FedEx has decided to spin off its freight trucking division, moving to streamline its structure and unlock value that some shareholders argue has been lost inside the delivery giant. Shares surged 8.7% in after-hours trading, even as the company reported lower quarterly profits and trimmed its financial goals for the rest of its fiscal year. Executives cited weak demand in the freight segment and its U.S. parcel business for the revised outlook. FedEx Freight is the largest less-than-truckload operator in the country, with more than 30,000 vehicles and 350 facilities in North America that move cargo for retailers, manufacturers and other shippers. The division had more than $9 billion in revenue in the last fiscal year, and some analysts have estimated the unit could be worth much more as a stand-alone public company. FedEx said its board had decided to spin off the business as a separate public company with a goal of completing the separation within 18 months. On Thursday, FedEx posted mixed results for its fiscal second quarter, which ended Nov. 30. Profit fell 18% from a year earlier and revenue slipped 1%. Cost cuts helped the bottom line, while weak demand—total package shipping volume fell about 1% - put pressure on revenue. FedEx, which has $88 billion in total annual revenue, sported a market value below $70 billion as of Wednesday. Old Dominion, which counts about $6 billion in revenue and is second to FedEx in its sector, is worth about $40 billion. For the current fiscal year, FedEx now expects revenue to be flat, compared with an earlier forecast for a small percentage increase. It lowered its adjusted per-share earnings outlook to a range of $19 to $20, down from a prior a range of $20 to $21. Analysts surveyed by FactSet had expected adjusted earnings of $19.44 a share on revenue of $88.43 billion, an increase of less than 1% from a year ago.

The Swiss stock market experienced a significant decline on Thursday. The SMI lost 1.9 per cent to 11,415 points. Of the 20 SMI stocks, there were 17 losers and two winners, with one share closing unchanged. A total of 27.29 (previously: 21.32) million shares were traded. The Fed's hawkish message sent interest rate-sensitive shares from the technology and financial sectors in particular on a downward spiral. Technology stocks such as Logitech (-2.4%) and Ams-Osram (-4.3%) were additionally weighed down by a disappointing outlook from US chip manufacturer Micron. In the financial sector, UBS dropped by 3.3 per cent and Partners Group by 4.3 per cent. Among insurers, Zurich Insurance (-1.8 per cent) also suffered from a negative analyst commentary: UBS had downgraded the shares to ‘sell’ from ‘neutral’. Investors likewise divested themselves of cyclical companies such as ABB, toppling 5.4 per cent and thus leading the list of losers in the SMI. A decline in Swiss watch exports in November depressed the share prices of Richemont (-1.6 per cent) and Swatch (-0.6 per cent). The important Chinese business in particular continues to weaken.

Europe
The European stock markets retreated on Thursday, penalised by the caution of the US and British central banks in the face of slowly falling inflation. The Stoxx Europe 600 index lost 1.5% to 506.7 points. In Paris, the CAC 40 and the SBF 120 each shed 1.2%. The DAX 40 gave up 1.4% in Frankfurt, while the FTSE 100 shed 1.1% in London. For its part, the Bank of England on Thursday maintained the status quo on interest rates and also expressed caution about the pace at which it will continue its monetary easing next year. European stocks linked to the semiconductor industry slumped substantially, penalised by the cautious outlook unveiled on Wednesday evening by US memory card manufacturer Micron. ASML lost 3.7% in Amsterdam. STMicroelectronics and Soitec tumbled by 6.2% and 6.8% respectively in Paris, while Infineon Technologies shed 5.4% in Frankfurt. Small electrical appliance manufacturer Seb (-3.1%) was fined €189.5 million for ‘taking part in vertical price-fixing practices’, according to the French competition authority. Retailer Fnac Darty (-1.9%) was also singled out as part of this investigation and fined €109 million. Renault gave up 1.2%. According to Taiwanese news agency CNA, electronics giant Foxconn is looking to buy the French carmaker's stake in Japanese Nissan.

United States
Asian and Australian stocks were mixed on Friday. In Tokyo, the Nikkei-225 was little changed. The Shanghai Composite gained 0.5 per cent and the Hang Seng Index rose by 0.2 per cent. The People's Bank of China (PBoC) left the key interest rate for bonds unchanged on Friday. The Kospi in Seoul lost 1.6 per cent. Shares in Samsung Electronics and SK Hynix extended their declines of the previous day, dropping 2.3 per cent and 4.1 per cent respectively. In Sydney, the S&P/ASX 200 dropped by 1.4 per cent. Here, sentiment was depressed by Wesfarmers (-4.6%). The group is selling its Coregas division to the Japanese company Taiyo Nippon Sanso (+3.3%) for 770 million Australian dollars. According to E&P Financial, Wesfarmers has received a good price for Coregas.

Asia
Asian and Australian stocks were mixed on Friday. In Tokyo, the Nikkei-225 was little changed. The Shanghai Composite gained 0.5 per cent and the Hang Seng Index rose by 0.2 per cent. The People's Bank of China (PBoC) left the key interest rate for bonds unchanged on Friday. The Kospi in Seoul lost 1.6 per cent. Shares in Samsung Electronics and SK Hynix extended their declines of the previous day, dropping 2.3 per cent and 4.1 per cent respectively. In Sydney, the S&P/ASX 200 dropped by 1.4 per cent. Here, sentiment was depressed by Wesfarmers (-4.6%). The group is selling its Coregas division to the Japanese company Taiyo Nippon Sanso (+3.3%) for 770 million Australian dollars. According to E&P Financial, Wesfarmers has received a good price for Coregas.

Bonds
Yields on long-dated U.S. government debt jumped on Thursday to their highest levels since late May as traders factored in the prospects of higher-for-longer interest rates, inflation risks, continued economic strength and the impacts of incoming President Donald Trump’s policies. The 10-year Treasury note yield climbed 7 basis points (0.06 percentage points) to 4.57%. By contrast, the 2-year Treasury note yield dropped by 4 basis points to 4.32%.

Analysis
UBS downgrades Zurich Insurance to Sell (Neutral) - Target CHF 515 (532)
Vontobel lowers Galderma to Hold (Buy) - Target 96 (90) CHF
UBS cuts target Pernod Ricard to EUR 118 (122) - Neutral
Produced by MBI Martin Brückner Infosource GmbH & Co. KG on behalf of Swissquote. All news is acquired with journalistic accuracy. No liability is assumed for delays or errors.