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Research Market strategy
by Swissquote Analysts
Morning News

EasyJet Flies Higher After 1H Results

Topic of the day

EasyJet PLC (EZJ.LN) on Friday reported a widened pretax loss for the first half of fiscal 2019, slightly better than previously guided, and said its capacity growth for fiscal 2020 will likely be at the lower end of previous growth rates. The budget airline said its headline pretax profit expectations for fiscal 2019 remain unchanged and in line with market expectations. The company said that for the period ended March 31, pretax loss was 272 million pounds ($348.6 million) compared with a loss of GBP68 million in fiscal 2018. Revenue for the period was GBP2.34 billion compared with GBP2.18 billion the year before. EasyJet said on April 1 that the pretax loss was expected to be about GBP275 million and revenue would be around GBP2.34 billion. Headline pretax loss - the company’s preferred metric which strips out exceptional and other one-off items - for the period was GBP275 million, compared with a loss of GBP18 million for the comparable period a year earlier. EasyJet finished up 5.3%, leading the FTSE 100 after investors welcomed proposals to cut back growth plans.

Swiss stocks

The SMI regained all earlier lost ground in late trading to close only 2 points lower on 9,659 points Friday, following Wall Street’s recovery after heavy initial losses, buoyed by strong US consumer confidence data. Yet caution reigned, as the US-China trade conflict remains a downside factor. The US Administration’s deferral of its decision on car import tariffs by up to six months was expected. Richemont rose 2.8 percent on yearly figures for 2018/19 which analysts rated as mixed; with turnover marginally better, but operating profit lower than expected. Competitor Swatch slipped 0.7 percent. Bank stocks slid Europe-wide as hopes of a hike in the ECB deposit rate waned, with a lowering of the rate no longer ruled out, while the US Federal Reserve is now expected to lower its rate this November. Credit Suisse fell 0.6 percent. UBS slid 0.2 percent. Adecco slumped 1.4 percent on profit-taking. The stock has already risen by some 30 percent this year, almost twice as much as the SMI.

International markets

Europe

European stocks were under pressure, with the Stoxx Europe 600 retreating 0.4%. For the week, the index was up 4.37 points, or 1.16%, to 381.51. The FTSE 100 closed slightly down, although a weak pound limited the losses for the large-cap index compared to other European markets. "A quiet day for data has meant that markets have little to go on apart from the ups and downs of the U.S.-China spat, but the past week has pointed to renewed bullishness among investors, with a commendably strong bout of dip buying going on over the last few sessions," Chris Beauchamp, analyst at IG, said. The French CAC index was down 9.88 points, or 0.18%, and up 110.79 points, or 2.08%, this week to 5438.23. And the German DAX was down 71.43 points, or 0.58%, but up 179.11 points, or 1.49%, this week to 12238.94. With a minus of 1.1 percent, the banking sector was one of the weakest sectors. While weeks ago the ECB had been fond of raising the deposit rate, an interest rate cut by the ECB is no longer completely ruled out in the longer term. The Fed is expected to take such a step in November of this year with a probability of 70 percent. Thomas Cook collapsed on the London Stock Exchange by almost 40 percent.

United States

Stocks lost gains in the final hour of trading as concerns over negotiations between Washington and Beijing were only partially offset by a delay in an expected U.S. decision on whether to impose new tariffs on vehicle and auto-parts imports. The Dow Jones Industrial Average fell 98 points, or 0.1%, to 25764, after falling about 200 points in early trading and then sitting on modest gains for much of the afternoon. The S&P 500 dipped 0.6%, as losses in energy and industrial shares in the broad index offset gains in utility stocks. The technology-heavy Nasdaq Composite lost 1%. The Trump administration said it would put off for 180 days a final decision on whether to impose broad tariffs on cars produced by major trading partners including the European Union and Japan, citing national-security concerns. "The fact that we got this flexibility on auto tariffs is crucial because the market is trying to determine if both sides are taking a hardline approach," said Jeff Sica, chief executive at Circle Squared Alternative Investments. "Some investors are viewing these concessions as a breaking of the stalemate."

Asia

Chinese stock markets fell in early trading Monday amid increasing trade tensions with the U.S., while markets in most of the rest of Asia gained. Monday's trading in Asia-Pacific stocks is largely like how Friday ended. Chinese equities were badly underperforming, logging declines of as much as 2%, and Hong Kong indexes are being dragged down with them.

Bonds

U.S. government-bond prices ticked higher after strong consumer-sentiment data helped blunt concerns about ongoing trade tensions. The yield on the benchmark 10-year U.S. Treasury note settled at 2.396%, compared with 2.407% Thursday.

Analysis

Dt. Bank rises SEB to Buy (Hold) – Target 106 (103) SEK
UBS lowers Zalando to Sell (Neutral) – 32 (34) EUR
IR rises the Nestle target to 104 (100) CHF – Hold


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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