Philip Morris acquires a 22.61% stake in Vectura
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Philip Morris (-1,5%) has already acquired a 22.61 percent stake in its takeover target Vectura on the market and announced plans to buy more shares along the way. The tobacco company said it had bought 135.5 million shares in Vectura Group plc, which specializes in inhalation medicines, at a price of 165 British pence - the same price it plans to pay in its takeover bid. Further purchases in the market would be made at the same price. Vectura Group had announced last week that it would recommend that its shareholders accept Philip Morris' offer. The group's offer price had beaten out financial investor Carlyle, which refused to further increase a rival offer of 155 pence per share. Philip Morris continued to indicate that the group would not be able to buy Vectura shares on the market from shareholders resident in the U.S. or in locations where Vectura shares would be sold from the U.S. due to regulatory requirements.
The Swiss stock market showed a slightly firmer trend on Wednesday. The leading index SMI climbed to a new record high. Alcon shares led the SMI by a wide margin with a price jump of 13.5 percent. The eye care specialist had raised its outlook when presenting strong business figures. The SMI gained 0.5 percent to 12,545 points. Among the 20 SMI stocks, there were 15 price gainers and five losers. 26.93 (previously: 25.32) million shares were traded. Index heavyweight Nestle, one of the winners of the previous days, fell 0.2 percent. The recently most reviled financial stocks recovered. Banks CS Group and UBS posted gains of 1.3 and 0.4 percent, respectively. Among insurers, Zurich stood out with a gain of 1.1 percent. In the pharmaceutical sector, Lonza and Roche gained 1.9 and 0.7 percent, respectively. Novartis (little changed) lagged the market. Among cyclicals, ABB improved about 1 percent and Sika 0.3 percent. However, Holcim (-0.1%) weakened again. Shares of luxury goods manufacturers Richemont (-2.8%) and Swatch (-3.5%) also sold off sharply again. Observers pointed to new contact restrictions to contain the Corona pandemic, especially in the important distribution country China. In the second tier, Zur Rose lost 5.6% after presenting financial results. The mail-order pharmacy operator had slipped deeper into the red in the first half of the year despite a strong increase in sales.
European stock markets gave up modest opening gains Wednesday to trade broadly lower, with investors looking ahead to an update from the Federal Reserve on possible plans to reduce U.S. stimulus. A string of strong employment reports has strengthened the case for the rate-setting FOMC to announce its intentions to begin tapering its monthly purchases of Treasurys and mortgage-backed securities at its next meeting in September. Carlsberg raised its 2021 earnings expectations but also showed some conservatism given increased volatility in Asia due to the coronavirus pandemic, said Jefferies. The company now expects organic growth in operating profit to be 8%-11%, up from its previous 5%-10% range. Given that consensus expectations already stand at 10.9%, Carlsberg's guidance seems an acknowledgment that the market has crept above its previous guidance, said Jefferies. "We do not rule out a further guidance upgrade at 3Q if pandemic headwinds ease," said the bank's analysts. Persimmon posted a sharp rise in first-half profits on strong growth in completions and said so far in the second half its forward sales were up around 9% on the more normal trading year of 2019. The housebuilder has seen improvement from the levels it experienced pre-pandemic, and is strongly ahead of last year's comparatives. It warned, however, it was facing increased costs. Richard Hunter at Interactive Investor said the current cost inflation of building, which is running between 4.5% and 5%, is seen as a red flag. Furthermore, the company's first-half results didn't encompass any effects that the end of the stamp duty holiday may have had. Additionally, the forthcoming removal of the U.K. government's furlough scheme may put pressure on both unemployment levels and consumer confidence. "Persimmon continues to build on its strengths, with a healthy order book, robust balance sheet and careful management of the factors within its control all underpinning progress," Hunter said.
U.S. stocks slid in the final hour of trading after minutes from the Federal Reserve’s last meeting showed officials increasingly in agreement about pulling back on the central bank’s asset purchases this year. That put some pressure on stocks, which have bounded back from their pandemic lows in part through extraordinary levels of fiscal and monetary support. “As long as policy remains reasonably supportive, growth continues and we keep increasing our vaccination, it is a strange environment where conditions are good for equities,” said Fahad Kamal, chief investment officer at Kleinwort Hambros. The minutes didn’t show officials arriving at a consensus about when exactly they should begin the tapering process. The Dow Jones Industrial Average dropped 382.59 points, or 1.1%, to 34960.69. The S&P 500 shed 47.81 points, or 1.1%, to 4400.27, and the Nasdaq Composite lost 130.26 points, or 0.9%, to 14525.91. Earlier Wednesday, many analysts focused their attention on earnings, which drove large swings among individual stocks even as the broader market appeared to be in a lull. Among individual stocks, Lowe’s jumped $17.47, or 9.6%, to $199.73 after raising its sales forecast for the year. The retailer has, like many of its peers, benefited from a pickup in consumer spending on tools and supplies for home improvement projects. TJX Cos., the parent company of HomeGoods, Marshalls and TJ Maxx, advanced $3.85, or 5.6%, to $73.00 after posting quarterly results that topped analysts’ expectations. Target bucked the trend, falling $7.07, or 2.8%, to $247.58. The retailer raised its forecast for the year, but reported online sales growth cooling as consumers returned to stores to shop. Krispy Kreme, which reported results late Tuesday, lost 97 cents, or 6.9%, to $13.07, giving up its initial post-earnings gain.
The losses in East Asia in view of the Fed signalling it might begin tapering later this year range from 0.7 percent in Tokyo to 1.7 percent in Hong Kong. Meituan sinks 5.2 percent in Hong Kong, Alibaba loses 3.8 percent. Tencent is down 1.0 percent after the quarterly statement.
Long-dated U.S. government debt yields remained higher on Wednesday after minutes from the Federal Reserve’s July meeting showed most officials backing a 2021 start to tapering asset purchases, and as policy maker James Bullard told MarketWatch that the coronavirus delta variant won’t derail the economy. The yield on the 10-year Treasury note rose to 1.273%, compared with 1.258% at 3 p.m. Eastern on Tuesday.
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