By Swissquote Analysts
Tesla Reports Near-Record Profit; Sales Miss Estimates
Topic of the day
Tesla Inc. cut its full-year growth expectations as it adjusts vehicle-shipping patterns, but Chief Executive Elon Musk brushed off worries about weakening demand amid recession fears. The company expects to “sell every car that we make for as far into the future as we can see,” Mr. Musk said as Tesla reported near-record quarterly profit. Strong vehicle pricing helped Tesla generate nearly $3.3 billion in quarterly profit for the three months ended in September, ahead of expectations of analysts surveyed by FactSet. That is just shy of the company’s record quarterly profit of more than $3.3 billion, set in the first quarter. Tesla, after the market’s close on Wednesday, posted quarterly revenue of $21.5 billion, its highest ever, up from around $13.8 billion in last year’s third quarter and short of Wall Street expectations. The company said its results were affected by the strong dollar, higher raw materials and logistics costs, and inefficiencies associated with getting car plants in Texas and Germany up to speed.
After swinging between gains and losses in cautious trade till noon, Swiss stocks slid gradually on Wednesday to finally end the session moderately lower. Worries about rising inflation and slowing global growth rendered the mood bearish. The benchmark SMI settled at 10,484.14, down 94.62 points or 0.89% from the previous close. Lonza Group shares fell 4.4%. Geberit, Partners Group, Logitech, Alcon, Sonova and Richemont lost 2.2 to 2.8%. Sika, Givaudan and Nestle also ended notably lower. Zurich Insurance Group climbed more than 2%. Swiss Re gained 1.25%, while Swiss Life Holding, Credit Suisse, ABB and UBS Group posted modest gains. In the Mid Price Index, Zur Rose plunged more than 10%. Tecan Group tumbled 6.1% and Bachem Holding ended nearly 6% down. Straumann Holding, VAT Group, Temenos Group, Ems Chemie Holding, Schindler Ps and Schindler Holding lost 2.2 to 3.3%. Flughafen Zurich surged nearly 2%. Baloise Holding and Helvetia gained 1.14% and 1.04%, respectively, while Julius Baer edged up marginally.
European stocks closed lower on Thursday, snapping a four-day winning streak, as worries about rising inflation and economic slowdown hurt sentiment. In addition to digesting the latest batch of economic data from the region, investors also reacted to quarterly earnings updates from big-name companies. The reversal of unfunded tax cut plans in the U.K., and some upbeat earnings updates helped limit markets' downside. The pan European Stoxx 600 drifted down 0.53%. The U.K.'s FTSE 100 ended 0.17% down, Germany's DAX slid 0.19% and France's CAC 40 ended lower by 0.43%, while Switzerland's SMI shed 0.89%. Among other markets in Europe, Austria, Belgium, Czech Republic, Denmark, Finland, Greece, Iceland, Ireland, Norway, Poland, Russia, Spain and Sweden closed weak. In the UK market, Kingfisher, Segro, Lloyds Banking Group, Hargreaves Lansdown, RightMove, Dechra Pharmaceuticals, B&M European Value Retail, Harbour Energy, Persimmon and Natwest Group lost 2 to 6%. BP climbed 2.25%. IAG, Pershing Square Holdings, HSBC Holdings, Vodafone Group, Scottish Mortgage, Imperial Brands, BAE Systems, GSK and Aviva gained 1 to 2%. In the French market, Saint Gobain drifted down 3.25%. WorldLine shed about 2.5%. LVMH, Capgemini, Kering, Danone, Pernod Ricard and Legrand lost 1 to 2%. Air France-KLM surged nearly 3%. AXA and Veolia gained about 2.2%. Orange, Valeo and Thales also ended notably higher. Alstom gained 1.4% after it announced the signing of an agreement to supply ERTMS signaling system for central and southern Italy. In the German market, medical instruments business Sartorius declined nearly 17% after it announced a fiscal 2022 revenue growth guidance that would be in the lower half of the range of around 15% to 19%.
U.S. stock indexes fell Wednesday as investors weighed a batch of solid corporate earnings against concerns that continued interest-rate increases will cause a recession. Stocks spent the morning bouncing between gains and losses but turned lower in the afternoon. The S&P 500 declined 24.82, or 0.7%, to 3695.16, a U-turn from Tuesday's gains. The Nasdaq Composite Index lost 91.89, or 0.9%, to 10680.51, and the Dow Jones Industrial Average slipped 99.99, or 0.3%, to 30423.81. United Airlines' forecast for rising profit margins and resilient sales lifted airline shares Wednesday but also indicated that travel demand may continue to support high ticket prices, said Brandon Pizzurro, director of public investments at GuideStone Capital Management. Trends like that build the case for more rate hikes. When they finally bite, corporate performance could quickly slump across industries, he warned. "I'm concerned that we're getting the very last amount of any good news out of a large majority of these companies," Mr. Pizzurro said. United shares rose $1.85, or 5%, to $39.10. Companies from a variety of industries have now posted reassuring third-quarter results. Procter & Gamble shares climbed $1.19, or 0.9%, to $129.56 after the consumer-goods company lowered its outlook for full-year sales and its quarterly earnings came in above Wall Street's estimates. Netflix jumped $31.52, or 13%, to $272.38 after it said it gained 2.4 million new subscribers last quarter, more than double the level it was expecting. Later Wednesday, Tesla shares fell in after-hours trading after the company's highest-ever quarterly revenue nonetheless came in shy of expectations. IBM shares notched after-hours gains after the computing company beat Wall Street's third-quarter sales forecasts and lifted full-year guidance.
The Asian stock exchanges are heading downwards across the board in late trading on Thursday. On the Chinese stock markets, the slide of the past few days continues, with Hong Kong (HSI -2.4%) plunging to its lowest level since 2009. In the special economic zone, it is very weak technology stocks that are depressing.
Yields on U.S. government debt, which largely reflect investors' expectations for how short-term interest rates will move through the maturity date, climbed on Wednesday. The 10-year yield rose to 4.127%, from 3.996% the day before. The two-year yield, more sensitive to short-term rate expectations, was at 4.55%, up from 4.435% on Tuesday. Yields and bond prices move in opposite directions.
HSBC lowers Adidas target to EUR 130 (165) – Hold
Citi lowers Easyjet target to GBP 2.90 (3.60) – Sell
UBS lowers Santander target to EUR 4 (4.10) – Buy
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