Research Market strategy
By Swissquote Analysts
Published on 15.09.2022
Morning news

Zara Looks Sharp, but It Is Not the Winter Trend

Topic of the day

So far, the world’s biggest fashion retailer has shrugged off high inflation, rising energy prices in Europe and a strong dollar. Its competitors look disheveled even before a chilly winter. Industria De Diseno Textil (3.8%), commonly known as Inditex and owner of Zara and other brands, grew sales by a quarter in the six months through July at constant exchange rates, versus the same period last year. The company’s half-year gross profit margin was the highest in seven years, boosted by price increases for its products and measures to control costs, and are expected to be stable for the full year. Clothing companies that make most of their sales in Europe and will soon have to compete with utility providers as well as each other for consumers’ cash. Inditex and Swedish competitor Hennes & Mauritz, or H&M, make around 60% of sales in the region. Energy costs, which are usually around 5% of households’ non-discretionary spending, are skyrocketing as the Kremlin chokes Europe’s gas supply. Inditex’s shares now trade at 18 times projected earnings. The 8% premium to H&M’s multiple is less than half its 10-year average. The Spanish company is living up to its reputation for quality among investors, but a tough winter could easily cut other fashion brands down in size.

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Swiss stocks

The Switzerland stock market ended lower for a second straight day as worries about rising inflation and looming interest rate hikes triggered a sell-off on Wednesday. The benchmark SMI posted a loss of 137.14 points or 1.26% at 10,754.40, nearly 30 points off the session's low of 10,727.43. The index shed about 0.9% on Tuesday. Nestle drifted down 2.65%. Geberit, Sika, Holcim, Novartis, ABB and Logitech ended lower by 1.4 to 2.1%. Swiss Re ended 1.1% down. Lonza Group, SGS, Swiss Life Holding and UBS Group also closed weak. Among the stocks in the Mid Price Index, Zur Rose ended 4.76% down. Schindler Ps, Schindler Holding, Georg Fischer, Lindt & Spruengli Part, Bachem Holding, Straumann Holding, Ems Chemie Holding and AMS lost 2 to 4%. Sonova, Swiss Prime Site and Swatch Group bucked the trend and posted modest gains.

International markets


Shares in Europe closed notably lower on Wednesday as investors continued to react to Wednesday's report from the U.S. Labor Department showing hotter-than-expected consumer prices inflation in the world's largest economy. The pan European Stoxx 600 drifted down 0.86%. The U.K.'s FTSE 100 dropped 1.47%, Germany's DAX ended 1.22% down, and France's CAC 40 fell 0.37%. On the economic front, UK consumer price inflation slowed slightly in August from a 40-year high on a fall in fuel prices, figures from the Office for National Statistics showed. Eurozone industrial production declined more than expected in July, data published by Eurostat showed on Wednesday. In the UK market, Ocado Group shares plunged 8.25%. ABRDN, Berkeley Group Holdings, Schrodders, Melrose Industries, Rolls-Royce Holdings, CRH, Antofagasta, RS Group, Dechra Pharmaceuticals and Tesco shed 3 to 6%. Scottish Mortgage rallied nearly 2.5%. Haleon and Pershing Square Holdings gained 1.4% and 1.1%, respectively. In Paris, ArcelorMittal ended more than 4% down. Legrand, Vivendi, Air France-KLM, Veolia, Saint Gobain, Publicis Groupe and Airbus Group ended lower by 2 to 3.1%. Renault rallied more than 3%. Valeo, Atos, Accor, Faurecia, Worldline and Sodexo posted moderate gains. In the German market, Deutsche Wohnen ended 4.7% down. Covestro, BASF, RWE, Vonovia, Fresenius Medical Care, Fresenius, Munich RE, E.ON. Deutsche Post, Siemens, Siemens Healthineers and MTU Aero Engines also ended sharply lower. KION Group shares plunged nearly 30% after a profit warning. The warehouse equipment manufacturer said it expects to report a third-quarter loss due to supply chain shortages and rising energy and material costs. Volkswagen gained about 1.1%. Deutsche Boerse and Porsche Automobil posted modest gains.

United States

U.S. stocks inched higher Wednesday, recovering some losses from the previous day’s wild session that was spurred by a hotter-than-expected inflation report. The S&P 500 added 13.32 points, or 0.3%, to 3946.01, a day after the benchmark index plummeted 4.3% in its worst selloff since June 2020. The Dow Jones Industrial Average rose 30.12 points, or 0.1%, to 31135.09. The tech-focused Nasdaq Composite gained 86.10 points, or 0.7%, to 11719.68. The indexes wobbled between small gains and losses throughout the session. On Wednesday, data measuring U.S. suppliers’ prices also indicated elevated inflation. The producer-price index, which measures what suppliers are charging businesses and other customers, rose 8.7% in August from a year ago. The Fed will make its next interest-rate policy decision next week. Federal-funds futures, used by traders to bet on interest-rate moves, showed a 76% chance that the central bank will lift rates by 0.75 percentage point. The data also show traders are assigning a 24% probability that the Fed will increase interest rates by 1 percentage point, according to CME Group data. Energy stocks rose broadly as Brent crude rebounded. The sector was the top-gaining segment of the S&P 500 on Wednesday. Among the top individual gainers in the S&P 500, Moderna shares added $8.10, or 6.2%, to $139.40 after its chief executive told Reuters the company is open to supplying Covid vaccines to China. Also making the index leaderboard, Starbucks rose $4.86, or 5.5%, to $92.70 after the coffee chain raised its longer-term financial outlook. The company now sees adjusted earnings-per-share growth over the next three years of 15% to 20%, up from its previous forecast of 10% to 12%. Shares of railroad operators declined as a possible freight labor strike looms. The White House is assessing how other transportation providers could fill potential gaps in the nation’s freight network as labor unions and railroads continue contract talks. Union Pacific lost $8.34, or 3.7%, to $217.95, and CSX shares shed 33 cents, or 1%, to $31.23.


Stocks in Asia mostly fell on Thursday. The Shanghai Composite is down 1 per cent, making it the only major stock market index in the region to fall. In Hong Kong, the HSI is up 0.5 per cent, supported by the crisis-hit property sector. Country Garden Holdings climbed 8.3 per cent, Longfor Group 6 and China Resources Land 3.2 per cent. In South Korea, the Kospi slipped slightly into negative territory. In Tokyo, the Nikkei-225 adds 0.2 per cent - once again driven by railway and airline stocks.


On Wednesday, traders continued to digest unexpectedly high consumer price inflation in August and a second straight monthly drop in the costs of U.S. wholesale goods and services. The 10-year U.S.Treasury yield was virtually unchanged at 3.416%, after rising almost 6 basis points on Tuesday. The 2-year Treasury note gained 4 basis points to 3.799%, after jumping almost 12 basis points the previous day.


Berenberg raises Roche to Buy (Hold) - Target 380 (350) CHF

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Berenberg lowers Novartis to Hold (Buy) - Target CHF 80 (90)

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