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Research Market strategy
by Swissquote Analysts
Morning News

Arbitrator Awards ConocoPhillips More Than $8 Billion In Venezuela Nationalization Case

Topic of the day

Venezuela has been ordered to pay more than $8 billion to ConocoPhillips over assets expropriated in 2007, according to a ruling from a World Bank tribunal. The $8.75 billion unanimous award is the latest that ties to a nationalization spree spearheaded by the late socialist President Hugo Chavez to secure greater control over key economic sectors, especially the oil industry. The World Bank’s International Centre for Settlement of Investment Disputes, or ICSID, ruled in 2013 that the expropriation of ConocoPhillips’s investments in the Hamaca and Petrozuata heavy-crude oil projects and the offshore Corocoro development project violated international law. The latest ruling addressed compensation, and the timing and manner of payment have yet to the determined, ConocoPhillips said in a Friday statement. “We welcome the ICSID tribunal’s decision, which upholds the principle that governments cannot unlawfully expropriate private investments without paying compensation,” said Kelly B. Rose, a ConocoPhillips senior vice president. Last year, a separate arbitration panel awarded ConocoPhillips about $2 billion in a judgment against Venezuela’s state-owned oil company Petroleos de Venezuela SA.

Swiss stocks

The SMI closed a bad week by falling 0.6 percent to 9,268 points Friday. After the ECB lowered Eurozone growth forecasts Thursday, weak Chinese trade data and a disappointing US labour market report Friday bolstered global markets’ worries about a slowdown in economic growth. Yet markets can draw hope from the fact this means that loose fiscal policies will be maintained for the foreseeable future. The ECB had stated Thursday that there would be no rate hikes this year. Roche fell 0.7 percent despite positive news that it had received extended approval for its cancer drug Tecentriq. The disappointing Chinese trade data pushed down export-reliant luxury goods makers, with Swatch down 1.8 percent, and Richemont falling 0.3 percent. Economic worries put pressure on financial stocks amid fears of sustained low interest rates that would create an unfavourable environment for banking. UBS slid 1.4 percent, Credit Suisse fell 1.3 percent and Julius Baer slumped 2.6 percent.

International markets

Europe

Europe's indexes fell, after economic slowdown fears were compounded by data showing a slump in Chinese exports. Disappointing figures from Germany's manufacturing sector added to the gloom, a day after the European Central Bank announced cuts to its growth forecast. And then weak U.S. jobs data compounded worries for investors. The Stoxx Europe 600 fell 0.9% to end at 370.57 after finishing down 0.4% on Thursday evening. The U.K.'s FTSE 100 slipped 0.7% to 7,104.31, while Germany's DAX fell 0.5% to 11,457.84 France's CAC 40 dropped by 0.7% and Italy's FTSE MIB index fell by 1%, while Spain's IBEX 35 tumbled 1.3%.

United States

Major U.S. indexes closed out their worst week since December ahead of the bull market's 10th anniversary, dragged down by swelling concerns about slowing economic growth around the world. Questions about the health of the U.S. economy mounted Friday after data showed a sharp slowdown in U.S. hiring growth last month, sending the Dow Jones Industrial Average, the S&P 500 and the Nasdaq Composite lower for a fifth-straight trading session. The lackluster data rounded out a troubling week for investors that included doubts around the fate of a trade pact between the U.S. and China, a Thursday decision by the European Central Bank to deploy additional stimulus and a Friday report showing Chinese exports falling combined to exacerbate investors' fears that major economies around the world may be decelerating faster than expected. The Dow Jones Industrial Average fell about 23 points, or 0.1%, to 25450, while the S&P 500 slid 0.2%. The Nasdaq Composite also declined, shedding 0.2%.

Asia

In Asia, most major stock markets were higher, with any declines generally muted in back-and-forth trading. The stabilization came after U.S. equities only fell slightly following the jobs data. Still, Wall Street had its worst week of the year so far.

Bonds

U.S. government bond prices rose after data showed that the economy added fewer jobs in February than forecast, spurring concerns that slowing global growth is weighing on the U.S. The yield on the benchmark 10-year Treasury note declined for a third consecutive trading session, settling at 2.627% from 2.637% Thursday.

Analysis

IR raises Continental target to 144 (142) EUR - Hold
BNP Paribas downgrades Vodafone to Neutral (Outperform)
Warburg raises Xing target to 315 (312) EUR - Hold
Barclays downgrades Axel Springer to 57 (62) EUR - Overweight


Produced by MBI Martin Brückner Infosource GmbH & Co. KG on behalf of Swissquote. All news is acquired with journalistic accuracy. No liability is assumed for delays or errors.

 
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