Research Market strategy
By Swissquote Analysts
Published on 22.02.2023
Morning news

Walmart Posts Strong Earnings as Shoppers Look for Discounts

Topic of the day

Walmart reported strong quarterly sales as cash-strapped shoppers gravitated to the discount retailer for food and other essentials and continued to pay higher prices on many items compared with last year. However the company provided a muted outlook for the coming year, saying that there is much uncertainty and that customers are being more cautious about spending, particularly on nonfood items. U.S. comparable sales, those from stores and digital channels operating for at least 12 months, rose 8.3% in the quarter ended Jan. 27, compared with the same period last year. That beat analyst expectations of 4.9% growth, according to estimates from FactSet. The country’s largest retailer by revenue said it is gaining market share in grocery, including among higher-income households that are spending cautiously. December was the largest sales-volume month in the retailer’s history, the company said. Walmart shares rose 89 cents, or 0.6%, to $147.33 and were the sole gainer in the Dow.

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Swiss stocks

On Tuesday, the SMI gained 0.1 per cent to 11,282 points. Among the 20 SMI stocks, there were twelve price losers and eight price winners. A total of 65.3 (previously: 29.33) million shares were traded. At the top of the selling lists in Switzerland was Credit Suisse (-4.1%), which fell to a new record low in the course of the day. According to a report by the Reuters news agency, the Swiss financial supervisory authority Finma is investigating statements by the chairman of the board of Credit Suisse, Axel Lehmann, about net outflows of funds from the beginning of December. Finma wants to find out whether Lehmann's statements were misleading. The Credit Suisse (CS) share had risen by 9.3 percent on 2 December. On that day, Lehmann said on Bloomberg TV that the net outflows had "virtually stopped". In November, Credit Suisse had warned that the withdrawal of client funds would weigh on the fourth-quarter result, which sent the stock on a downward slide at the time. On the other hand, the pharmaceutical heavyweights Novartis (+1.1%) and Roche (+0.7%) were sought after. The SMI was also supported by Nestle (+0.1%). In the wake of rather lacklustre data on Switzerland's watch exports, Richemont shares trended in the red for most of the session, but rallied sharply in the last minutes of trading to eventually close 0.6 per cent higher. Traders revealed LVMH was interested in Richemont. Swatch's share price fell by 0.4 per cent. Watch exports increased by 8.6 per cent in January compared to December. For the full year 2022, growth of 11 per cent was recorded. Temenos gained 5.5 per cent due to a convincing outlook for continued strong growth in the medium term.

International markets


European stocks were slightly weaker on Tuesday, with sentiment cautious, as geopolitical tensions combined with worries over U.S. interest rates. The Stoxx Europe 600 index closed down 0.2% at 463.8 points. In Paris, the CAC 40 and the SBF 120 both lost 0.4%. The DAX 40 index in Frankfurt and the FTSE 100 in London slipped by 0.5%. The energy supplier Engie (+4.8%) published 2022 results that were up sharply and above analysts' expectations, thanks in particular to a distinct rise in thermal activity, driven by the increase in energy prices. Electronic payments specialist Worldline (-3.9%) is targeting further like-for-like revenue growth this year, after reporting results in line with expectations for 2022. Capgemini (-2.8%) fell 2.8% as investors were disappointed by the digital services group's cautious approach to fiscal 2023. Workplace payment solutions specialist Edenred (+1.2%) reaffirmed its 2023 guidance after reporting full-year results driven by rising petrol prices and strong sales momentum across its divisions. Barclays began tracking Air France-KLM (stable at €1.70) with an "overweight" recommendation and a €2.3 price target. The airline is well positioned strategically and has a strong management team, the financial intermediary said.

United States

U.S. stock indexes suffered their worst session of the year Tuesday, dragged down by a disappointing forecast from Home Depot and growing concerns that the Federal Reserve will keep interest rates higher for longer. The S&P 500 declined 81.75 points, or 2%, to 3997.34 on Tuesday. The Dow Jones Industrial Average fell 697.10 points, or 2.1%, to 33129.59, erasing its gains for the year. The technology-focused Nasdaq Composite dropped 294.97 points, or 2.5%, to 11492.30. All three indexes logged their biggest one-day point and percentage declines since Dec. 15. Markets were closed Monday for Presidents Day. All 11 sectors of the S&P 500 traded lower, as did 29 of the 30 stocks in the Dow. Home Depot’s disappointing report sent ripples through the market. The home-improvement retailer warned that its profits will fall this year as it invests an additional $1 billion in wage increases for its hourly employees. It shares fell $22.45, or 7.1%, to $295.50, their largest one-day percentage decrease in a year and their lowest close since November, according to Dow Jones Market Data. Shares of rival Lowe’s dropped $10.90, or 5.1%, to $201.85. Home Depot’s fall shaved 148 points off the Dow and weighed on the consumer-discretionary segment of the S&P 500, which dropped 3.3% as the index’s weakest link. Shares of home builders declined as well after new data showing sales of previously owned homes fell for the 12th consecutive month in January. Toll Brothers, D.R. Horton and PulteGroup dropped more than 2%. Harley Davidson fell 2.2 per cent in line with the weak market. The motorbike manufacturer announced that it would pay a dividend of 16.50 cents per share, up from 15.75 cents for the first quarter. The shares of the Canadian mining company Sigma Lithium Corp shot up by a good 16 per cent. Tesla (-5.3%) is rumoured to have consulted advisors to prepare a possible bid for Sigma Lithium, according to a report. Lithium is a key component in the production of batteries in the e-mobility sector.


Stocks in Asia mostly fell, with Japan’s Nikkei 225 down 1.3% to 27,122 points and the Hang Seng in Hong Kong down 0.2%. China’s Shanghai Composite slipped 0.4% while the Kospi in Seoul edged 1.5% lower. Here, participants also observe caution before the interest rate decision of the Korean central bank on Thursday. Among individual stocks, Japan Post Bank lost 5.7 per cent. A report that Japan Post Holding (-2.1%) intends to reduce its stake in the subsidiary is depressing the market.


U.S. government debt yields jumped to new highs on Tuesday as traders returned from the extended Presidents Day weekend and priced in expectations for higher-for-longer U.S. interest rates this year. The 10-year Treasury note rose by 13 basis points to 3.953%. The 2-year Treasury note, being more sensitive to changes in Fed rates, added 11 basis points to 4.729%, its highest level since July 2007.


UBS raises Hermes target to EUR 2,003 (1,782) - Buy

Jefferies increases Sika target to CHF 322 (292) - Buy

UBS lifts Standard Chartered target to 890 (825) p - Buy

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