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By Swissquote Analysts
Published on 03.08.2022
Morning news

Caterpillar Second Quarter Sales Up 11%

Topic of the day

Caterpillar Inc. said higher prices and increased sales helped to offset the continued drag from rising material and freight costs on the company's bottom line. The maker of heavy equipment, which last month said it would move its headquarters to Irving, Texas, from Illinois, posted an 11% sales increase in the second quarter. Profit rose, too, amid unfavorable currency impacts and an uncertain macroeconomic climate. Chief Executive Jim Umpleby said Tuesday the results reflect healthy demand across most of the company's end markets. For the three months ended June 30, Caterpillar reported a profit of $1.67 billion, or $3.13 a share, up from $1.41 billion, or $2.56 a share, a year earlier. Stripping out one-time items, adjusted second-quarter earnings were $3.18 a share, above analyst expectations of $3.01, according to FactSet. Revenue rose to $14.25 billion from $12.89 billion in the year-earlier quarter. Analysts polled by FactSet anticipated revenue of $14.28 billion.

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Swiss stocks

The Swiss stock market declined slightly on Tuesday after the holiday break. The strength of defensive stocks prevented higher losses, as traders spoke of a difficult market environment. Investors reduced their risk positioning and favoured defensive stocks. Swisscom (+0.8%), Nestle (+0.2%), Roche (+0.5%) and Novartis (+0.2%) rose, while cyclicals fell. Credit Suisse, for example, lost 6.1 per cent - after a lowered credit rating by Moody's, Standard & Poor's had also made negative comments. Roche, on the other hand, was helped by positive study results. The SMI fell by 0.2 per cent to 11,118 points. Among the 20 SMI stocks, there were twelve price losers and eight price winners. 38.64 (previously: 43.46) million shares were traded. In addition, there were renewed concerns about the economy. Goldman Sachs had significantly lowered its forecasts for Europe. Current data from Switzerland, however, showed light and shadow. On the stock market, Holcim lost 1.8 per cent; the building materials group had completed the acquisition of the SES roofing and insulation business.

International markets


European equity markets closed in the red on Tuesday, worried about diplomatic tensions between China and the United States, which were reignited by House Speaker Nancy Pelosi's visit to Taiwan. The Stoxx Europe 600 index ended down 0.3% at 436.1 points. In Paris, the CAC 40 and SBF 120 were down 0.4% and 0.5%, respectively. The DAX 40 in Frankfurt was down 0.2% and the FTSE 100 in London was down 0.1%. BP PLC was the latest oil major to cash in on the highest energy prices in more than a decade, reporting strong second-quarter profit helped by higher margins on fuel production and oil trading. London-based BP said Tuesday its underlying replacement-cost profit, a metric similar to net income that U.S. oil companies report, was $8.5 billion. That compared with a $6.8 billion average projection of 28 analysts compiled by BP and $2.8 billion in the year-ago period. The world’s biggest energy companies are awash with cash as economies have roared back from the pandemic and demand for natural gas and fuel outstrips supplies. Russia’s invasion of Ukraine has added to the energy shortage, particularly in Europe, where countries are quickly trying to replace declining gas flows delivered via pipelines from Russia. Oatly Group AB cut its sales outlook for the year, warning that macroeconomic uncertainty is making it harder to switch consumers from regular milk to its plant-based options. The Swedish maker of oat-based milk said on Tuesday that challenges, including the war in Ukraine, continuing Covid-19 outbreaks and supply-chain problems, are crimping the pace of its expansion and recovery in certain markets. The company now expects full-year revenue of between $800 million and $830 million, down from its previous forecast of between $880 million and $920 million. A stronger dollar is responsible for $35 million of the lowered view.

United States

U.S. stocks fell on Tuesday as U.S. House Speaker Nancy Pelosi's visit to Taiwan added to geopolitical tensions and Federal Reserve officials indicated that their fight against inflation was still going strong. The Dow Jones Industrial Average dropped 402.23 points, or 1.2%, to 32396.17. The S&P 500 declined 27.44, or 0.7%, to 4091.19. The technology-heavy Nasdaq Composite slipped 20.22, or 0.2%, to 12348.76. Mrs. Pelosi landed in Taiwan on Tuesday and was scheduled to meet later with Taiwanese officials, in the first visit by a House speaker to the democratically governed island since 1997. Beijing, which claims Taiwan as part of its territory, had warned Mrs. Pelosi not to go through with the trip. Chinese officials had threatened unspecified countermeasures should her visit proceed. Pinterest shares jumped $2.32, or 12%, to $22.31 after activist investor Elliott Management confirmed it was the social-media company's biggest investor and Pinterest's new chief executive said he would focus on profitability. Uber rallied $4.65 per share, or 19%, to $29.25 after its revenue more than doubled, signaling the ride-hailing company's efforts to trim its losses were working. In commodity markets, futures on benchmark Brent crude oil gained 0.5% to settle at $100.54 a barrel. Commodity prices from energy to metals have eased from their highs in recent weeks on fears of slowing global growth. That has added to hopes that inflation could soon peak.


In the middle of the week, the stock markets in East Asia record a small counter-reaction to the previous day's heavy losses. However, the controversial visit of the Speaker of the US House of Representatives Nancy Pelosi to Taiwan prevents a more significant recovery. The already tense relations between the USA and China are likely to deteriorate further, according to fears. In Shanghai, share prices are up 0.4 per cent on average. Support came from the Caixin purchasing managers' index for the service sector, which rose again in July. Among individual stocks, Kweichow Moutai gained 0.1 per cent after the liquor maker reported a 21 per cent rise in first-half profit.


Government bond prices fell on Tuesday, sending yields higher, after jitters over Mrs. Pelosi's trip had earlier sent investors scurrying to assets considered havens. The yield on the benchmark 10-year U.S. Treasury note rose to 2.740% after sinking to 2.605% on Monday, its lowest level since April. Bond yields and prices move in opposite directions.


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BoA raises IAG target to 150 (130) p – Neutral

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