Southwest Airlines (+1%) adopted a shareholder-rights plan as it seeks to fend off activist investor Elliott Investment Management. The poison pill will kick in if an investor acquires at least 12.5% of the company and would give all other shareholders the right to buy stock at a 50% discount. The Dallas-based airline said the plan was designed to deter the acquisition of control of Southwest without appropriately compensating shareholders. Elliott disclosed last month it had built a $1.9 billion stake in Southwest, which it said amounts to an 11% economic interest in the company. It demanded Southwest oust its chief executive, overhaul its board, and consider big business-model changes. Elliott is known for taking on companies and forcing changes that include management shake-ups and outright sales. Southwest confirmed in a filing Wednesday that Elliott hadn’t yet disclosed its full position in Southwest but had made filings with antitrust authorities that would allow the hedge-fund firm to grow its stake and voting power. Another investor, the Artisan Partners Global Value Team, joined Elliott last month in calling for dramatic change and new leadership at the airline.

The Swiss stock market was unable to keep pace with its European counterparts on Wednesday. The SMI gained 0.1 per cent to 12,018 points. Of the 20 SMI stocks, there were 12 price gainers and 8 price losers. A total of 14.77 million shares were traded (Tuesday: 18.19 million). Roche fell by 1.0 per cent, Novartis by 0.4 per cent and Alcon (-0.9%) was also sold, despite analysts at UBS raising their price target for the ophthalmology group's shares. The shares of food giant Nestlé closed slightly higher. Lonza (+2.1%) led the way with no news. Holcim (+1.7%) and Geberit (+1.4%) were also firm. Here, the interest rate cut speculation is likely to have played a supporting role, especially as all three companies come from cyclical sectors. Regarding the biotechnology and pharmaceutical company Lonza, analysts at RBC revealed in a new research report speculating that the so-called Biosecure Act is likely to be passed in the USA soon. With this law, the USA intends to curb China's influence on its own pharmaceutical industry. Lonza, among others, could benefit as a result

Europe
European stocks rose on Wednesday, tracking global gains after Jerome Powell noted progress in bringing down inflation. The Stoxx Europe 600 index gained 0.7% to 514.67 points. In Paris, the CAC 40 and SBF 120 advanced by 1.2% and 1.3% respectively. The DAX 40 climbed 1.2% in Frankfurt, while the FTSE 100 added 0.6% in London. Rheinmetall gained 4.8 per cent. The defence company wants to cooperate with the Italian defence group Leonardo (+3.8%) in the further development of land defence systems. The two companies intend to develop and subsequently commercialise Rheinmetall's new main battle tank (Panther) and the Lynx infantry fighting vehicle. The project could have a volume of up to 20 billion euros. A buy recommendation from Morgan Stanley also had a supportive effect. Deutsche Lufthansa may acquire a stake in the Italian airline ITA Airways and closed trading 3.1 per cent higher. Curevac lost 1.1 per cent; in early trading the shares were still up more than 20 per cent. The biotech company is selling the rights to mRNA vaccine candidates to GSK and will receive an upfront payment of 400 million euros. EQT fell by 0.5 per cent on the Stockholm Stock Exchange. Software games developer Keywords Studios has agreed to be acquired by the Swedish private equity firm for 2.1 billion pounds, or 2,450 pence per share. Keywords Studios is known for titles such as Fortnite and League of Legends. Keywords Studios climbed 3.1 per cent to 2,390 pence.

United States
Another run-up in Tesla shares helped push the S&P 500 and the Nasdaq Composite to fresh records in a shortened trading session ahead of the July 4 holiday. The tech-heavy Nasdaq rose 0.9%, logging its 23rd record close of 2024, while the benchmark S&P 500 hit its 33rd of the year, up 0.5% on the day. The indexes have gained 21% and 16% for the year, respectively. The Dow Jones Industrial Average edged down 0.1%, or 24 points. U.S. stock and bond markets will be closed Thursday to mark Independence Day. The gains came after fresh labor-market data reaffirmed investors’ belief that the Federal Reserve can begin cutting interest rates during its September meeting. The central bank has tried to balance slowing economic growth to curb inflation while keeping momentum going enough to avoid a recession. Private-sector employment rose by 150,000 jobs in June, down from a rise of 157,000 in May, according to the ADP National Employment Report published Wednesday, marking a third month in a row in which job creation slowed. Meanwhile, the number of Americans applying for first-time unemployment benefits in the week ended June 29 edged up to 238,000, from 234,000 the week before. This new labor-market information suggests that the Federal Reserve can begin cutting interest rates in September. Tesla shares added 6.5%, up for seven sessions in their longest winning streak since June 2023. Shares jumped 10% Tuesday after the company said vehicle deliveries slid for a second consecutive quarter—but not as much as analysts expected. Paramount Global shares jumped 6.9% on the news that an on-again, off-again deal involving the Hollywood business and its parent company— Shari Redstone’s National Amusements—was on again.

Asia
Asian stocks were mixed on Thursday. The Nikkei-225 climbed 0.9 per cent to 40,934 points - driven by automotive and real estate stocks. In China, the stock markets are lagging regional events. The Shanghai Composite lost 0.4 per cent, while the HSI in Hong Kong posted a meagre gain of 0.1 per cent. Tesla's recent rally in the USA in the wake of compelling sales figures is also fuelling the shares of e-car manufacturers in Hong Kong, where Nio is up 5.2 per cent, XPeng 4.2 per cent, Li Auto 3.9 per cent and BYD 2.3 per cent. Meanwhile, the South Korean Kospi climbed 1.2 per cent, boosted by electronics and battery stocks. The Australian S&P/ASX-200 performed similarly well, rising 1.1 per cent.

Bonds
U.S. government debt yield extended declines after the Institute for Supply Management’s index of services businesses produced its lowest reading since the height of the pandemic in May 2020. The 10-year Treasury note yield fell by 8 basis points to 4.353%. The 2-year Treasury note yield declined by 4 basis points to 4.70%. The market's assessment of the probability of a Fed rate cut of 25 basis points in September rose to 67%, compared with 63% on Tuesday, according to CME Group's FedWatch tool.

Analysis
Price target VAT: Jefferies upgrades to CHF 700 (625) - Buy
Target price Alcon: Berenberg lifts to CHF 93 (90) - Buy
Target price Orascom DH: UBS lowers to CHF 4.20 (4.60) - Neutral

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