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Research Market strategy
by Swissquote Analysts
Morning News

Intel's Earnings Boosted by Data-Center, PC Demand

Topic of the day

Intel Corp. posted strong fourth-quarter earnings that benefited from an upswing in personal-computer shipments and robust demand for chips to power data centers. The chip maker said adjusted earnings per share in the quarter rose to $1.52 from $1.28 in the year-prior period. Analysts surveyed by FactSet were expecting $1.25 per share on an adjusted basis. Sales in the period rose 8% to $20.21 billion, beating the $19.23 billion analysts had expected. The company's shares rose around 6% in after-hours trading. Intel's results are only the latest sign technology companies expect continued healthy demand at the start of this year despite wider expectations for only a modest economic rebound this year. Taiwan Semiconductor Manufacturing Co. Ltd., the world's largest contract chip maker, last week forecast a 42% jump in sales for the current quarter. European chip maker STMicroelectronics NV on Thursday promised solid revenue growth for the year. Intel benefited from bumper sales of high-margin products, including its most advanced processors for data centers. That demand helped drive earnings significantly higher than Wall Street and Intel had projected, Chief Financial Officer George Davis said in an interview. Intel's bottom line was also padded by gains on investments, he said.

Swiss stocks

The SMI closed down 0.7 percent on 10,814 points Thursday with all 20 stocks lower. After the SMI had reached a new all-time high Wednesday, investors used the fear surrounding a potential pandemic of the new coronavirus in China to take profits. Luxury good stocks Richemont slumped 2.3 percent and Swatch 3 percent. China is a key market for them, and the fact that the government in Peking imposed travel restrictions for Chinese New Year for fear of an epidemic has sparked worries of negative impact on sales of luxury articles. Among second-tier stocks, duty free shop operator Dufry fell 3.2 percent. Cyclicals also suffered, with Sika down 2.4 percent and ABB 1.4 percent. Insurers Swiss Life and Zurich Insurance fared relatively well, only falling 0.2 percent and 0.1 percent respectively. Givaudan slipped 0.9 percent. It will present 2019 financials Friday. AMS slid 3 percent the day before its extraordinary general meeting, where a capital increase will top the agenda.

International markets

Europe

European shares were a sea of red as fear about coronavirus outbreaks dominates market sentiment. The Stoxx Europe 600 fell 0.7%, the FTSE 100 was down 0.9%, the CAC-40 dropped 0.7% and the DAX was off 0.9%. Miners and travel-related stocks were among the biggest European decliners as investors worry about the effect on trade and tourism. "China remains the key concern for global markets today, with the decision to shut travel into and out of the entire Hubei province providing a warning signal for global travel firms," said IG's Josh Mahony. "Losses for the likes of easyJet, IAG, Carnival and Intercontinental Hotels all highlight fears that this could escalate into a global epidemic which limits travel in affected regions." Renault shares tumbled on Thursday as Citigroup downgraded the French car maker's stock in a research note titled "Running out of cash, Nissan stake sale may be only option." The stock (ticker: FR:RNO) dropped 5.1% to EUR36.99 ($40.87) -- around its lowest level since the end of 2012.

United States

The Dow Jones Industrial Average recouped most of its losses intraday, but remained in the red as mixed earnings reports and a worsening viral outbreak unsettled investors. The blue-chip index was down 41 points, or 0.1%, to 29146 in recent trading, nearly recovering from a pullback of more than 200 points earlier in the session. Shares of Boeing rose for the first time in four trading sessions to help the Dow pare its decline. At the same time, investors eased their buying of haven assets, including gold and U.S. Treasury bonds. But falling shares of insurer Travelers and consumer-products giant Procter & Gamble held the Dow back from entering positive territory. Both reported mixed earnings results that sent shares of the companies lower. New Boeing CEO Dave Calhoun spoke to the media Wednesday, taking public questions for the first time since taking on the new role. It was an unusual move. Boeing (ticker: BA) (+2,8%) reports fourth-quarter earnings in about a week. Perhaps Calhoun felt the market couldn't wait to hear a new voice. After all, Boeing has been battered by reports about questionable design choices for the grounded 737 MAX and production delays since former CEO Dennis Muilenburg was let go in December.

Asia

Stocks in Asia were mixed ahead of the Lunar New Year holiday and after the World Health Organization said the Coronavirus outbreak is not yet a public health emergency beyond China.

Bonds

U.S. government yields intraday extended a recent decline after concerns around the coronavirus outbreak in China drove investors to the relative safety of traditional havens. The yield on the benchmark 10-year Treasury note dropped to 1.720%, according to Tradeweb, from 1.768% on Wednesday.

Analysis

CS rises the Takeaway.com target to 110 (95) EUR – Outperform
UBS rises the Burberry target to 2.258 (2.202) p – Neutral
UBS rises the ASML target to 300 (265) EUR – Buy


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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