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Research Market strategy
by Swissquote Analysts
Morning News

Telefonica Shares Soar After Tower Divisions Sale

Topic of the day

Shares in Telefonica SA traded higher on Wednesday after subsidiary Telxius Telecom SA agreed to sell its European and Latin American telecommunication-tower divisions for 7.7 billion euros ($9.40 billion). Under the agreement, Telxius is selling roughly 31,000 telecommunication-tower sites to real-estate investment trust American Tower Corp. The Spanish telecommunications company owns the majority share in Telxius, while investment firms KKR and Pontegadea hold minority shares. The deal shows a better multiple than anticipated, said analysts at Citi, who had expected proceeds of EUR5.8 billion. The transaction is also boosting the strategic alliance between Telefonica and American Tower, the analysts say.


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Swiss stocks

The SMI closed down 0.3 percent on 10,847 points Wednesday as the coronavirus pandemic again came into focus. The Swiss government extended and escalated pandemic containment measures, with all restaurants, cultural and leisure facilities, and shops selling non-essential goods to close or remain closed until the end of February. Alcon gained 2.7 percent after an analyst presentation indicated it plans to pay out a dividend this year. Givaudan rose 1.0 percent. Index heavyweight Nestle closed almost unchanged. Sika rose 0.9 percent after it posted first financials Tuesday and analysts raised their target to CHF 300 from CHF 270 and confirmed their buy recommendation. Financial stocks fell as US bond yields declined again. Zurich Insurance slid 1.1 percent. Analysts had also revised their target down slightly. UBS fell 1.3 percent and Credit Suisse 1.0 percent. Second-tier Temenos slid 3.1 percent after releasing figures. Analysts had also downgraded it to "underperform" from "neutral".

International markets

Europe

European stocks are mostly higher, led by gains in French grocer Carrefour and Spanish telecom group Telefonica. The Stoxx Europe 600 and the DAX gain 0.1%, the CAC-40 climbs 0.2% and the FTSE 100 falls 0.1%. Persimmon declines 6.2% after the UK housebuilder reported a 9% drop in 2020 revenue. Just Eat Takeaway drops 4.2% after the Dutch-based takeaway delivery group said it would continue to invest heavily and prioritize market share over profit. Carrefour SA traded sharply up Wednesday after confirming it is in preliminary talks over a potential tie-up with Canadian grocery-chain owner Alimentation Couche Tard Inc. The French grocer confirmed late Tuesday that it had been approached, but stressed that talks were "very preliminary," while Couche Tard, which owns the Circle-K chain of convenience stores, also said there was no certainty of a deal. The deal makes more sense for Couche Tard, as it would provide access to Carrefour's supermarket networks in Europe and South America, according to Citi. Total SE and Engie SA are teaming up to set up a renewable hydrogen production site in Chateauneuf-les-Martigues, France. The French energy companies said Wednesday that they have agreed to start construction of the project – called Masshylia – in 2022, aiming to begin production two years later. The project will be located at Total's La Mede biorefinery site and produce five metric tons of green hydrogen a day for the biofuel production process.

United States

U.S. stocks wobbled, swinging between small gains and losses for most of the session, as investors monitored the impeachment proceedings against President Trump in Washington. House lawmakers voted shortly after the stock market closed to impeach the president for inciting last week's Capitol riot, just days before he is due to leave office. While the political rancor has weighed on market sentiment in recent days, most money managers are looking past the developments in Washington to focus on the prospects for additional fiscal stimulus. "The market is largely focusing on the fundamentals around a Biden administration," said Willem Sels, global chief investment officer at HSBC Private Banking. The S&P 500 ticked up 8.65 points, or 0.2%. The Dow Jones Industrial dropped 8.22 points, or less than 0.1%. The Nasdaq Composite rose 56.52 points, or 0.4%. Mithril Capital said today that its portfolio company, NUVIA Inc., has agreed to be acquired by Qualcomm, Inc. for approximately $1.4 billion before working capital and other adjustments. Mithril led NUVIA's $240 million Series B financing in September 2020 with an investment of approximately $70 million, at which time Mithril founder and managing general partner Ajay Royan joined its board of directors. Mithril is NUVIA's largest institutional shareholder, holding a 12.5% stake. Federal officials have been told that Johnson & Johnson's (JNJ) vaccine production has fallen as much as two months behind the original production schedule and won't catch up until the end of April, The New York Times reported, citing people familiar with the situations. The report quoted the lead manufacturing adviser for Operation Warp Speed that the company might be able to catch up with initial production goals by March.

Asia

The stock markets in East Asia and Australia show no clear trend on Thursday. While Tokyo and Hong Kong are rising due to renewed gains in technology stocks, prices in Shanghai and Seoul are falling slightly. Participants in South Korea report position adjustments ahead of the small expiry date on Friday.

Bonds

Bonds were back under pressure in Asia, with the yield on the benchmark 10-year Treasury above 1.1% on reports that Joe Biden is considering a stimulus package as large as $2 trillion. Treasury yields fell Wednesday after a successful government debt auction highlighted strong demand for long-term paper in the wake of a January selloff that pushed yields to more appetizing levels for bond buyers. The 10-year note yield slumped 4.5 basis points to 1.089%, its largest single-day drop in a month.

Analysis

UBS rises the Dialog Semic. Target to 55 (46) EUR – Buy
UBS rises the Nokia target to 4,40 (4,10) EUR – Buy
Dt. Bank rises the Siemens Health. Target to 43 (39) EUR – Hold


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