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Research Market strategy
by Swissquote Analysts
Morning News

Bristol-Myers Squibb to Acquire Celgene for About $74 Billion

Topic of the day

Global biopharmaceutical company Bristol-Myers Squibb Co. will acquire Celgene Corp. in a cash and stock transaction for about $74 billion. Under the deal, Celgene shareholders will receive one Bristol-Myers Squibb share and $50 in cash for each share of Celgene, the companies announced Thursday. Celgene shareholders will also receive one tradeable Contingent Value Right for each share of Celgene. A CVR is often used when buyers and sellers can't agree on a purchase price and usually kicks in after an acquired company meets certain sales or regulatory targets. When the deal is completed, Bristol-Myers shareholders would own about 69% of the combined company, while Celgene shareholders would own about 31%. Bristol-Myers develops medicines that help patients prevail over serious diseases. Summit, N.J.-based Celgene is involved in the development and commercialization of therapies for the treatment of cancer and inflammatory diseases.

Swiss stocks

The SMI bucked the worldwide trend on Thursday, its first trading day of the new year, to close up, rising 0.4 percent to 8,466 points, as it profited from its composition and the low significance of tech stocks, which came under pressure worldwide after Apple issued a profit warning Wednesday. However, market participants doubt that the Swiss market will be able to avoid the downward spiral, largely driven by weakness in the Chinese market, in the long term. Defensive stocks also buoyed the SMI, with heavyweight Nestle up 1.8 percent and Roche 2.4 percent higher. Watch stocks, on the other hand, were depressed by worries about a weakening Chinese economy, with Swatch down 3.5 percent and Richemont 2.8 percent lower. Adecco slid 5.2 percent after negative analyst opinions added to long-running economic worries. One bank downgraded Adecco to “underperform”, expecting a weaker market in the coming months, while another bank voiced scepticism about the entire temp staff sector.

International markets

Europe

The Stoxx Europe 600 closed down 1% at 333.92 as tech stocks took a hammering following U.S. giant Apple's revenue warning. Shares in Austrian semiconductor maker AMS fell 23.5%, ST Microelectronics lost 11.7%, while Infineon Technologies and Siltronic were also among other tech stocks that suffered sharp losses after the U.S. smartphone maker blamed weaker Chinese demand for the revenue guidance cut. Electronic payment groups Temenos and Wirecard also took a hit, falling 8.1% and 5.9%, respectively. Still, retailers rose after slightly-better-than-expected Christmas sales from U.K. firm Next, whose shares rose 4%, while German online fashion retailer Zalando gained 4.4%. Regionally, Germany's DAX index lost 1.6%, while France's CAC 40 ended down 1.7%. The U.K.'s FTSE 100 ended down 0.6%, Italy's FTSE MIB was down 0.6%, while Spain's Ibex 35 closed 0.3% lower.

United States

The Dow Jones Industrial Average slumped intraday, as weak economic data and a rare sales warning from Apple sparked new worries about a global slowdown. The blue-chip index dropped 517 points, or 2.2%, to 2829, after falling more than 650 points earlier in the trading session. The S&P 500 fell 1.8% and the technology-heavy Nasdaq Composite shed 2.3%. At their lows on the day, the Dow and S&P 500 were both down more than 2% in 2019, their worst start to a year since 2000. Nine of the 11 sectors in the S&P 500 fell. The technology sector shed 4%, with Apple shares dropping 9%. Meanwhile, dividend-paying "safety" stocks, which investors typically buy when they are nervous, rose with the real-estate group mildly higher. Utilities also rose. Selling accelerated after data showed a decline in U.S. factory activity in December, intensifying concerns that economic growth is weakening.

Asia

Japanese markets tumbled Friday as they reopened after the New Year holidays, while other Asian indexes were mixed after a technology-led sell-off on Wall Street. The Nikkei 225 index was down as technology and electronics makers slumped in the first trading day of 2019 for Tokyo. Hong Kong's Hang Seng rallied and stocks jumped in mainland China on renewed trade hopes as Bloomberg News confirmed reports that a U.S. delegation will travel to Beijing for talks beginning Monday.

Bonds

A rally in U.S. government bonds accelerated after a soft report on manufacturing activity added to concerns that the U.S. economic growth is poised for a slowdown. The yield on the benchmark 10-year U.S. Treasury note had its biggest one-day decline since May, settling at 2.557%, compared with 2.659% Wednesday. The yield has fallen for five consecutive trading sessions. Yields, which fall when bond prices rise, dropped sharply after the Institute for Supply Management said its manufacturing index was 54.1 in December, down from 59.3 in November and below the 57.9 anticipated by economists surveyed by The Wall Street Journal.

Analysis

Jefferies downgrades Apple to Hold (Buy) - Target 160 (225) USD
IR downgrades Salzgitter target to 28 (36) EUR - Hold
Dt. Bank downgrades UBS target to 14 (16) CHF - Hold
UBS ugrades Nestle to Buy (Neutral)

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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