Research Market strategy
By Swissquote Analysts
Published on 11.08.2022
Morning news

TUI Misses Forecasts After Booking Travel Disruption Charge in 3Q

Topic of the day

Shares of TUI AG fell in early trading Wednesday after the travel company missed earnings forecasts after booking a charge related to air traffic disruptions. The London-listed, German travel operator reported an underlying loss before interest and tax for the quarter ended June 30 of 27 million euros ($27.6 million) compared with a loss of EUR669.8 million the year before and a forecast by UBS analyst Cristian Nedelcu for a EUR75 million profit. TUI booked a EUR75 million charge in its accounts related to the air traffic disruptions. The European travel sector has been hit over recent months by a shortage of staff after airlines and airports laid off employees during the pandemic crisis, and strikes among ground crew at some major airports. Shares at 0742 GMT were down 5.10 pence, or 3.6%, at 138.30 pence having fallen to a low of 137.25 pence earlier in the session. Despite the extra charge TUI said that it expects to return to positive underlying EBIT for the year as a whole as it benefits from a return to travel after the lifting of coronavirus-related restrictions. It carried 5.1 million passengers over the quarter, generating revenue of EUR4.43 billion compared with EUR649.7 million in the year-prior period. One analyst polled by FactSet had a revenue estimate of EUR4.30 billion.

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Swiss stocks

Weaker-than-expected US inflation data gave the Swiss stock market a small midweek gain. The data pushed the SMI up significantly in the afternoon and pushed the index into positive territory. At 8.5 per cent plus, inflation was slightly lower than the expectation of 8.7 per cent. The data fuel hopes that inflation may have seen the peak of its rise. The SMI improved 0.2 per cent to 11,155 points. Among the 20 SMI stocks, there were 15 gainers and 5 losers. 28.65 (previously: 24.99) million shares were traded. Among the individual stocks, the Alcon share recorded a minus of 6.4 per cent - despite convincing figures for the second quarter. The company, which specialises in ophthalmology, slightly exceeded the consensus estimate with its sales, and its profit was even clearly better than expected, UBS noted. The eye surgery division was primarily responsible for the surprisingly good performance. The international business also performed well. The contact lens division, on the other hand, suffered from a decline in reusable lenses and supply chain problems.

International markets

Europe

European equity markets ended in the green on Wednesday as investors welcomed the slowdown in US inflation in July. The Stoxx Europe 600 index gained 0.9% to 439.9 points. In Paris, the CAC 40 and SBF 120 rose 0.5 percent and 0.6 percent, respectively. The DAX 40 in Frankfurt gained 1.2%, while the FTSE 100 in London gained 0.3%. E.ON SE said Wednesday that profit dipped in the second quarter but confirmed the outlook for the full year. The German utility company said it booked a quarterly net profit of 1.43 billion euros ($1.46 billion), down from EUR1.75 billion in the year-earlier period. Adjusted earnings before interest and taxes were EUR1.28 billion compared with EUR1.51 billion the previous year, while sales for the quarter rose to EUR23.34 billion from EUR14.64 billion. ABN Amro Bank NV on Wednesday reported a rise in net profit for the second quarter of 2022, which came in significantly above market views, and said it now expects to close the year with a stronger net interest income. The Dutch lender posted a net profit of 475 million euros ($485.1 million), compared with EUR393 million a year earlier. Net profit had been expected to decline to EUR390 million, according to a bank-compiled consensus.

United States

U.S. stocks rallied and bond yields fell Wednesday after new data raised investors' hopes that the pandemic era's stubbornly high inflation might finally be easing. The encouraging report sent a charge through Wall Street, where investors have waited months for signs that inflation is peaking. Stocks surged, sending the technology-focused Nasdaq Composite into bull market territory, a rise of at least 20% from a recent low. The gains were particularly strong among sectors that stand to benefit in different ways if the Federal Reserve can slow its pace of interest-rate increases and avoid pushing the economy into a severe recession. Tech stocks in the S&P 500 climbed 2.8%, while the economically sensitive financial and consumer-discretionary sectors gained 2.3% and 2.9%, respectively. Netflix surged 6.2%, Bank of America rose 3.4%, and General Motors climbed 3.6%. Elon Musk sold nearly $7 billion of Tesla Inc. stock in recent days, regulatory disclosures show, amid uncertainty over the fate of his $44 billion deal to buy Twitter Inc. Mr. Musk, Tesla’s chief executive and largest shareholder, sold around 7.9 million shares between Friday and Tuesday, the disclosures show, leaving him with a 15% stake in the company.

Asia

Thanks to clear tailwinds from the US, share prices are rallying across the board in Asia on Thursday. While the stock markets in Japan remain closed for a holiday, the stock markets in China are picking up more clearly after their recent weakness. The Shanghai composite extended its gains to 1.2 per cent over the course of the day. The market is also supported by the relative calm surrounding the China-Taiwan conflict. However, analysts note that there is a new threat of trouble. This is because the Chinese authorities published a white paper detailing how China intends to claim Taiwan through a series of economic incentives and military pressure.

Bonds

U.S. Bond prices advanced, pushing the yield on the benchmark 10-year U.S. Treasury note down to 2.786% from 2.797% Tuesday, according to Tradeweb. The yield on the two-year note, which is more sensitive to changes in the near-term interest rate outlook, dropped to 3.214% from 3.284% Tuesday.

Analysis

Credit Suisse raises the AMS-Osram target to CHF 9.50 (8) – Neutral

JP Morgan raises the Fraport target to EUR 55 (51) – Neutral

UBS lowers the Salzgitter target to EUR 25 (44) – Neutral

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