Morning News

Bayer To Cut Dividend

By Peter Rosenstreich
Published on Mon, 02/19/2024 ‑ 23:00

Topic of the day

German pharmaceutical and life sciences major Bayer said it plans to amend its dividend policy to pay out the legally required minimum for three years. This follows a review of the company's capital allocation priorities to reduce debt. The change would result in a dividend of 0.11 euros per share for fiscal year 2023 compared to 2.40 euros per share paid in fiscal year 2022. The Board of Management and the Supervisory Board will present the dividend proposal for shareholder vote at the Annual Stockholders' Meeting on April 26, 2024. The proposal comes as the company faces a high level of debt, coupled with high interest rates and a challenging free cash flow situation, Bayer said in a statement.

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Swiss stocks

The Swiss stock market started the week on a positive note. The SMI was largely supported by its heavyweights, as the results season came to a halt. The index even broke back through the symbolic 11,400‑point barrier at its day's high, finishing just below it. Investors were awaiting news from Temenos after the close. The SMI ended up 0.78% at 11,398.44 points, with a high of 11,407.31 points and a low of 11,292.66 points in the first hour of trading. The SLI gained 0.50% to 1,894.21 points and the SPI 0.69% to 14,900.36 points. Of the 30 leading stocks, 21 rose and 9 fell. Roche (+1.9%) finished on top of the podium, ahead of the dividend‑right Roche (+1.7%) and Nestlé (+1.5%). Roche announced on Friday that the US Food and Drug Administration (FDA) had approved an extension to the approval of its treatment Xolair (omalizunab). The Basel‑based pharmaceutical giant's product is now approved for children aged one and over and adults suffering from one or more food allergies. The third heavyweight, Novartis (+1.3%), also finished at the front of the pack. The Basel‑based company announced that it was studying various strategic options concerning the future of its Indian subsidiary Novartis India Limited, which is listed on the Bombay stock exchange.

International markets

Europe
European equity markets got off to a shaky start this week, with investors catching their breath after last week's record highs, while Wall Street was closed for a bank holiday in the United States. On Monday, the Stoxx Europe 600 index gained 0.2% to 492.4 points. In Paris, the CAC 40 ended flat at 7,768.55 points, after setting a session record of 7,800.91 on Friday. The SBF 120 lost 0.1%. The DAX 40 in Frankfurt lost 0.2%, while the FTSE 100 gained 0.2% in London. This week, investors are gearing up for another series of corporate results in Europe, including HSBC, retailer Carrefour and food group Danone, while the agenda will be less busy on the other side of the Atlantic, with Nvidia's results the highlight. Automotive supplier Forvia (‑12.7%) announced that it could cut its workforce by 10,000 as part of a competitiveness plan in Europe aimed at improving sales and profitability by 2024. "We consider the group's willingness to tackle its lack of competitiveness in Europe to be a positive signal, but it also confirms that the dynamics are likely to remain difficult in the long term in this region," commented Oddo BHF. Thales lost 4.7% to 134 euros, the biggest fall on the CAC 40. Thales lost 4.7% to 134 euros, the biggest fall on the CAC 40. UBS downgraded its recommendation on the technology and defence group from "neutral" to "sell", while lowering its target price from €140 to €115. ‑Fnac Darty shares gained 3.3% amid speculation in the specialist retail sector. The Chinese e‑commerce group JD.com announced that it was studying the possibility of buying British specialist retailer Currys, whose share price soared by more than 36% on the London Stock Exchange. Currys said it had rejected a takeover offer from private equity firm Elliott Advisors.

United States
U.S. markets were closed for a holiday Monday.

Asia
Stock markets in East Asia and Australia were mostly in the red on Tuesday. Sentiment was weighed down by the latest US inflation data, which suggested that an interest rate cut by the US Federal Reserve could be a little longer in coming. A long‑awaited interest rate cut by the Chinese central bank (PBoC), which has now taken place, is not providing a boost, although according to observers it was higher than expected. The PBoC has lowered the five‑year key lending rate (LPR), which is used as a benchmark for Chinese banks' property loans, by 25 basis points to 3.95 per cent. However, the central bank left the one‑year LPR unchanged. The market had been hoping for a rate cut for some time in order to support the Chinese economy, which has been slow to recover from the consequences of the pandemic. However, the move may have come too late, says Zhaopeng Xing, Senior China Strategist at ANZ Research. This is because by rescuing the ailing domestic property sector, the PBoC is not yet solving the real problem of the Chinese economy, namely fundamentally weak demand.

Bonds
The U.S. bond market was closed on Monday due to the public holiday. At the end of the week last Friday, yields in the ten‑year range had temporarily reached their highest level since the end of November 2023.

Analysis
The U.S. bond market was closed on Monday due to the public holiday. At the end of the week last Friday, yields in the ten‑year range had temporarily reached their highest level since the end of November 2023.


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