Tesla (-5.5%) was rocked Monday by a series of internal changes that included plans to slash more than 10% of the carmaker’s global workforce and the departure of prominent executives. The shakeup comes as the company’s growth prospects have dimmed and the electric-vehicle market has cooled. Tesla’s once-enviable profit margins have also narrowed in recent quarters as the company has resorted to deep price cuts to stimulate sales. Tesla Chief Executive Elon Musk, who has warned of “notably” lower growth this year, sent a note Monday to employees informing them about job cuts and citing the need to reduce costs and increase productivity, according to the email, which was seen by The Wall Street Journal. Hours later, Drew Baglino, a senior vice president and 18-year company veteran, posted on X saying he had made the “difficult decision” to leave Tesla. Another top executive, Rohan Patel, who oversaw policy and business development, also posted on X Monday bidding colleagues farewell. Musk, in a reply, thanked him for “everything you’ve done for Tesla.” Bloomberg earlier reported the two executive departures. As the electric-vehicle market has cooled, Tesla has leaned into the development of autonomous vehicles. Apparently employees recently were told to give priority to a robotaxi project. China’s BYD briefly surpassed Tesla as the world’s largest EV seller in the last quarter of last year, though Tesla has since reclaimed the title. Tesla had more than 140,000 employees globally as of the end of 2023, according to a securities filing. Tesla has made layoffs in some previous years, including in 2022, when Musk told employees he planned to cut 10% of salaried workers.

On Monday, the SMI improved by 0.1 per cent to 11,396 points, after the index had already reached a high for the day of 11,464 points. Among the 20 SMI stocks, there were 13 gainers and six losers, with the Sika share closing unchanged. A total of 17.52 (previously: 19.69) million shares were traded. Among the individual stocks, the shares of luxury goods manufacturers Richemont (+1.7%) and Swatch (+0.5%) were in demand. In contrast, UBS shares (-0.4%) did not benefit from the good results of Goldman Sachs. Temenos shares shot up by 19.5 per cent. According to the banking software company, independent auditors had established compliance with accounting regulations. The investigation into the allegations made by Hindenburg Resesarch has thus been concluded. Julius Baer (-4.8 per cent) fell purely visually. A dividend of CHF 2.60 was distributed to shareholders at the start of the week.

Europe
The European stock markets closed on a positive note on Monday, against a backdrop of rising yields on both sides of the Atlantic and investors' hopes that tensions in the Middle East would subside. The Stoxx Europe 600 index gained 0.1% to 505.9 points. In Paris, the CAC 40 and SBF 120 were both up 0.4%. The DAX 40 added 0.5% in Frankfurt, while the FTSE 100 in London lost 0.5%, weighed down by mining and oil stocks. BNP Paribas (+0.6%) announced that it had signed an agreement to acquire, via its insurance subsidiary BNP Paribas Cardif, the approximately 9% stake held by the Chinese group Fosun in the Belgian insurer Ageas (+3.2% in Brussels). Elior fell by 3.5% to €2.25. Cable manufacturer Nexans advanced 2.7% to 99.25 euros. Property company Icade shed 0.9% to 24.02 euros. Air transport group Lufthansa (down 4.6% in Frankfurt) warned on Monday that its adjusted operating loss would be higher than expected in the first quarter, due to the impact of industrial action on its results. The German group expects an adjusted operating loss of 849 million euros, compared with a loss of 273 million euros in the first quarter of 2023.

United States
Stocks fell broadly Monday, extending their recent slump in response to continuing Middle East tensions and surging U.S. Treasury yields. Stocks climbed in early trading, reflecting relief after Iran’s well-telegraphed attack on Israel on Saturday resulted in minimal damage. Traders, though, remained nervous about how Israel might respond and the potential for the conflict to escalate. Meanwhile, new data showed that retail sales increased more than expected last month. That suggested the economy remained on solid footing, but also led to a jump in U.S. bond yields as traders further scaled back bets on how much the Federal Reserve will be able to cut interest rates. Up as much as 0.9% in early trading, the S&P 500 finished down 1.2%. The Dow Jones Industrial Average fell 0.7%, or roughly 248 points, while the Nasdaq Composite dropped 1.8%. Interest-rate-sensitive sectors fared particularly poorly on Monday, with real-estate stocks in the S&P 500 falling 1.8%. Shares of Goldman Sachs climbed 2.9% after the investment-banking giant reported sharply higher earnings in the first quarter. The S&P 500 is still up 6.1% this year despite its recent declines. Business software developer Salesforce (down 7.3%) is in advanced talks to acquire data management software provider Informatica (down 1.8%), sources close to the deal informed The Wall Street Journal. Informatica has a market capitalisation of more than 11 billion dollars. US Steel shareholders (-1.2%) voted in favour of the takeover of the American steel manufacturer by its Japanese competitor Nippon Steel, while the unions are opposed to this $14.1 billion project, which is also being examined by the regulatory authorities. Apple (-2.2%) saw its iPhone sales tumble by almost 10% year-on-year in the first quarter and was supplanted by the South Korean group Samsung Electronics as the world's leading supplier of smartphones during this period, according to preliminary data from the research firm International Data Corporation (IDC).

Asia
The stock markets in East Asia fell sharply in the course of trading on Tuesday. The losses in Seoul and Tokyo exceeded 2 per cent and were only slightly lower on the Chinese stock exchanges. The Nikkei index in Tokyo slipped 2.2 per cent to 38,385 points. In addition to technology stocks, whose sub-index lost 2.7 per cent, property stocks were among the biggest underperformers in Hong Kong. Longfor, for example, declined by 3.2 per cent and China Vanke by 2.4 per cent. In Seoul, shares of battery manufacturers LG Energy Solution and Samsung SDI shed 1.5 and 1.7 per cent respectively after electric car maker Tesla announced on Monday that it would cut around 10 per cent of its workforce due to sluggish sales.

Bonds
Two- through 30-year yields were jumping Monday morning after healthy U.S. retail sales data for last month prompted traders to price in stronger economic growth over the intermediate to longer term.
However, rates on 3-month and 6-month Treasury bills slid after a prominent Federal Reserve official said interest-rate cuts would probably commence this year. The 10-year Treasury note yield increased by 11 basis points to 4.61%. The 2-year Treasury note yield rose by 3 basis points to 4.914%.

Analysis
Barry Callebaut price target: Barclays downgrades to CHF 1400 (1410) - Underweight
Target price ABB: UBS cuts to CHF 40 (43) - Neutral
Target price ABB: Royal Bank of Canada raises to CHF 40 (39) - Sector Perform
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