BHP Considers Sale of $15 Billion-Valued Petroleum Business
Topic of the day
The world’s biggest mining company is plotting a new future. It wants to focus solely on mining. BHP Group Ltd. said it is considering selling its oil-and-gas business in what would rank as one of the energy industry’s biggest deals this year. BHP Group revealed it's in talks with Australian oil-and-natural-gas company Woodside Petroleum Ltd. Analysts estimate the business has a value of at least $15 billion, and a deal is being explored while BHP separately hunts for a buyer for its thermal-coal mining business. In the event of a sale, BHP Group Ltd would reduce its exposure to the fossil fuels business. More and more investors are calling on commodity companies to reduce their emissions. If the petroleum business was sold, BHP would focus on mining commodities such as iron ore, metallurgical coal, copper, nickel and possibly potash if a major Canadian project is undertaken. Of these commodities, iron ore accounts for the largest share of BHP's profits. If the coal business was also sold along with it, this would be very positive from an ESG perspective, Jefferies said. BHP shares nevertheless fell by 1.8 percent in London - here the general weakness in raw materials weighed. BHP's stock has gained 15.4% year to date, while the S&P 500 has advanced 18.4%.
The Swiss stock market ended Monday's trading with slight losses. After the stock prices - also thanks to convincing quarterly reports of domestic companies - had recently risen from record to record, investors cashed in. There were plenty of reasons: Rising Corona case numbers combined with weak economic data from China and the U.S. fueled fears that the economic recovery could already be over. Added to this was geopolitical uncertainty with the conquest of Afghanistan by the Islamist Taliban. And last but not least, concerns continued to smolder in the background that the U.S. Federal Reserve could soon begin to scale back its bond purchases. The SMI lost 0.4 percent to 12,419 points. Among the 20 SMI stocks, there were 16 price losers and four price winners. Turnover was 25.71 (previously: 18.89) million shares. The list of losers was headed by Richemont (-2.8%) and Swatch (-2.1%). The two luxury goods manufacturers depend heavily on business in China, which is why here - in addition to the prospect of further pandemic-related restrictions - the weak Chinese retail sales reported on Monday are likely to have weighed down. Chinese industrial production and the Empire State Manufacturing Index in the U.S. also missed expectations. Among cyclicals, Holcim fell 1.6 percent and Sika lost 1.0 percent. Bond yields, which receded again, pushed the prices of banks Credit Suisse and UBS by 1.2 and 1.1 percent. Index heavyweight Nestle (+0.1 percent), which is considered defensive, held up better than the market. Pharmaceutical stocks also more or less defied the negative trend. While Novartis declined by 0.1 percent, Roche posted a plus of 0.1 percent. The share price of drug contract manufacturer Lonza rose 0.6 percent. The company manufactures the active ingredient for the US pharmaceutical group Moderna's Corona vaccine.
European stocks dropped on Monday after more than a week inching higher. The Stoxx Europe 600 index lost 0.5% to 473.5 points. In Paris, the CAC 40 and the SBF 120 each gave up 0.8%. In Frankfurt, the DAX 30 was down 0.3%, while the FTSE 100 in London lost 0.9%. "Weaker economic data emanating from China has spoiled the mood, with lower readings on retail sales and industrial production raising questions on whether the recovery momentum can be maintained," said nteractive Investor analyst Richard Hunter. There also remain some health issues in Asia due to rising coronavirus cases while geopolitical concerns have surfaced after Taliban forces swept into Afghanistan's capital city of Kabul on Sunday following the sudden collapse of the country's government, he said. Faurecia said it has agreed to buy Hella in a deal valuing the German automotive supplier at around $8 billion. Ultra Electronics has recommended a $3.6 billion takeover by U.K. rival Cobham, with the cash price a 42% premium to Ultra's closing share price on July 22, the day before it said it had received an approach.
Germany's finance agency said it plans to sell a stake of up to 5% in Lufthansa over the next several weeks, citing the airline's success in combating the travel crisis caused by the pandemic. Axa (-0.5%) will sell its activities in Singapore to the bank HSBC (-1.5% in London) for a total cash amount of 575 million dollars, or 487 million euros.
U.S. stocks finished mostly higher Monday and oil prices fell after data showed a slowdown in China’s economy. The S&P 500 reached its 49th record close of the year by gaining 11.71 points, or 0.3%, to 4479.71 after being in the negative territory most of the day, the largest comeback since late March, according to Dow Jones Market Data. The Dow Jones Industrial Average rose 110.02 points, or 0.3%, to 35625.4, to end the trading day at its 35th record close of 2021. The blue-chip index also finished last week at a high. Today’s close marks five consecutive trading sessions of new highs for both benchmarks. The tech-heavy Nasdaq lost 29.14 points, or 0.2%, to 14793.76. Stocks have ground higher in thin summer trading, buoyed by a bumper set of quarterly earnings reports from American companies. However, investors remain wary of the damping effect of the Delta variant of Covid-19 on business activity, and potential pitfalls including geopolitical uncertainty and a possible end to the Federal Reserve’s asset-purchase program by mid-2022. The U.S. highway safety authority has decided to look into Tesla's (-4.3%) advanced driver assistance system, known as Autopilot, after a series of accidents involving emergency vehicles. U.S. hotel group Hyatt Hotels (+0.2%) announced on Sunday that it would acquire fellow U.S. company Apple Leisure, which is owned by investment funds KKR and KSL Capital Partners, for $2.7 billion. Pfizer (+0.9%) provided new clinical data to U.S. health authorities in hopes of getting a third dose of Covid vaccine approved for a major portion of the population. Walmart (-0.8%) is looking to hire a manager to develop its cryptocurrency strategy. Moderna Inc. slipped $15.92, or 4.1%, to $373.86 while Advanced Micro Devices Inc. fell $3.07, or 2.8%, to $107.48 and Nvidia Corp. slid $2.38, or 1.2%, to $199.50.
In Asia, on a broad front, the indices drop on Tuesday. The best performer is the Tokyo stock market, the Nikkei index closes barely changed at 27,541 points, but in the meantime had already been up by almost half a percent. In Seoul, the Kospi loses about 1 percent after Monday's holiday break. On the Chinese stock markets, the declines turned out to be smaller. In Hong Kong, it is again the technology heavyweights Tencent, Meituan and Alibaba with setbacks of up to 3.7 percent dragging the index down.
Long-dated U.S. government Treasury prices rose on Monday, pulling down yields, as a round of weaker-than-expected data out of China and headlines around the Taliban’s seizure of power in Afghanistan soured investor appetite for riskier assets for part of the day. The yield on the 10-year Treasury note fell to 1.255% from 1.297% at 3 p.m. Eastern on Friday.
Berenberg raises Medios target to EUR 47 (46) - Buy
Barclays increases Hellofresh target to EUR 100 (92) - Trader
Jefferies lifts Swiss Re target to CHF 92 (90) - Hold
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