cent the day before publishing results. ABB reported a small order worth 30 million US dollars and the industrial goods group's share price gained 0.2 per cent. Schindler's interim report did not generate enthusiasm. According to Citigroup, the margin was 20 basis points below expectations due to cost pressures. Although the company reported better-than-expected order intake, this was not reflected in higher sales. Citigroup lowered its price target significantly - the share price fell by 5.7 per cent. Zur Rose (-9.1%) was under heavy pressure. Traders pointed to reports from Germany that the test phase for the e-prescription is to be extended. Dufry (+2.7%) prolonged its concession with Helsinki Airport for another five years. Supported by positive business figures, Cembra climbed 6 per cent.

International markets


European stocks were mixed as the tension in eastern Europe continues to weigh on the market mood. The Stoxx Europe 600 index advanced 0.04% to 467.8 points. In Paris, the CAC 40 and the SBF 120 each gave up 0.2%. In Frankfurt, the DAX 40 lost 0.3% while the FTSE 100 in London gave up 0.1%. Vallourec (+9%) and CGG (+7.7%) were the two biggest risers on the SBF 230, benefiting from the rise in oil prices. FDJ gained 3%, as the gambling operator raised its objectives for 2025. FDJ now expects its turnover to grow at an average annual rate of between 4% and 5% between 2021 and 2025, compared with an initial forecast of between 3% and 4%. Nexans jumped 6.4%. The cable manufacturer published better than expected 2021 results, including an EBITDA of 463 million euros, compared to the average analysts' expectations of 455 million euros. Coface gained 3.9%. The credit insurer reported record net income in 2021 and said it was continuing to "execute its Build to Lead strategic plan, whose objectives throughout the cycle are confirmed". Air Liquide climbed 2.7% after the industrial gases specialist said it expected further earnings growth this year, following a strong 2021 financial year. In Amsterdam, Ahold Delhaize fell 7.1% as the Belgian-Dutch retailer expects its earnings per share to fall slightly into a range this year, Invest Securities noted. Vopak's 4Q was soft, with pressure on occupancy rates and its return on invested capital, Jefferies said. The Dutch tank-storage company's Ebitda rose 3% on year to EU212.5 million, 2% ahead of consensus, but its EBIT of EUR121.9 million and EPS of 55 European cents missed market consensus by 4% and 20%, respectively, Jefferies said. Shares were down 5.1% at EUR29.91.

United States

U.S. stocks ended Wednesday’s session little changed, reversing an early selloff after the release of the minutes of the Federal Reserve’s most recent meeting. The Dow Jones Industrial Average slipped 54.57 points, or 0.2%, to 34934.27, paring a morning loss of more than 300 points. The S&P 500 closed slightly higher, up 3.94 points, or 0.1%, to 4475.01, while the Nasdaq Composite fell 15.66 points, or 0.1%, to 14124.09. The technology-heavy index had been down more than 1% earlier in the session. The latest inflation data also sent worrying signals to some investors. In the U.K., prices rose at their fastest pace in nearly 30 years in January. In the U.S., retail sales rose 3.8% in January from December, more than economists had expected. Among individual stocks, ViacomCBS fell 18% to $29.58 and social-gaming company Roblox fell 27% to $53.87 after both companies posted earnings reports that missed analysts’ forecasts. Shopify fell 16% to $746.85 after the company said it expects revenue growth will slow in 2022 from the year prior. Cedar Fair shares declined 5.3% to $58.35 after SeaWorld Entertainment signaled it was unlikely to pursue a deal for the theme-park business after the company rejected its approach. SeaWorld rose 1.1% to $71.48. Airbnb shares rose 3.7% to $186.64 after the company posted record revenue, while Kraft Heinz rose 5.6% to $36.62 after its profit and sales beat expectations.


In Asia, major indexes are showing a mixed trend on Thursday. Losers in the region include the Nikkei-225 in Tokyo (-0.8%) and the Hang Seng Index in Hong Kong (-0.4%). In contrast, the Shanghai Composite (+0.2%) and the Kospi in Seoul (+0.9%) are rising. Shares of Chinese lithium suppliers are showing significant gains as prices of the raw material for battery production continue to increase due to tight supplies and the booming electric car market. Tianqi Lithium, Ganfeng Lithium and Chengxin Lithium Group advance between 6 and 9 per cent.


Long-dated U.S. government debt yields were mixed Wednesday, with the 10-year rate barely budging at around 2%, as investors parsed the minutes of January’s Federal Reserve meeting — with some saying it provided little new information about policy makers’ coming plans. The yield of the 10-year US Treasury bond fell to 2.042% from 2.048% on Tuesday evening. The yield of the two-year T-Bond lost 6 basis points to 1.515%. The yield on the German Bund with the 10-year maturity was 0.278%, down from 0.313% on Tuesday night.


Jefferies raises Glencore target to 530 (500) p - Buy

Berenberg lowers Home24 target to EUR 15.90 (17.30) - Buy

Deutsche Bank cuts Delivery Hero to Hold (Buy) - EUR 80 (140)

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