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Research Market strategy
by Swissquote Analysts
Morning News

Biden Proposes $1.9 Trillion Covid-19 Package

Topic of the day

President-elect Joe Biden is calling for a $1.9 trillion Covid-19 relief plan to help Americans weather the economic shock of the pandemic and pump more money into testing and vaccine distribution. Mr. Biden in a speech Thursday night described his priorities related to the pandemic for the early days of his administration, pressing the often-divided Congress for urgent, unified action. His plan calls for a round of $1,400-per-person direct payments to most households, a $400-a-week unemployment insurance supplement through September, expanded paid leave and increases in the child tax credit. Aid for households makes up about half of the plan's cost, with much of the rest going to vaccine distribution and state and local governments. "We have to act and we have to act now," Mr. Biden said. Mr. Biden made both a moral and an economic pitch, arguing that it was essential to use the government's borrowing power to support struggling families and arguing that the resulting consumer spending would spur growth. "Even our debt situation will be more stable, not less stable, if we seize this moment with vision and purpose," he said


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Swiss stocks

The SMI Thursday closed almost unchanged on 10,851 points amid depressed sentiment from high coronavirus infection figures and optimism on hopes of a new US stimulus package from President-elect Joe Biden. Cyclicals were in demand. Luxury goods stocks Swatch rose 2,9 percent and Richemont 0.6 percent, profiting also from good economic data from China, their top sales market. Financial stocks benefited from a slight rise in US bond yields. UBS rose 1.1 percent, Credit Suisse 0.3 percent, Swiss Life 1.0 percent and Swiss Re 0.7 percent. Alcon continued its rally after announcing plans Wednesday to pay a dividend this year, rising 0.9 percent. Despite exceeding market expectations with 2020 figures, Geberit slumped 5.6 percent. Participants attributed this to profit-taking after the stock’s recent strong showing. Sika too fell 2.3 percent on profit-taking. Swisscom slid 0.9 percent after analysts downgraded the stock to "underperform" from "hold" and revised their target down sharply.

International markets

Europe

European stocks rise as hopes for additional US fiscal stimulus under the incoming Biden administration lifts market sentiment. The Stoxx Europe 600 rises 0.7%, the FTSE 100 gains 0.8%, the DAX climbs 0.4% and the CAC-40% edges up 0.3%. Tesco PLC said Thursday that comparable sales rose during the key Christmas period, supported by strong food and online sales, and reiterated its guidance for fiscal 2021 as a whole. The U.K. grocer said retail like-for-like sales – excluding fuel sales and value-added tax – were up 5.4% during the six weeks to Jan. 9. In the U.K., Tesco's like-for-like sales were up 8.1% over the Christmas period, accelerating from a 6.7% rise for the third quarter ended Nov. 28. Online sales in the U.K. for the 19-week period including the third quarter and Christmas grew 80%, the company said. Shares of French supermarket owner Carrefour stumbled on Thursday, surrendering gains after France's finance minister objected to a proposed foreign takeover. Carrefour shares stumbled 6% in early action, after surging 13% when Canada's Alimentation Couche-Tard said it was in early-stage takeover talks. French finance minister Bruno Le Maire said in a television interview that the country's "food sovereignty" was at stake. He said "at first glance" that he did not favor the deal.

United States

U.S. stocks edged lower as investors awaited details of the incoming Biden administration's plans for a fresh coronavirus relief package. The Dow Jones Industrial Average pared earlier gains, falling about 69 points, or 0.2%. The S&P 500 dropped 0.4%, while the Nasdaq Composite Index lost 0.1%. BlackRock Inc.'s quarterly profit rose 19% as investors turned to the money-management giant's funds through election uncertainty, vaccine breakthroughs and a year-end rally. The investment company posted fourth-quarter profit of $1.5 billion, or $10.02 a share, up from $1.3 billion, or $8.29 a share, a year earlier. BlackRock's revenue rose 13% to about $4.5 billion in the final three months of 2020. BlackRock has used its scale to undercut the prices of rival funds in popular index strategies while focusing on growing more lucrative areas of the business such as private equity. Delta Air Lines Inc. said it is hunkering down for a long, dark winter as the coronavirus pandemic drags on but still expects air-travel demand to turn a corner this year. Delta on Thursday reported a net loss of $755 million for the fourth quarter, compared with a profit of $1.1 billion in the same period a year earlier. Cisco Systems Corp. on Thursday said it has struck a new deal to buy Acacia Communications Inc., boosting the purchase price by 64%. Networking-equipment giant Cisco said it would now pay $115 a share for Acacia in a deal that values the Maynard, Mass.-based maker of optical interconnect technologies at about $4.5 billion on a fully diluted basis.

Asia

At the end of the week, negative signs dominate the stock markets in East Asia and Australia. Initial gains cannot be defended. Technology stocks, which have been doing well recently and are among the beneficiaries of the coronavirus pandemic, are said to be taking profits before the weekend. The biggest drop was in Seoul, where the Kospi fell by 1.5 per cent. In Tokyo, the Nikkei-225 is down 0.6 per cent to 28,527 points.

Bonds

The yield on the 10-year Treasury note climbed 3.9 basis points to 1.13%. The WSJ Dollar Index recently was down 0.23% to 85.01.

Analysis

SocGen rises the Allianz target to 230 (220) EUR – Buy
MS lowers the Geberit target to 475 (479) CHF – Underweight
JPM rises the Vinci target to 97 (94) EUR – Overweight


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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