Research Market strategy
By Swissquote Analysts
Published on 01.07.2022
Morning news

Russian Gas Cuts Push Uniper into Bailout Talks

Topic of the day

Uniper SE, one of Europe's largest utilities, is in bailout talks with the German government, saying earnings would be hit hard by dwindling natural-gas supplies from Russia. Russia's state-controlled Gazprom PJSC reduced deliveries to Germany via the Nord Stream pipeline to 40% of its capacity earlier this month. Uniper, by extension, said it has been receiving only 40% of its contractually committed gas volumes from Gazprom since mid-June. Uniper, which relies on those deliveries to meet demand from its commercial and residential customers, has had to make up the difference in the spot gas market, paying higher prices for that gas. Uniper said those higher costs will hit earnings, and it withdrew its full-year earnings guidance. Its shares tumbled around 18% on Thursday to their lowest level in around five years. The shares are down roughly 66% this year. Uniper was facing strain before Russia's invasion of Ukraine, but the war has exacerbated it, an example of the corporate fallout of the conflict. RBC Capital Markets, in a note to clients Thursday, estimated the loss of Russian gas supplies and Uniper's scramble to replace them means the utility is burning through about 30 million euros in cash daily.

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Swiss stocks

On Thursday, the SMI slipped 0.7 per cent to 10,741 points. Among the 20 SMI stocks, there were 17 price losers and 3 price winners. In the process, 49.29 (previously: 32.24) million shares were traded. The index heavyweights Nestle, Novartis and Roche were among the losers, dropping between 0.3 and 0.9 per cent. Barry Callebaut shares closed 2.0 per cent lower. The chocolate maker halted production at its plant in Belgium because of salmonella. UBS shares edged 1.8 per cent lower. The bank agreed to a settlement in the US in connection with allegations of fraud with the "Yield Enhancement Strategy" investment strategy. According to the US Securities and Exchange Commission (SEC), UBS had to pay USD 25 million to settle the case. One accusation was that UBS had not sufficiently informed clients about the risks of the financial product.

International markets


European stocks fell on Thursday as investors rebalanced portfolios ahead of the end of a grueling first half and becoming increasingly convinced that the pace of rate rises will prompt a recession. About 90% of investors expect the U.S. to enter a recession before the end of 2023, according to a survey by Deutsche Bank published Thursday. The Stoxx Europe 600 index lost 1.5% to 407.2 points. In Paris, the CAC 40 and the SBF 120 were down 1.8% and 1.9%, respectively. In Frankfurt, the DAX 40 dropped 1.7%, and the FTSE 100 in London gave up 2%. Trigano's activity (-7.9%) in the third quarter of its 2021-2022 financial year was penalised by tensions on supplies of motorhome bases. The leisure vehicle manufacturer reported third-quarter sales of €921.2m, up 1.7% on a reported basis but down 10.4% on a like-for-like basis. Cloud services specialist OVHcloud (-4.6%) raised its revenue forecast for the year to 31 August 2022 after reporting like-for-like sales growth of 12.7% in the first nine months. Worldline (-4.7%) is a reliable player for SMEs and the stock looks less risky compared to its Capital Markets Day 2021 period, but it could be difficult for the payment services specialist to gain market share in the future given its current positioning, Credit Suisse believes. The financial intermediary has initiated an 'underperform' rating on the stock, with a target price of EUR 36.50. The UK Competition and Markets Authority (CMA) said on Thursday that it was postponing its decision on the merger of utilities groups Veolia (-3.4%) and Suez by eight weeks to 11 September 2022, citing the "scope and complexity of the investigation". German carmaker BMW (-1.4%) announced on Thursday that it would launch a €2bn share buyback programme and reduce its share capital. BMW said the share buybacks would begin in July and end no later than December 2023.

United States

U.S. stocks retreated on the final day of a brutal quarter for markets, weighed down by losses among shares of everything from banks to oil producers. The S&P 500 finished down 33.45 points, or 0.9%, to 3785.38, bringing its losses for the first half of the year to 21%. The Dow Jones Industrial Average fell 253.88 points, or 0.8%, to 30775.43, while the Nasdaq Composite retreated 149.16 points, or 1.3%, to 11028.74. Thursday’s losses capped off stocks’ worst first half of the year since 1970, a stunning reversal of the rally that lifted markets around the world the preceding two years. Now, many investors worry central banks’ actions could push the global economy into recession. Fed Chairman Jerome Powell said in a speech Wednesday that he was more concerned about failing to stamp out high inflation than the possibility of raising interest rates too much and having the economy go into a downturn. European Central Bank President Christine Lagarde made similar remarks. Technology and consumer discretionary stocks, which have been among the hardest hit areas of the stock market in this year’s selloff, extended losses Thursday. fell $2.71, or 2.5%, to $106.21 and Apple was down $2.51, or 1.8%, to $136.72. The KBW Nasdaq Bank Index fell 1.6%. Shares of manufacturers and industrial companies also declined, with Caterpillar, Boeing and United States Steel each falling more than 1%. Even consumer staples stocks fell. Initially, many traders had seen shares of companies selling everyday goods that consumers rely on as relatively safe investments, since in theory, demand for their goods should stay the same even in a cooling economy. Recently, that view has weakened as some major retailers have warned that they, too, are being hit by rising inflation. Data released Thursday showed U.S. consumer spending rose at its slowest pace yet this year in May as shoppers struggled with high inflation. Grocer Kroger fell 78 cents, or 1.6%, to $47.33. Energy stocks declined too, with the S&P 500 energy sector losing 2%.


In Asia, stock markets edged mostly lower on Friday. In Tokyo, the Nikkei 225 index slipped 1.7 per cent. In Seoul (-1.4%), investors are concerned about significantly weaker export growth in June. In mainland China, the Shanghai Composite Index was an exception, declining by 0.2% only. Meanwhile, the Hong Kong stock exchange is closed on Friday for the holiday marking the establishment of the Special Administrative Region.


Long-dated U.S. government debt yields slipped on Thursday with the 10-year Treasury note easing to 2.973% from 3.091% the previous day. The 2-year rate fell by 6 basis points to 2.984%. Fears of an economic downturn have drawn more investors toward the guaranteed returns offered by ultrasafe Treasury bonds, reversing some of the rapid gains’ yields saw earlier this year.


Berenberg launches Barry Callebaut with Buy - Target 2,600 CHF

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Citi lowers Deutsche Börse target to EUR 173 (182) - Neutral

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