Research Market strategy
By Swissquote Analysts
Published on 05.09.2022
Morning news

Shell, Exxon Mobil Sell California Oil and Gas Producer

Topic of the day

Exxon Mobil Corp. and Shell PLC are selling their stakes in one of California’s largest oil and gas producers to German asset manager IKAV Capital Partners GmbH. Aera Energy LLC, a joint venture of the oil giants, accounts for nearly a quarter of the state’s production, according to its website. Shell Offshore Inc. said Thursday it agreed to sell its entire stake in Shell Onshore Ventures LLC, which owns 51.8% stake in Aera Energy, to IKAV for $2 billion in cash as well as additional contingent payments based on future oil prices. Exxon Mobil said its affiliates agreed to sell their entire stake in Aera to Green Gate Resources E LLC, a unit of IKAV. Exxon Mobil didn’t disclose the terms of the transaction. Mobil California Exploration & Producing Co., an affiliate of Exxon Mobil, holds a 48.2% stake in Aera Energy and a 50% share of Aera Energy Services Co. Shell said it secured and will maintain its current oil marketing agreements for at least five years after the sale is completed.

Swiss stocks

The Switzerland stock market closed on an upbeat note on Friday, in line with markets across the globe amid slightly easing concerns about monetary tightening after data showed an increase in U.S. unemployment rate. The benchmark SMI ended with a gain of 228.27 points or 2.14% at 10,891.71, slightly off the day's high. All the components of the SMI index closed in positive territory. Credit Suisse rallied 6.13% after reports that the embattled Swiss bank is looking at cutting around 5,000 jobs as part of a cost-reduction drive. Holcim climbed 5.4% and Sika gained 5%. UBS Group, Partners Group, Geberit, Swiss Re, ABB, Swiss Life Holding and Lonza Group gained 3 to 4.2%. SGS, Alcon, Zurich Insurance Group, Givaudan and Logitech advanced 2.5 to 2.9%. Among the stocks in the Mid Price Index, Zur Rose rallied more than 9%. Temenos Group surged nearly 7%. Straumann Holding, Georg Fischer, Clariant, Julius Baer, VAT Group, AMS, Dufry, Adecco and Bachem Holding gained 3 to 5%.

International markets

Europe

The European stock markets staged a strong rebound on Friday, as US jobs figures could prompt the Federal Reserve (Fed) to temper its rate hike enthusiasm and fears over Europe's gas supplies eased. At the close, the Stoxx Europe 600 index gained 2% to 416 points. In Paris, the CAC 40 and SBF 120 gained 2.2% each. The DAX 40 in Frankfurt gained 3.3%, while the FTSE 100 in London rose 1.9%. Volkswagen AG’s largest shareholder, Porsche Automobil Holding SE, said it would acquire 25% plus one additional share of the voting stock in Porsche AG when VW lists the sports-car brand, which could happen by the end of the month, the companies said on Saturday. VW, Europe’s biggest auto maker by sales, said the companies’ boards would meet on Monday to discuss the private placement of common stock and whether to move forward with an initial public offering of 25% of Porsche’s nonvoting preferred shares. If approved, Porsche shares could begin trading at the end of the month or in early October, VW said. ArcelorMittal SA, one of the world’s largest steelmakers, said it plans to close two of its plants in Germany amid soaring electricity costs. Steelmaking is particularly energy intensive, alongside other industries like fertilizer and chemical production and glass making. Steelmakers have also been hit by efforts to reduce emissions and by lower metals prices, as slowing global growth impacts order books. Luxembourg-based ArcelorMittal said separately on Thursday that it will close a blast furnace in Spain amid low demand.

United States

A late-summer selloff in the stock market accelerated in a volatile session Friday, with investors betting an encouraging monthly jobs report wouldn't ultimately alter the Federal Reserve's course on interest rates. Major indexes initially surged after the release of the jobs report but turned lower midday, capping a third consecutive week of losses. The end-of-week moves continued a stretch of turbulence that dragged the S&P 500 down 3.3% for the week and 8.3% over the past three weeks. The S&P 500 fell 42.59 points, or 1.1%, to 3924.26. The tech-focused Nasdaq lost 154.26 points, or 1.3%, to 11630.86, falling for a sixth consecutive session in its longest losing streak since August 2019. The Dow Jones Industrial Average shed 337.98 points, or 1.1%, to 31318.44. The Nasdaq tumbled 4.2% for the week, while the Dow shed 3%. In corporate news, shares of Lululemon Athletica jumped $19.72, or 6.7%, to $314.17 Friday after the sportswear company reported higher-than-expected quarterly sales. Shares of Nvidia were among the worst-performing in the S&P 500 for the week, falling more than 16% after the chip maker reported new requirements regarding shipments of its chips to China. The PHLX Semiconductor index dropped 7.1% for the week and on Thursday completed its longest run of declines of more than 1% since January 2016, according to Bespoke Investment Group.

Asia

At the start of the new week, stock markets in East Asia and Australia are mostly hovering around Friday's closing prices. Some support comes from China's Caixin Purchasing Managers' Index for the service sector, which remained stable in August in expansion-indicating territory. In Shanghai, the Composite Index is trading 0.1 per cent higher after initial losses. In contrast, the Hang Seng Index in Hong Kong is down 1.3 per cent. Here, the lockdowns in various Chinese cities weighed heavily, according to trading sources.

Bonds

The yield on the two-year Treasury note, which is more sensitive to near-term Fed policy expectations, ticked down Friday but rose for the week and settled at 3.398%. The yield on the benchmark 10-year Treasury note also continued its streak of weekly gains and settled at 3.190%.

Analysis

Deutsche Bank lowers the Pernod Ricard target to EUR 233 (242) – Buy
BoA lowers the Vonovia target to EUR 40 (57) – Buy
Citi raises Nordex to Buy (Neutral) – Target EUR 12 (9)

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