Research Market strategy
By Swissquote Analysts
Published on 13.05.2022
Morning news

Siemens to Wind Down Russia Business; Took EUR600 Mln Impairment in 2Q

Topic of the day

Siemens AG said Thursday that it would exit its Russia business after 170 years, dragging its second-quarter profit below expectations. The German industrial company said second-quarter profit was affected by around 600 million euros ($630.9 million) due to impairments and other charges related to Russia, mainly at its mobility railway-technology segment. Siemens in March put on hold all new business in Russia, which in 2021 generated around 1% of the company's revenue. In comments to the media after second-quarter results, Chief Executive Roland Busch said that Siemens foresees further risks to net income in the "low- to mid-triple-digit million range" from consequences of the Russia exit, though he couldn't give an exact time frame. The exit wouldn't affect the business activities of Siemens Healthineers AG, he said. Siemens's net profit in the January-March period was affected as a result, declining on year to EUR1.21 billion from EUR2.39 billion a year earlier.

Looking for New Structured Product Ideas?
https://en.swissquote.com/trading/investment-products/yield-boosters

Swiss stocks

The Swiss stock market recorded smaller losses on Thursday. The SMI lost 0.4 per cent to 11,506 points. Among the 20 SMI stocks, there were eleven price losers and nine price winners. 43.57 (previously: 45.66) million shares were traded. Zurich Insurance (+1.5%) was up. The insurance company benefited from a solid pricing environment in the first quarter. The company achieved premium growth across all lines of business. The group expects to exceed all financial targets for 2022. Banking stocks ran lower after making significant gains the previous day. Participants pointed to lower market interest rates making it harder for banks to do business. Credit Suisse fell 0.8 per cent and UBS 1.1 per cent. Luxury goods stocks also reversed their previous day's trend. After significant gains, Richemont (-2.4 per cent) and Swatch (-0.5 per cent) were now down.

International markets

Europe

European equity indices fell on Thursday after a sharp rebound, as persistently high inflation in the United States in April raised fears of a prolonged tightening of the Federal Reserve's monetary policy. The Stoxx Europe 600 index closed down 0.8% at 424.4 points. In Paris, the CAC 40 and the SBF 120 each gave up 1%. In Frankfurt, the DAX 40 was down 0.6% and in London the FTSE was down 1.6%. Shell PLC has agreed to sell its Russian retail-station and lubricants business to oil giant Lukoil PJSC, the latest Western company to find a local buyer for its planned Russia exit. The deal for the business, called Shell Neft LLC, includes 411 retail stations in Russia and a lubricants-blending plant near Moscow. Shell, which didn’t disclose a deal value, said Thursday the agreement was expected to preserve 350 Shell employees’ jobs in Russia. It said last week that its Russian marketing business, which includes assets in the Lukoil deal, was valued at about $600 million. RWE AG on Thursday said that adjusted earnings rose in the first quarter and confirmed its outlook for the full year. The German utility company said quarterly adjusted net profit was 735 million euros ($774.4 million) compared with EUR340 million a year earlier. Adjusted earnings before interest, taxes, depreciation and amortization increased to EUR1.46 billion from EUR883 million, while adjusted EBIT came in at EUR1.10 billion.

United States

The Dow Jones Industrial Average declined for a sixth consecutive session Thursday, extending a streak of volatility in a market driven by worries that the Federal Reserve will hamper growth in its effort to bring inflation under control. The blue-chip index fell 103.81 points, or 0.3%, to 31730.30. The S&P 500 declined 5.10 points, or 0.1%, to 3930.08. The Nasdaq Composite Index edged up 6.73 points, or less than 0.1%, to 11370.96. All three indexes are on pace for weekly declines of at least 3.5%. Stocks have come under pressure due to concerns about the Fed's pullback of easy monetary policies as it combats the recent bout of high inflation. Consumer prices rose in April at a slower pace than the previous month, but still faster than economists had expected, data released Wednesday showed. In corporate news, Beyond Meat edged down $1.09, or 4.2%, to $25.08 after the meat-alternative company reported a wider-than-expected loss in the latest quarter due to higher spending. Shares of WeWork rose 53 cents, or 10%, to $5.63 after reporting a narrower loss and raising its guidance. Walt Disney declined 90 cents, or 0.9%, to $104.31 after the company reported higher operating losses and said it may not maintain its current growth rate in streaming subscribers. Meme stocks climbed. GameStop rose $8.24, or 10%, to $89.57. AMC Entertainment added 83 cents, or 8%, to $11.20. Bed Bath & Beyond gained 18 cents, or 2%, to $9.40. Meanwhile, Saudi Aramco, the state-owned oil company, surpassed Apple as the largest company in the world by market value, according to Dow Jones Market Data. Apple's stock fell $3.94, or 2.7%, to $142.56.

Asia

The stock markets in East Asia and Australia recovered significantly from the previous day's losses on Friday. However, market participants do not want to speak of a trend reversal. Although the latest setbacks are being used to get back into the market, the overriding negative factors - concerns about inflation and recession - remain unchanged. Shanghai's stock market is up a modest 0.6 per cent by regional standards, but had mostly defied the negative trend in recent days. In Hong Kong, the Hang Seng Index is up 2.0 per cent.

Bonds

The yield on the U.S. benchmark 10-year Treasury note declined to 2.815%, edging down for a fourth consecutive trading session. Bond yields and prices move in opposite directions.

Analysis

JPM raises the BBVA target to EUR 6.90 (6.40) – Neutral

Dt. Bank lowers the Anglo American target to 3,900 (4,300) p – Buy

Dt. Bank lowers Roche to Hold (Buy) – Target 350 (425) CHF

Produced by MBI Martin Brückner Infosource GmbH & Co. KG on behalf of Swissquote. All news is acquired with journalistic accuracy. No liability is assumed for delays or errors.