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LGT Navigator: M&A activity boosts US stock markets

September 15, 2020

US stock markets started the new week with solid gains and have thus partially made up for the previous week's losses. Merger plans in the technology sector in particular created a more risk-on sentiment. The shares of Nvidia climbed at times by around +8% after the company announced its intention to buy the chip manufacturer Arm Holdings from SoftBank. In addition, hopes of a soon-to-be-available corona vaccine improved sentiment. The focus is also on today's Apple event and already on tomorrow's interest rate decision by the US Federal Reserve. 

M&A activity boosts US stock markets

Besides the M&A activity in the technology sector, the focus was once again on the Chinese video portal TikTok. The TikTok parent company ByteDance plans to sell its US business to Oracle. The US company has confirmed the negotiations, but did not provide any details. As a result, the Oracle titles gained +4.3%. US Treasury Secretary Steve Mnuchin has given ByteDance until September 20 to sell the video platform. In the healthcare sector, the share price of the biotech company Immunomedics more than doubled after the US pharmaceutical group Gilead Sciences (+2.22%) made a USD 85bn takeover bid.

Takeover rumors also caused some movement in Switzerland, following media reports that the two major Swiss banks UBS and Credit Suisse are to sound out a merger. Speculations are not really new and have surfaced from time to time. The shares of UBS closed +2.4% higher and Credit Suisse gained +4.3%. However, the SMI was not impressed by this and closed on Monday with a moderate daily gain of +0.17%.

After two weeks of losses, the US leading index Dow Jones Industrial closed Monday with a daily gain of +1.18% and closed at 27 993.33 points. The market-wide S&P 500 gained +1.27% to 3 383.54 points, while the technology-heavy Nasdaq 100 gained 1.72% and closed at 11 277.76 points. In Asia, most stock exchanges were unable to benefit from the positive indications from New York and better than expected economic data from China. The MSCI index for Asian equities outside Japan rose by more than 1% in some places, but failed to sustain its gains. In Tokyo, the Nikkei index, which comprises 225 stocks, was down around -0.5%, while in Hong Kong the Hang Seng index rose by +0.5%. China's retail sales increased in August for the first time this year. Compared to last year, retail sales in August increased by +0.5% (consensus +0%), contrary to expectations. At the same time, China's industrial production increased by +5.6% for the year (consensus +5.1%).

Apple event probably without a big bang

Today, investors are eagerly awaiting Apple's product launch. New models of the Apple Watch computer watch will be presented at the virtual event. Industry observers also expect a refreshed model of the iPad Air tablet computer, a smaller version of the HomePod speaker and new headphone models. According to analysts, however, new iPhone models are not yet to be presented today.

Change in Japan's government

Yoshihide Suga was elected leader of Japan's ruling LDP party on Monday, succeeding outgoing Prime Minister Shinzo Abe. Since the LDP is the majority party in parliament, 71-year-old Suga is also expected to succeed Abe as head of government on Wednesday. The incumbent prime minister has announced his resignation as party and government leader for health reasons.

Europe's industry recovers more slowly

The recovery of the European industry lost momentum in July. Companies produced +4.1% more goods than in June, following growth of +9.5% (June) and +12.2% (May) in the previous months. Despite the catch-up process, industrial production is still well below the previous year's figures. In July 2019, for example, goods output was 7.7% higher than this year's figure.



Economic Indicators September 15

MEZ Country Indicator Last
04:00 China Industrial Production (August, y/y) 4.8%
08:30 CH Producer prices (August, m/m) 0.1%
11:00 EZ ZEW economic expectations (September) 64.0
14:30 US Empire State Index (September) 3.70
15:15 US Industrial Production (August, y/y) -8.18%

Earnings Calendar September 15

Country Corporate Period
US Newron Pharmaceuticals Q2


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