Hearing aid manufacturer Sonova stabilized as expected in the first half of the 2024/25 financial year. However, profitability suffered from temporarily higher costs. New products should now provide momentum in the second half of the year. Specifically, the company from Stäfa in Zurich, known for its Phonak brand, increased sales by 4.6 per cent to CHF 1.83 billion in the first half of 2024/25 (as at the end of September), as Sonova announced on Tuesday. Adjusted operating profit (EBITA), however, fell by 7.1 per cent to 325.2 million (-3.7% in local currencies). The corresponding margin dropped to 17.7 per cent (previous year: 20.0%). The bottom line was a net profit of CHF 211.7 million (previous year: CHF 249.6 million). It was already clear that profitability would come under pressure. The company had to bear high marketing expenses and product launch costs for the new hearing aid platform. There were also additional costs for measures to optimize operating structures, including the construction of a new factory in Mexico. Sonova recently signed a new contract with the wholesaler Costco in the USA. This is of great significance as, according to analysts, around 15 per cent of hearing aids in the country are sold through this chain of retail shops.

The Swiss stock market ended trading on Monday little changed. The SMI gained 0.1 per cent to 11,640 points. Among the 20 SMI stocks, there were 11 price gainers and 8 price losers, while Swisscom shares closed unchanged. A total of 16.86 (previously: 19.88) million shares were traded. Nestlé was in high demand. The shares of the index heavyweight gained 0.9 per cent. The food group is holding its Capital Markets Day on Tuesday. Meanwhile, the shares of the two pharmaceutical giants recorded losses. Novartis shed 0.5 per cent and Roche 0.9 per cent. Insurance stocks performed well indeed. Swiss Re rose by 2.2 per cent, while Zurich Insurance and Swiss Life each gained 0.7 per cent. However, cyclical stocks were sold off. ABB slipped 1.1 per cent. Sika slid 0.6 per cent and Geberit 0.5 per cent. Sunrise declined by 3.1 per cent. The telecoms group returned to the stock market at the end of the previous week following its spin-off from parent company Liberty Global.

Europe
The European stock markets got off to a sluggish start this week, as investors continued to debate the future course of interest rates at the major central banks. The Stoxx Europe 600 index fell by 0.1% to 502.8 points on Monday. In Paris, the CAC 40 and SBF 120 gained 0.1% each. In Frankfurt, the DAX 40 retreated by 0.1%, while the FTSE 100 added 0.6% in London. The activist management company Phitrust has recommended voting against all the resolutions to be submitted to the combined general meeting convened by Vivendi (-1.7%) on 9 December to ratify the demerger of the diversified group into four companies. FDJ (+1.6%) announced the success of its first bond issue, worth €1.5 billion, to finance the takeover of Swedish company Kindred, owner of online betting site Unibet. Danone (stable) has increased its offer to acquire the remaining shares in US yoghurt drink producer LifeWay Foods after rejecting an initial bid. German industrial conglomerate Thyssenkrupp (+1.8%) plans to float its shipbuilding business, ThyssenKrupp Marine Systems (TKMS), after US investment fund Carlyle withdrew from the bidding process for the sale of part of the business.

United States
Indexes were mixed on Monday. The Nasdaq Composite gained 0.6%, while the S&P 500 rose 0.4%. The Dow Jones Industrial Average slipped 0.1%. All three of the major U.S. indexes fell last week. Shares of Elon Musk’s electric-car maker jumped 5.6% after a report that President-elect Donald Trump’s transition team wants a federal framework for self-driving vehicles. Uber Technologies and Lyft fell 5.4% and 4.5%, respectively, on concerns that they would face competition from Tesla’s robotaxi strategy. After the initial market euphoria of Trump’s win, investors have been adjusting their bets as they monitor cabinet appointments and expected policy shifts from the incoming administration. Earnings continue to be a focus, too. This week’s highlight will likely be Nvidia, which is due to report Wednesday. Walmart, Lowe’s and Deere are also on deck this week. As of Friday, 460 companies in the S&P 500 had already reported for the latest quarter, with 76% beating forecasts, according to LSEG, a slightly lower ratio than in recent quarters. In individual stock moves, Super Micro Computer rallied 16% on hopes the server maker would avert a delisting. Spirit Airlines, meanwhile, filed for bankruptcy and trading in its shares was halted. Trump Media & Technology Group surged 17% after the Financial Times reported it was in advanced talks to acquire cryptocurrency company Bakkt. Shares of Bakkt more than doubled. CVS Health rose 5.4% after it agreed to add four new members to its board, striking a deal with a hedge fund that had pushed for changes at the healthcare company. Bitcoin traded around $91,500. A filing showed MicroStrategy, the software company turned bitcoin whale, had snapped up a record $4.6 billion of tokens recently.

Asia
In Asia and Australia, major indexes broadly closed with gains on Tuesday. The S&P/ASX-200 index in Sydney jumped 1.6 per cent, making it the day's winner. In Tokyo, the Nikkei-225 is able to recover from its setback the previous day. It rose by 0.8 per cent to 38,532 points. Following the rally triggered by Samsung Electronics, the Kospi in Seoul continues to climb by 0.3 per cent. However, Samsung fell by 1 per cent after the rally of the previous two days, triggered by a comprehensive share buyback program. The market barometer in Hong Kong also increased slightly by 0.4 per cent, while Shanghai declined by 0.4 per cent.

Bonds
Yields on U.S. government debt held steady amid a lack of major market-moving data on Monday, as investors weighed the outlook for further rate cuts by the Federal Reserve. The 10-year Treasury note yield shed 2 basis points (0.02 percentage points) to 4.422%. The 2-year Treasury note yield declined by 2 basis points to 4.31%.

Analysis
UBS upgrades Swiss Re target to CHF 150 (136)/Buy - Trader
Jefferies raises Geberit target to CHF 393 (355) - Underperform
Target price Zurich Insurance: Barclays lifts target to CHF 565 (540) - Overweight

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