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Research Market strategy
by Swissquote Analysts
Morning News

USA Tells Germany to Drop Huawei or See Intelligence Sharing Pared Back

Topic of the day

The Trump administration has told the German government it would limit the intelligence it shares with German security agencies if Berlin allows Huawei Technologies Co. to build Germany's next-generation mobile-internet infrastructure. In a letter dated Friday and seen by The Wall Street Journal, U.S. Ambassador to Germany Richard A. Grenell wrote to Germany's economics minister that the U.S. wouldn't be able to keep intelligence and other information sharing at their current level if Germany allowed Huawei or other Chinese vendors to participate in building the country's 5G network. This marks the first time the U.S. has explicitly warned its allies that refusing to ostracize Huawei could have consequences on these countries' security cooperation with Washington. European security agencies have relied heavily on U.S. intelligence in the fight against terrorism for instance. U.S. officials have urged allies for months to ban Huawei and other Chinese companies from bidding for critical communication infrastructure work because of suspicion that these companies might share data with the Chinese government. But the German government says it has seen no evidence that Huawei had or could use its equipment to spy on its users and that it should therefore be allowed to bid for the country's upcoming 5G network if it satisfies basic security criteria.

Swiss stocks

Bank stock gains helped push the SMI up 0.8 percent to 9,341 points Monday after speculation of a Commerzbank-Deutsche Bank merger buoyed European bank stocks on expectations of consolidation in the sector. Credit Suisse led the SMI, rising 1.9 percent, UBS gained 1.7 percent and Julius Baer was up 1.4 percent. Otherwise, sentiment was muted in advance of Tuesday’s Brexit vote in London, with markets expecting another rejection of the EU deal, leading to votes on other options in the UK Parliament this week. If no deal is agreed, the UK will leave the EU on 29 March. Company news was rare.Swisscom rose 0.2 percent on the news of a new strategic partnership with stock exchange operator Deutsche Börse and fintech Sygnum to develop trustworthy financial market architecture for digital assets. Roche rose 0.5 percent after US food and health agency FDA approved the Roche cancer drug Tecentriq in combination with chemotherapy with Abraxane in an accelerated approval process.

International markets

Europe

Europe's indexes finished in positive territory, led higher partly by banks, with investors also awaiting a scheduled U.K. parliamentary vote on Prime Minister Theresa May's Brexit. Shares of Deutsche Bank and rival Commerzbank jumped after a report said that the two embattled German lenders were engaged in informal merger talks. The Stoxx Europe 600 added 0.8% to 373.47, after producing a weekly loss on Friday. The climb represented the pan-European index's largest daily point and percentage gain since Feb. 15, according to Dow Jones Market Data. The U.K.'s FTSE 100, meanwhile, added 0.4% to 7,130.62, coming off its intrasession highs. Germany's DAX advanced 0.8% to 11,543.48 and France's CAC 40 climbed 0.7% to 5,265.96. Italy's FTSE MIB index gained 0.8% to close at 20,638.22, while Spain's IBEX 35 closed 0.5% higher at 9,171.90.

United States

U.S. stocks rose intraday, powered by gains in technology shares. The Dow Jones Industrial Average climbed 140 points, or 0.6%, to 25589. The S&P 500 advanced 1.3% and the tech-heavy Nasdaq Composite added 1.8%. Tech shares in the S&P 500 advanced 2.1% after Nvidia agreed to buy computer-networking supplier Mellanox Technologies in an all-cash deal valued at roughly $7 billion. Nvidia's shares rose 7.3% while Mellanox's shares jumped 8.4%. Shares of tech companies, the darlings of the stock market in recent years, were pummeled in the bruising fourth-quarter selloff amid worries about the health of the now 10-year-old bull market for stocks. But shares have broadly bounced back this year, with the tech sector up 15% so far this quarter.

Asia

Stocks in Asia rallied. Japanese equities have been the strongest after that market's recent soft patch, with the Nikkei up 1.7%. Benchmarks in Hong Kong, Taiwan and Singapore were up about 1%; as well as those in China after a strong rebound yesterday-once again led by smaller stocks.

Bonds

U.S. government bonds steadied intraday after rising at the end of last week, keeping yields range-bound as investors monitor global political and economic developments. In recent trading, the yield on the benchmark 10-year U.S. Treasury note was 2.637%, according to Tradeweb, compared with 2.627% Friday.

Analysis

CS raises Danone target to 76 (74) EUR - Outperform
Berenberg downgrades MBB target to 90 (101) EUR - Buy
UBS raises Ericsson target to 85 (72) SEK - Neutral
Nomura upgrades Facebook to Buy (Neutral) – Target 215 (172) USD


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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