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Research Market strategy
by Swissquote Analysts
Morning News

BMW Posts 2Q Loss; Backs 2020 View

Topic of the day

BMW AG said it swung to a loss in the second quarter during the coronavirus pandemic, and it confirmed its guidance for the year. The German luxury car maker posted a quarterly net loss of 230 million euros ($271.5 million) compared with a profit of EUR1.45 billion the same period a year earlier. It swung to a loss before interest and taxes of EUR666 million compared with an earnings before interest and taxes of EUR2.20 billion the year prior. In the automotive segment, BMW's EBIT margin fell to negative 10.4% in the quarter from positive 6.5% a year ago. Revenue for the quarter dropped to EUR19.97 billion from EUR25.72 billion, BMW said. The company backed its guidance for 2020, which includes an auto segment EBIT margin of between 0% and 3%. Group profit before tax is expected to be "significantly lower than in 2019." BMW Chief Executive Oliver Zipse said the company was "cautiously optimistic for the second half of the year."


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Swiss stocks

Despite a positive market environment, the SMI closed 0.6 percent softer on 10,098 points. All other major European markets followed Wall Street up. US markets had risen Tuesday and gained new momentum Wednesday from good service sector data. The Swiss index was dragged down by heavyweights Nestle, Novartis and Roche. Observers ascribed defensive heavyweight Nestle’s 1.2 percent decline to a reallocation to cyclical stocks. The same reason likely caused the 1.5 percent slide in Novartis stocks and the 1.2 percent drop in Roche papers. Roche was unable to even benefit from the news that the US FDA health authority had approved a Roche test for the Epstein-Barr virus. Cyclical stock Adecco rose 1.7 percent in anticipation of the release of its Q2 report Thursday despite a weak ADP US employment report. ABB and Geberit each rose by 0.4 percent. Second-tier AMS surged 3.4 percent after Tuesday’s news that it had won a contract to supply a spectral sensor for a rapid Sars-Cov-2 test.

International markets

Europe

European markets rise as mining, oil and transport stocks gain in response to higher precious-metal and crude prices and upbeat US economic data. The Stoxx Europe 600 lifts 0.5%, the FTSE 100 is up 1.1%, the CAC-40 gains 0.9% and the DAX climbs 0.5%. Accor's (+3,5%) 1H results were weak with revenue and Ebitda that came below market expectations, Jefferies says. However, "with 81% of hotels open, Accor sees recovery signs in all regions following the 2Q trough," the brokerage says. The French hospitality group's balance sheet remains robust, Jefferies adds. Accor trades 3.1% lower at EUR21.62. Intesa Sanpaolo (+2,3%) delivered a solid set of results for the second quarter, UBS says. Net profit was well above consensus, helped by the better-than-expected results in the insurance business, it says. Quarterly net profit was 1.42 billion euroscompared with EUR1.22 billion a year earlier. However, the results "imply limited (core) standalone earnings upside at first sight," UBS says. "Upside remains mainly related to UBI's contribution in terms of: room to accelerate NPL clean up, and increased cost savings." Shares in the Italian bank trade 3.1% higher at EUR1.85. Allianz (-0,5%) reported a fall in second quarter operating profit to EUR2.57 billion following weakness at its property-casualty business, but said it expected "a solid financial performance" for the rest of 2020.

United States

U.S. stocks rose after White House negotiators said they aim to reach a deal on a new coronavirus-relief package by the end of the week. The S&P 500 gained 0.64% as of the 4 p.m. close of trading in New York. The tech-heavy Nasdaq Composite added 0.52%. The Dow Jones Industrial Average advanced 1.4%, or about 373 points, boosted by a big gain in shares of Walt Disney. Shares of Johnson & Johnson (JNJ) gained 0.8% in premarket trading on Wednesday after the company said it will receive more than $1 billion from the U.S. government to manufacture 100 million doses of its investigational COVID-19 vaccine. The vaccine will be provided at a "global not-for-profit basis for emergency pandemic use," J&J said. The company's vaccine candidate recently entered the Phase 1/2a clinical trial, which is taking place in Belgium and the U.S. J&J's stock is up 0.9% year-to-date, while the S&P 500 has gained 2.3%. Walt Disney Co. (+8,8%) posted its first quarterly loss since 2001, nearly $5 billion, as the majority of its business segments reeled from government efforts to corral the coronavirus by shutting down public spaces around the world. The Covid-19 pandemic has closed Disney's theme parks, virtually eliminated movie distribution and curtailed live sports, a key programming source for Disney TV networks. However, the world's shut-in nature has helped the company's Disney+ streaming service secure more than 60 million users in nearly nine months, a mark that Netflix took about eight years to achieve. Disney said Tuesday it lost $4.72 billion in the three months ended June 27, compared with a profit of $1.43 billion in the year-earlier period. Total revenue fell 42% to $11.8 billion.

Asia

In Asia, shares suffered broad losses with the dollar and oil lower too, while gold continued to surge, as wary investors focus on U.S. stimulus talks and as fears over U.S.-China tensions continue to linger.

Bonds

Treasury yields rose Wednesday after signs of a pick-up in the U.S. services sector activity, the brunt of the U.S. economy, weighed on appetite for government bonds. The 10-year Treasury note yield rose 2.7 basis points to 0.541%, while the 2-year note rate was at 0.115%. The 30-year bond climbed 2.7 basis points to 1.218%.

Analysis

HSBC lowers the Fraport target to 40 (50) EUR – Buy
IR rises the Vivendi target to 25 (23,50) EUR – Hold
IR lowers the Hugo Boss target 24 (29) EUR – Hold


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