By Swissquote Analysts
Philip Morris Raises Offer for Swedish Match
Topic of the day
Philip Morris International Inc. raised its offer for Swedish Match AB by 9.4% and has agreed to pay $2.7 billion to regain the U.S. rights for its IQOS heated tobacco products from Altria Group Inc. Philip Morris said it is now offering 116 Swedish kronor, equivalent to $10.34, for each Swedish Match share, up from the original offer in May of 106 Swedish kronor. The total value of that deal, though in dollar terms, is roughly unchanged from the original offer because of the appreciation in the U.S. currency against the Swedish krona. That made it easier for the company to raise its offer. The current bid values Stockholm-based Swedish Match at 176.4 billion Swedish kronor, or $15.7 billion. That is roughly in line with the initial bid’s $16 billion dollar value. Philip Morris also said inflation, volatility in equity markets and changes in interest rates played a role in determining the new offer price. The Wall Street Journal previously reported that this was expected. Philip Morris has been under pressure from Elliott Management Corp. and other investors to sweeten the bid, creating a potential standoff if the latest offer continues to face opposition.
The Switzerland stock market, which stayed weak till about the penultimate hour of the day's trading session on Thursday, aw some brisk buying in closing minutes, but still ended the day on a slightly negative note. The benchmark SMI, which fell to 10,426.20 a little past mid afternoon, climbed to 10,502.14 towards the fag end of the session, but dropped down to settle at 10,473.45, recording a marginal loss of 10.69 points or 0.1%. Roche Holding shed about 1.1%. Credit Suisse ended nearly 1% down. Novartis and Nestle ended lower by 0.76% and 0.51%, respectively. Richemont climbed 2.3% and Sonova surged 2.05%. Partners Group ended 1.6% up and Lonza Group advanced 1.35%. Sika, Givaudan and Logitech gained 1 to 1.15%. In the Mid Price Index, Schindler Holding and Schindler Ps drifted down 4.36% and 4.2%, respectively. Tecan Group gained nearly 4%, Temenos Group, Bachem Holding and Straumann Holding gained 3 to 3.32%, while AMS, Georg Fischer, PSP Swiss Property, Swatch Group, VAT Group and Zur Rose gained 1.4 to 2.5%.
Despite spending much of the day's trading session in negative territory, European stocks closed broadly higher on Thursday, reacting to the U-turn in the British fiscal plan and Prime Minister Lizz Truss's decision to resign from her post. With her own Conservative Party members revolting and joining the protest againt the tax-cutting budget, Truss chose to step down, making way for a new leader to take up the mantle of Prime Ministership. Worries about rising inflation, looming interest rate hikes, and fears of a recession in several economies across the globe continued to weigh, but the markets still managed to garner enough support to sign off on a positive note today. Comments from Bank of England Deputy Governor Ben Broadbent that signaled the interest rates are unlikely to rise as much as markets currently expect, contributed a bit in lifting sentiment. 'Whether official interest rates have to rise by quite as much as currently priced in financial markets remains to be seen,' Broadbent said at a speech in London. The MPC is likely to respond relatively promptly to news about fiscal policy, he said. The pan European Stoxx 600 gained 0.26%. The U.K.'s FTSE 100 climbed 0.27%, Germany's DAX advanced 0.2% and France's CAC 40 surged 0.76%. Switzerland's SMI edged down 0.1%. Among other markets in Europe, Austria, Czech Republic, Greece, Ireland, Netherlands, Norway, Poland, Portugal, Russia and Spain closed with sharp to moderate gains. Denmark, Finland, Iceland and Sweden ended weak, while Belgium settled flat. In the UK market, Fresnillo, Lloyds Banking Group, Carnival, Ocado Group, Land Securities and Antofagasta gained 3 to 4%.
U.S. stocks moved lower Thursday as investors weighed the latest batch of corporate earnings and the question of how aggressively central banks will raise interest rates to moderate inflation. The S&P 500 fell 29.38 points, or 0.8%, to 3665.78 near the end of the trading day. The tech-focused Nasdaq Composite dropped 65.66 points, or 0.6%, to 10614.84 and the Dow Jones Industrial Average lost 90.22 points, or 0.3%, to 30333.59. Major central banks are expected to further lift interest rates during coming meetings as price pressures show little signs of easing. Inflation figures in the U.K. and Canada came in above expectations this week. Germany's producer prices rose strongly in September from a year earlier, driven by higher energy prices, the German statistics office Destatis said Thursday. Stocks have been volatile in recent sessions, buoyed by a batch of mixed though better-than-expected earnings results. Still, some investors believe that earnings expectations are too high across the board and a downward recalibration is likely ahead. Tesla shares fell $14.76, or 6.7%, to $207.28 after the electric-car maker cut its full-year growth expectations. Shares of AT&T added $1.20, or 7.7%, to $16.74 after the telecommunications giant raised its outlook for profit and wireless revenue. Labor Department data showed that 214,000 workers filed for unemployment benefits in the week ended Oct. 15, down from the week prior. The National Association of Realtors reported sales of previously owned homes fell for an eighth straight month to 4.7 million in September, the lowest level since May 2020.
After renewed declines on Wall Street and US bond yields at 14-year highs, the downward slide on the Asian stock exchanges also continued on Friday. However, most of the declines were moderate. The familiar worries about an impending recession and simultaneously rising key interest rates are boiling up again and weighing on the stock markets. The Nikkei-225 is still holding its own with a discount of 0.3 per cent. In Japan, inflation based on consumer prices has climbed to a fresh eight-year high.
In U.S. bond markets, the yield on benchmark 10-year Treasurys ticked up to 4.225% from 4.127% Wednesday. Yields and prices move inversely.
Citi lowers Volvo target to SEK 202 (210) – Buy
Bank of America raises Renault target to EUR 40 (38) – Buy
HSBC lowers Michelin target to EUR 30 (35) – Buy
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