Despite generic competition, Novartis returned to a growth trajectory in the second quarter. Management has confirmed its previous outlook for the full year. According to a press release issued Tuesday, second-quarter revenue totaled $14.4 billion. This represents a 3 percent increase compared with the same period last year. At constant exchange rates (CXR), revenue increased by 1 percent. In the first quarter, Novartis had still reported a decline due to the launch of generic versions of key blockbuster drugs. Novartis had repeatedly emphasized recently that the erosion caused by generic drugs had likely peaked. In terms of operating profit, the Basel-based company posted a 2 percent decline to just under 4.8 billion. The bottom line was a net income of 3.3 billion, down from 4.0 billion in the same period last year. The decline was primarily triggered by higher income taxes and higher interest expenses, the press release added. For analysts, however, the core operating profit—adjusted for various factors—is the key metric. At 5.9 billion, it remained stable and significantly exceeded the analyst consensus of 5.3 billion.

The Swiss stock market ended the first trading day of the week in the red. The SMI declined 0.6 percent to 14,254 points. Among individual stocks, Sika dropped 1.9 percent. According to a preliminary assessment by the European Commission, ten construction chemicals companies and three industry associations engaged in a cartel. The aim was to raise prices following the COVID-19 pandemic and Russia’s invasion of Ukraine. The allegations are the result of a three-year investigation into suspected price-fixing between 2021 and 2022, the Commission further stated. Sika is among the companies under investigation. If the Commission concludes that the companies and associations are guilty, they could face a fine of up to 10 percent of their global annual revenue. Nestlé shares closed 0.2 percent higher. The company is expanding its production capacity for pet food. As Nestlé’s Purina division announced, it is investing 520 million Swiss francs in an Italian plant to manufacture wet food for cats and dogs. In contrast, shares of the other two index heavyweights, Roche (-0.8%) and Novartis (-1.5%), closed lower. Polypeptide shares jumped 4.8 percent to 43.75 francs. Samsung Biologics has submitted a takeover offer for the Swiss pharmaceutical services provider valued at 1.46 billion francs. Shareholders are set to receive 44.31 francs per share.

Europe
European stock markets closed mixed on Monday, as investors adopted a cautious stance amid geopolitical tensions ahead of a slew of corporate earnings reports in the coming days. The Stoxx Europe 600 index fell 0.3% to 639.60 points. In Paris, the CAC 40 and the SBF 120 ended virtually unchanged. In Frankfurt, the DAX 40 edged up 0.1%, while the FTSE 100 gave up 0.7% in London. DBV (-4.4%): The biotech company reported Friday evening that it had filed a new automatic registration statement with the U.S. Securities and Exchange Commission (SEC) to renew its financing program (ATM Program), which allows it to sell up to $150 million in American Depositary Shares (ADSs). EUROFINS SCIENTIFIC (+1.2%): the testing laboratory announced on Monday that it had reached an agreement to acquire the North American life sciences testing services business of the British company Element Materials Technology. The transaction could be completed in the fourth quarter of the year based on an enterprise value of $400 million, or approximately 350 million euros. RYANAIR (-4.55%): The Irish low-cost airline revealed on Monday a sharp decline in its net income for the first quarter of its fiscal year, which runs on a staggered schedule. Ryanair is facing falling ticket prices and soaring fuel costs amid the war in the Middle East.

United States
Artificial-intelligence anxieties and Mideast tensions weighed on markets on Monday. Major U.S. stock indexes edged lower, with the Dow industrials leading losses. The Dow dropped 0.6%, or 307 points, while the S&P 500 fell 0.2%. The Nasdaq composite ended slightly lower, declining less than 0.1%, after rising more than 1% in morning trading. Shares of semiconductor companies and other names linked to the AI infrastructure build-out managed to regain some ground, however. Some stocks that fell by double digits last week, including Micron Technology MU, Sandisk SNDK and Seagate Technology STX, advanced more than 1% Monday. The gains come despite Alibaba previewing its new artificial-intelligence model—the second time in a week that China has flexed its advances in AI. Shares of Elon Musk’s SpaceX SPCX suffered their seventh straight day of declines, falling 3.3% to $119.85. SpaceX, whose stock is now well below its $135 offering price from June, on Monday dropped below Meta Platforms META to become the eighth-largest U.S. company by market value. Investors in coming days will parse a number of much-awaited corporate earnings reports, including Alphabet GOOGL, Tesla TSLA, IBM IBM and Intel. Otherwise, it is a quiet week for economic data and Federal Reserve speakers, with policymakers in a blackout period ahead of next Wednesday’s interest-rate decision.

Asia
In Asia, major indexes broadly closed with gains on Tuesday. The region’s markets are led by the Seoul stock market, where the Kospi is up 4.2 percent—though following similarly steep losses the previous day. The index is being buoyed by chip heavyweights Samsung Electronics (+7.6%) and SK Hynix (+6.5%). In Tokyo, the Nikkei 225 Index is up 2.8 percent after the holiday break at the start of the week. The broader Topix gained 2.1 percent. On the Shanghai Stock Exchange, the Composite Index rose 0.6 percent. The Hang Seng Index in Hong Kong remained largely unchanged, though it had posted significant gains on Monday.

Bonds
Long-dated U.S. government debt yields edged higher on Monday. Longer-lasting tensions with Iran could lift the price of oil and raise concerns about higher inflation. The 10-year Treasury note yield increased by 0.055 percentage points to 4.597 percent.

Analysis
UBS raises Docmorris to Neutral (Sell) - Target: 10.70 (4) CHF
Vontobel increases ABB target to 82 (80) CHF - Hold
Vontobel cuts Georg Fischer target to 72 (75) CHF - Buy

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