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Research Market strategy
by Swissquote Analysts
Morning News

Pandemic Drives More Boeing Job Cuts

Topic of the day

Boeing Co. said it is reviewing jet production levels and plans to shed another 7,000 jobs by the end of next year in response to the mounting toll on the global airline industry from a fresh global surge in coronavirus cases. The plans came as the U.S. aerospace giant on Wednesday reported a third-quarter loss of $466 million and said it is focused on preserving cash ahead of the expected return to service of the 737 MAX as soon as next month, ending a protracted world-wide grounding after two crashes took 346 lives. The company expects to end next year with around 130,000 employees, having started 2020 with a workforce of 160,000, with the cuts including some layoffs. Boeing's sales fell 29% in the latest quarter from a year ago and the company burned through $4.8 billion in cash, further evidence of the mounting financial cost from the MAX crisis and fallout from the coronavirus pandemic. The per share loss of 79 cents in the quarter compared with a $2.05 profit a year earlier. Boeing shares rose 1% in premarket trading.

Swiss stocks

The SMI crashed 2.7 percent to 9,619 points Wednesday with all 20 stocks lower, weighed down like its European neighbours and Wall Street by coronavirus fears. With the onset of a second infection wave, new lockdowns are imminent, though many governments hope to limit lockdown measures to keep the economy moving. Worries also arose about a narrow Democrat win in the US presidential election, which could cause turmoil. Straumann fell 6.1 percent despite strong Q3 financials, as analysts said future growth was by no means certain. Geberit fell 1.6 percent, Partners Group 0.4 percent, and Swisscom 0.9 percent. Cyclicals ABB plunged 4 percent and Lafargeholcim 3.9 percent. Financial stocks were hit by low interest rates and credit default risks amid economic fallout from lockdowns. Credit Suisse and UBS each fell by 4 percent, Zurich slid 2.4 percent, Swiss Re 3.3 percent and Swiss Life 3.8 percent. Defensive heavyweights Nestle fell 2.3 percent, Novartis 3.1 percent and Roche 3 percent.

International markets

Europe

European stocks slump as investors retreat in the face of surging coronavirus cases around the world. The Stoxx Europe 600 drops 3%, the FTSE 100 is off 2.6%, the CAC-40 falls 3.4% and the DAX sheds 4.2%. Carrefour SA said Wednesday that like-for-like sales grew in the third quarter and that it backed the targets it set as part of its Carrefour 2022 plan. The French grocery company said group sales including value added tax and pre-IAS 29 came in at 19.7 billion euros ($23.24 billion), an 8.4% increase on a like-for-like basis. Sales in its home French market were EUR9.68 billion for the period, up 3.8% on a like-for-like basis. Food e-commerce saw a boost in the quarter, growing more than 65%, the company said. Brazil, France and Spain were growth drivers in the segment, Carrefour said. Fiat Chrysler Automobiles NV posted record operating profits in the third-quarter, riding a surge in demand for expensive pickups and a rebound in the U.S. auto market, where dealers are straining to keep inventories in stock. GlaxoSmithKline PLC on Wednesday reported a 20% fall in third-quarter net profit, but still beat market estimates, and backed its full-year forecast.

United States

U.S. stocks sold off as rising coronavirus infections shook investors' confidence in the global economic recovery and sent them toward the safety of Treasurys and the dollar. All three major indexes were on pace for their worst week since the week ending March 20. The Dow industrials lost 3.4%, its fourth losing session in a row. The S&P 500 fell even more, 3.5%, its third consecutive retreat. The benchmark has slipped more than 7% from its record closing level in early September and its gains for the year now stand around 1.3%. The Nasdaq Composite dropped 3.7% Shares of General Electric Co. (GE) jumped 5.6% in premarket trading Wednesday, after the industrial conglomerate reported a surprise third-quarter adjusted profit and positive cash flow, as revenue fell less than forecast. The company reported a net loss that narrowed to $1.19 billion, or 14 cents a share, from a loss of $9.47 billion, or $1.08 a share, in the year-ago period. Excluding non-recurring items, adjusted earnings per share slipped to 6 cents from 15 cents, while the FactSet consensus was for a loss of 4 cents. Industri Microsoft Corp. expects the pandemic-era surge in demand for cloud-computing services, videogaming and computers that delivered a solid quarter to persist at least through the rest of the year. The software company on Tuesday said sales rose 12% to $37.2 billion, generating a net profit of $13.9 billion in the first quarter of its fiscal year. The results surpassed Wall Street expectations on revenue and profit for the quarter ending in September.

Asia

The stock markets in Asia showed today the same patterns of the previous days. Although they are following Wall Street and Europe, the heavy losses seen there are only partly understood. The Nikkei index is supported by the good business figures of well-known companies. Sony closed by 6,6% after the company had presented surprisingly strong quarterly figures the day before and also raised its outlook.

Bonds

The yield on the 10-year Treasury recovered from early losses and rises to 0.780% from 0.778% Wednesday, in a day marked by risk aversion fueled by revived fears of major lockdowns to fight a resurgent coronavirus.

Analysis

IR lowers the BASF target to 53 (54) EUR – Hold
CS rises the Covestro target to 50 (49) EUR – Neutral
H&A lowers Rational to Sell (Hold) – Target 460 EUR

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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