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Research Market strategy
by Swissquote Analysts
Morning News

3M Sales Rise But Profit Falls in 3Q

Topic of the day

3M Co. said its sales rose for the September quarter, though profit fell as expenses grew and sales of products serving industries affected by the Covid-19 pandemic continued declining. The company posted a third-quarter profit of $1.41 billion, or $2.43 a share, compared with $1.58 billion, or $2.72 a share, in the same period last year. Excluding items, earnings were also $2.43 a share, topping analysts' expectations. The Saint Paul, Minn., manufacturer on Tuesday said its sales rose 4.5% to $8.35 billion. The company had expected sales of $8.2 billion to $8.3 billion, and analysts polled by FactSet had expected $8.31 billion. Comparable local-currency sales rose 0.9%. At the company's safety and industrial business, sales grew 6.9%. Health-care sales increased almost 26%. Consumer-product sales rose 5.6%, while transportation and electronics products fell 7.4%.

Swiss stocks

The SMI fell 1 percent to 9,887 points Tuesday amid investor fears about the second coronavirus wave, as rising new infection numbers in Europe and the US dashed hopes of a economic recovery soon. New US consumer confidence data was also weaker than expected, and a stimulus package before next Tuesday’s US presidential election remains unlikely. However, investors hope a Democrat win will bring generous stimulus measures. On the SMI, Novartis fell 2.9 percent on releasing Q3 figures. Although Novartis raised its 2020 core operating income forecast after a solid Q3 to a percentage increase on year in the low double digits to mid-teens, analysts said Q3 turnover was disappointing. Competitor Roche gained 0.5 percent after lagging the market recently. Financial stocks were sold off in a low-income environment. UBS fell 1.4 percent and Credit Suisse 2.6 percent. Swiss Re slid 1.9 percent and Zurich Insurance 1.2 percent. Sika gained 0.2 percent, Lonza 0.6 percent and Givaudan 0.9 percent.

International markets

Europe

European stocks fall as worries about rising coronavirus cases, movement restrictions and the lack of a US economic-stimulus bill drag on sentiment. The Stoxx Europe 600 drops 1%, the FTSE 100 sheds 1.1%, the CAC-40 backtracks 1.8% and the DAX retreats 0.9%. Meanwhile, the Dow declines 0.6%. HSBC Holdings PLC's net profit fell in the third quarter as the coronavirus ravaged the global economy and political tensions between the U.S. and China intensified over Hong Kong. The London-based bank with Asian roots said net profit fell 54% to $1.36 billion in the three months ended Sept. 30, from $2.97 billion in the same period last year. HSBC set aside $785 million in provisions for bad loans in the quarter, less than a third of the amount set aside in the previous three months. In addition to navigating the pandemic, HSBC is embroiled in a political clash between Beijing and Washington over the status of Hong Kong. When HSBC's top Asia executive endorsed China's extension of a national-security law to the port city in June, Secretary of State Mike Pompeo described the act as a "show of fealty." BP PLC reported a fifth consecutive quarterly loss on Tuesday, providing the first glimpse of how major oil companies navigated the third quarter amid a prolonged slump in demand triggered by the coronavirus pandemic. The loss follows one of the worst second quarters ever for the sector, in which BP halved its dividend and cut jobs. In the third quarter, oil prices stabilized at around $40 a barrel after diving earlier in the year.

United States

U.S. stocks wobbled Tuesday, attempting to stabilize after worries about the coronavirus pandemic sent markets tumbling to start the week. The Dow Jones Industrial Average fell 222.19 points, or 0.8%, to 27463, down four of the past five trading days. The blue chips are down 3.8% for 2020. The S&P 500 lost 10.29 points, or 0.3%, to 3390.68. The Nasdaq Composite climbed 72.41 points, or 0.6%, to 11431.35. Technology stocks were a relative bright spot in Tuesday's market, buoyed by Advanced Micro Devices' planned $35 billion acquisition of Xilinx, a fellow chip maker. Xilinx shares rose $9.80, or 8.6%, to $124.35. AMD fell $3.35, or 4.1%, to $78.88 Advanced Micro Devices Inc. announced Tuesday morning that it plans to acquire Xilinx Inc. in an all-stock deal valued at $35 billion, confirming recent speculation. AMD (AMD) also delivered an early release of its third-quarter financial results, which had been due to come out after the closing bell. The company delivered adjusted earnings per share of 41 cents on revenue of $2.8 billion, up from 18 cents and $1.8 billion, respectively, a year earlier. Analysts surveyed by FactSet had been expecting 35 cents in earnings per share and $2.56 billion in revenue. Shares of AMD are off 3.5% in morning trading Tuesday, while shares of Xilinx are up 9%. Caterpillar said Tuesday that machinery sales fell 23% in its third quarter as customers held off on big purchases. Revenue fell in Caterpillar's three global segments, declining 23% in construction, 21% in mining and 24% in its energy and transportation business. "Those are very big machines, very expensive, and people are deferring [purchases] until such time as they have clarity," Andrew Bonfield, Caterpillar's financial chief, said in an interview.

Asia

In Asia, shares dipped, along with oil and gold, while the yen continued to strengthen, as rising Covid-19 infection levels around the world compound worries about the global economic outlook. Among the individual shares in Tokyo, that of the bicycle manufacturer Shimano stands out with a plus of 16,7%. The company is profiting from the bicycle boom during the pandemic and has raised its sales and net profit outlook for the full year.

Bonds

U.S. Treasury yields fell Tuesday as investors grew pessimistic on the economic outlook as Covid-19 cases and hospitalizations are rising, while U.S. lawmakers failed to hash out another financial aid package ahead of the Nov. 3 elections. The 10-year Treasury note yield fell 2.3 basis points to 0.778%, the 2-year note yield was flat at 0.147% and the 30-year bond yield was down 2.1 basis points to 0.571%.

Analysis

UBS lowers the Utd. Internet target to 35 (40,50) EUR – Neutral
UBS lowers the Ströer target to 70 (71) EUR – Buy
Commerzbank lowers the Washtec target to 29 (30) EUR – Reduce

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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