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Research Market strategy
by Swissquote Analysts
Morning News

Ford Announces Major European Restructuring

Topic of the day

Motor Co. has launched talks with trade unions in Europe about job cuts that could run into the thousands as it shuts European plants and cancels production of unprofitable models in response to a storm of bad news for global car makers. The move comes as Ford Chief Executive Jim Hackett has embarked on a broad cost-cutting effort amid a rapidly changing automotive landscape buffeted by electric vehicles and a push toward autonomous driving. In October, the company informed employees of a global reorganization that it said could affect salaried jobs, part of Mr. Hackett's broader push to improve profits and boost its flagging stock price. The restructuring is also the latest sign that waning demand and weaker profits in Europe, amid concerns around Brexit, trade, the gradual death of diesel engines and an economic slowdown in China, are forcing auto manufacturers to aggressively prune their businesses after years of steady growth. "We are taking decisive action to transform the Ford business in Europe, " Steven Armstrong, the company's president of Europe, Middle East and Africa, said.

Swiss stocks

The SMI surged 1.3 percent to 8,801 points Thursday and was thus the clear winner among its European counterparts. Driving sentiment was the Swiss franc, which fell continuously throughout the day against the dollar and euro, and thus improving Swiss exporters’ competitiveness. However, market participants struggled to explain the weakness, speculating about an intervention by the Swiss central bank against its own currency, as the news on the market instead suggested an appreciation of the franc as a safe haven. Among individual SMI stocks, Julius Baer led the field, rising 3.3 percent, followed by Lonza and Credit Suisse, up 2.6 percent and 2.1 percent respectively. On the other hand, Swatch and Richemont both fell slightly. With their heavy reliance on Chinese demand, they were hit by news that new economic indicators signalled weaker growth in China. In addition, analysts revised downward their targets for the European luxury goods sector, including for Swatch and Richemont.

International markets

Europe

The Stoxx Europe 600 rose 0.3%, or 1.2 points, to 348.88 as Wall Street made modest gains, though auto stocks fell after news of industry restructuring and job cuts. The DAX climbed 0.3%, though the CAC-40 edged 0.2% lower, as the Dow Jones Industrial Average advanced 26 points. Headlight maker Osram Licht, car-seat maker Faurecia and tire-maker Continental were among the sector's biggest fallers. The largest riser was tobacco maker Swedish Match, with shares up 4%.

United States

The S&P 500 fell intraday, stymieing a market rebound as lackluster holiday sales reports from retailers and weak economic data from Asia and Europe rekindled investors' fears of fading global growth. Falling shares of retailers weighed down the broad stock-market index after several chains, including Macy's and Kohl's, reported disappointing sales results from the holiday season, reviving concerns among investors that companies will struggle to boost profits this year. Lackluster economic data from China and France added to the worries. The losses pulled the S&P 500 down nearly 1% soon after the opening bell, putting the broad index on pace to snap a four-day run of gains, its longest winning streak since September. Still, the strong volatility that has buffeted stocks in recent weeks was apparent. After opening lower, stocks wobbled between small gains and losses. The S&P 500 fell 0.4% in recent trading, while the Dow Jones Industrial Average lost 76 points, or 0.3%, to 23803. The Nasdaq Composite declined 0.3%.

Asia

In Asia, stocks were mostly higher with the Nikkei considerably outperforming other regional indexes. The progress made between Washington and Beijing has helped markets recover this month, though analysts say a firm resolution is needed to ease the harsh volatility.

Bonds

U.S. government-bond prices ticked higher intraday following four sessions of declines, as weak Chinese inflation helped bolster demand for safer assets. In recent trading, the yield on the benchmark 10-year U.S. Treasury note was 2.717%, according to Tradeweb, compared with 2.728% Wednesday.

Analysis

HSBC lowers the Bouygues target to 35 (38) EUR - Hold
UBS lowers Kering to Neutral (Buy) - Target 450 (575) EUR
JPM lowers Safran to Neutral (Overweight) - Target 115 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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