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By Swissquote Analysts
Published on 21.09.2022
Morning news

Germany in Talks to Nationalize Energy Supplier Uniper After Russian Natural-Gas Halts

Topic of the day

Germany is in talks to nationalize the ailing energy giant Uniper SE, seeking to save a systemically important supplier that was hit hard by throttled Russian gas flows to Europe, the company said on Tuesday. Germany's largest importer of Russian natural gas until recently, Uniper suffered heavy losses after Moscow throttled supplies in recent months and was forced to buy gas on the market where prices have hit records. The German state in July pledged to take a 30% stake in Uniper and extended credit lines as part of a bailout package. Uniper on Tuesday said it was in final discussions with the German government which would inject EUR8 billion, or around $8 billion, and obtain a significant majority stake in the company. The German state would also acquire the stake of Uniper's parent company, Finnish utility Fortum Oyj, Uniper said, adding that a final agreement had not been concluded. Uniper's shares were trading up 2.4% on Wednesday. The company's shares are down around 90% year-to-date. The move underlines the economic pains Europe is going through as it scrambles to rebuild an energy sector that was once highly reliant on Russian fossil fuels as Moscow chokes supplies to the continent in retaliation for western sanctions for its attack on Ukraine.

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Swiss stocks

The Switzerland stock market ended sharply lower, in line with most of the markets across Europe, as mounting fears about a global recession amid rising interest rates triggered heavy selling at several counters. A downward revision in Switzerland's growth forecast weighed significantly on sentiment. The benchmark SMI ended with a loss of 140.47 points or 1.32% at 10,478.54, the day's low. Switzerland's economy is expected to grow less than previously estimated this year and next, as the economic prospects are hampered by a tense energy situation and sharp price increases, especially in Europe, the government said. Despite strong employment growth in the first half of the year, unemployment is expected to rise in the fourth quarter in line with slowing economic growth. The average annual unemployment rate is projected to come in at 2.2% for this year, followed by 2.3% in 2023, the report said. Swisscom declined 2.73%. Geberit, Credit Suisse, Alcon, Holcim, Zurich Insurance Group, Partners Group, Swiss Re, Roche Holding, Lonza Group, Nestle, Swiss Life Holding and Sika shed 1.2 to 2.2%.

International markets


European stocks closed notably lower on Tuesday amid rising concerns that aggressive monetary tightening by central banks to fight inflation might result in a global economic recession. Investors, looking ahead to monetary policy announcements from the Federal Reserve, the Bank of England, the Swiss National Bank, the Bank of Japan, and the People's Bank of China, also reacted to the rate decision by Swedish central bank, and digested a slew of economic data from the continent. Sweden's central bank raised its benchmark rate at a sharper-than-expected pace on Tuesday citing high inflation. The Executive Board of Riksbank decided to raise the key interest rate by 1 percentage point to 1.75%. Markets widely expected a 75 basis-point rate hike. The pan European Stoxx 600 fell 1.09%. The U.K.'s FTSE 100 drifted down 0.61%, Germany's DAX declined 1.03% and France's CAC 40 ended 1.35% down, while Switzerland's SMI dropped 1.48%. Among other markets in Europe, Austria, Belgium, Czech Republic, Denmark, Finland, Iceland, Ireland, Netherlands, Norway, Poland, Portugal, Russia, Spain and Sweden all ended in the red, posting sharp to moderate losses. Greece edged up marginally. In the UK market, Ocado Group plunged nearly 10%. Persimmon, Barratt Developments, ICP, Admiral Group, Melrose Industries, Unite Group, British Land Co., Segro, Tesco and 3I Group shed 3 to 6.5%. Lloyds Banking Group, Haleon, IAG, Halma, Fresnillo and WPP gained 1 to 2.5%. In the French market, Teleperformance, Faurecia, Atos, Unibail Rodamco, CapGemini, Veolia, Legrand, Safran, ArcelorMittal, Saint Gobain, Pernod Ricord, Carrefour, Societe Generale an BNP Paribas lost 1.7 to 5.2%. Air France-KLM rallied more than 4%. Kering and L'Oreal posted modest gains.

United States

Stocks fell and Treasury yields rose to fresh multiyear highs on expectations the Federal Reserve will unveil more forceful monetary tightening to curb inflation this week. The major U.S. indexes opened Tuesday morning in the red and stayed there through the closing bell, a reversal of Monday's gains. The S&P 500 lost 43.96 points, or 1.1%, to end at 3855.93. The Dow Jones Industrial Average dropped 313.45 points, or 1%, to 30706.23 and the Nasdaq Composite retreated 109.97 points, or 1%, to 11425.05. Stock losses were broad Tuesday, hitting all 11 S&P sectors. Ford shares posted their biggest proportional loss since 2011, dropping $1.84, or 12%, to $13.09, a day after the auto maker warned that parts shortages and higher costs will hit earnings. Gap fell 31 cents, or 3.3%, to finish at $9.21. The Wall Street Journal reported that the apparel retailer will trim about 500 corporate jobs to cut costs. Casino operators were among the small group of S&P stocks that notched gains on signs that loosening Covid-19 restrictions could improve tourism in Macau, an Asian gambling mecca. Wynn Resorts rose $1.91, or 2.9%, to $67.80 and Las Vegas Sands gained 46 cents, or 1.2%, to $39.28. Fed officials have made clear they are willing to accept a recession if it is the price of slowing the pace of inflation. Data last week showed inflation remained strong, cementing expectations the central bank will keep raising rates.


The stock markets in East Asia and Australia (-1.5 per cent) drop significantly in trading on Wednesday. In Tokyo, the Nikkei-225 is down by 1.3 per cent to 27,342 points, in Hong Kong by 1.5 per cent. Once again, tech stocks (-3.5%), which are considered particularly sensitive to interest rates, are sold off. In Shanghai (-0.6%) and in Seoul (-0.8%) the losses are somewhat smaller.


U.S. Government bond prices kept falling, pushing yields higher. Ten-year Treasury yields rose to 3.571% from Monday's 3.489%, setting a new closing high since March 2011. Yields on two-year notes, which are sensitive to the interest-rate outlook, climbed to 3.962% from 3.946% Monday, ending once again at their highest level since 2007.


BoA downgrades MTU to Neutral

CS raises Dt. Börse to Outperf. (Neutral)/EUR200 (178) – Trader

CS raises the LSE target to 9,200 (9,100) p/Outperf. – Trader

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