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Research Market strategy
by Swissquote Analysts
Morning News

LSE in Talks With Euronext Over Borsa Italiana Sale

Topic of the day

Shares in Euronext NV rose Friday after it said that it was in exclusive talks with London Stock Exchange Group PLC over the acquisition of Italy's Borsa Italiana. Euronext said that it had engaged in the talks with LSE with CDP Equity, an entity owned by Italian investment bank Cassa Depositi e Prestiti, and Italian banking group Intesa Sanpaolo SpA. "Italy, through Borsa Italiana, would become the largest revenue contributor to the enlarged Euronext group," Euronext said. In a separate release Friday, London Stock Exchange said it had received and reviewed a number of proposals from several parties for Borsa Italiana and electronic fixed-income trading market MTS. Earlier this month, Euronext and Cassa Depositi e Prestiti joined forces to present a bid to acquire Borsa Italiana. The bid was submitted on Sept. 14, in partnership with Intesa Sanpaolo. In July, LSE started exploring the possibility of selling its interest in MTS and Borsa Italiana, in an effort to satisfy the European Commission's regulatory concerns regarding its own deal to acquire financial-data provider Refinitiv. The exchange operator had agreed to buy Refinitiv in August 2019 for $27 billion, and the European Commission launched a Phase II review into the deal.

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Swiss stocks

After Thursday’s slight decline, the SMI closed up 0.2 percent on 10,539 points Friday, amid some volatility because of the quarterly “triple witching hour” in the last hour of the day’s trading session, when three kinds of securities expired. Additionally, the coronavirus pandemic again came to the fore with rising numbers of infections, including reports the UK could introduce a second lockdown. The SMI’s pharmaceutical stocks were in demand. Roche gained 1.8 percent to lead the index after launching a newcoronavirus antibody test. Furthermore, its US subsidiary Genentech reached the primary endpoint in a phase 3 study with its arthritis drug Actemra. Novartis rose 0.8 percent, Lonza 1.6 percent and Sika 0.4 percent. Temping staff company Adecco slid 1.3 percent on its last trading day in the SMI. It will be replaced by private equity firm Partners Group (down 0.3 percent) Monday. Richemont slumped 2.0 percent. Financial stocks Credit Suisse crashed 2.4 percent and UBS 1.5 percent.

International markets

Europe

European stocks decline on worries about US-China tensions and new restrictions to contain rising coronavirus cases. The Stoxx Europe 600, the FTSE 100 and the DAX fall 0.7% and the CAC-40 drops 1.2%. "The atmosphere across stock markets is turning sour as the weekend looms, as investors fret about possible retaliatory measures from China after the US announced a ban on [Chinese apps TikTok and WeChat] from Sunday," an analyst said. Travel stocks are among the worst performers following reports of renewed restrictions in parts of Europe to contain a resurgence in coronavirus infections. Shares of Covestro climbed over 6% after Bloomberg News reported that buyout firm Apollo Global Management is mulling a takeover of the plastics maker, citing sources. Covestro declined to comment and a source at Apollo couldn't immediately be reached, the report said. Covestro rose 5%. rejected allegations regarding its business and liquidity positions by short-selling firm Viceroy and said it would commission a special audit in light of the accusations. In a statement and in a call with reporters, Grenke's Chair of the Board of Directors Antje Leminsky said the German leasing company rejected Viceroy's likening of Grenke to insolvent payments firm Wirecard AG and called its allegations "completely unfounded." Shares fall 6.6%.

United States

Declines in shares of technology companies pushed the S&P 500 toward a third consecutive week of declines, capping another tumultuous stretch for the stock market. The S&P 500 slipped about 1%, with losses accelerating midday. The tech-heavy Nasdaq Composite lost 1.7%. The Dow Jones Industrial Average shed about 150 points, or 0.5%. The S&P 500 and Nasdaq are on track for weekly declines, while the Dow is headed for a slim gain. Friday's moves continue a spell of volatility that has dominated recently, mainly driven by the tech heavyweights that powered the market higher this year. These companies continued to falter Friday, dragging major indexes lower. The big tech companies have outsize influence on the S&P 500 given their towering market valuations.
In corporate news, shares of Oracle lost 0.6% after the Trump administration said it would block downloads of TikTok and the use of Chinese messaging and payment app WeChat. Under the latest plan for a majority U.S. ownership of Chinese-owned video-sharing app TikTok, Oracle and Walmart could together own a significant stake. Shares of Nvidia lost 2.7%, while Amazon.com stock fell about 2.5%.

Asia

Most of the Asian markets recorded losses on Monday during the course of the day. The stock exchange in Japan remains closed on Monday and Tuesday due to public holidays. In Shanghai the market is down 0.4 percent and in Hong Kong 0.9 percent.

Bonds

U.S. Treasury yields edged up Friday, bouncing off their lows after a stronger-than-expected reading in consumer sentiment helped to ease some concerns around the U.S. economic recovery. The 10-year Treasury note yield rose 1.2 basis points to 0.694%, contributing to a 2.6 basis point increase last week. Meanwhile, the 2-year note rate was up 0.6 basis point to 0.139%, adding to a single basis point weekly rise.

Analysis

Mainfirst raises Kering target to 605 EUR - Hold
Mainfirst raises Richemont target to 65 CHF - Hold
Bryan Garnier upgrades Burberry to Sell (Neutral) - 1.640 (1.580) p
Metzler raises Deutsche Post target to 48,50 (48) EUR - Buy

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