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LGT Navigator: Turbulent company news

June 18, 2019

Ahead of the Fed's interest rate decision on Wednesday evening, investors remain cautious. Meanwhile, several corporate news items caused a stir: Lufthansa due to a profit warning and Pfizer due to a billion-dollar takeover.

Navigator_Lufthansa

Lufthansa shares under pressure after profit warning

After a profit warning, shares of German Lufthansa came under massive pressure and lost more than -12% yesterday – the largest daily loss in five years. Due to price pressure in the European airline business, triggered by market-wide overcapacities and aggressively growing low-cost competitors, as well as higher fuel costs, the airline felt compelled to strongly lower its profit target for 2019. Lufthansa now expects an adjusted operating result of EUR 2.0 to EUR 2.4bn (previously EUR 2.4-3.0bn).

Pfizer invests in cancer division

The US pharmaceutical group Pfizer acquires the biotechnology company Array BioPharma for USD 11.4bn, thereby expanding its portfolio of cancer drugs. At USD 48 per Array share, Pfizer will pay a premium of 62% over last Friday's closing price. Array has been cooperating with Pfizer for many years in the development of cancer drugs.

Huawei expects significantly lower sales

Due to the US sanctions, the Chinese telecom group Huawei expects revenue over the next two years to be around USD 30bn lower than previously forecast. Revenue in 2018 was 721bn yuan (EUR 95bn). The US government blacklisted the company for security reasons, subjecting Huawei's business relationships with US partners to strict controls. This makes the relationship between Huawei and American suppliers massively more difficult, and the sanctions for the Chinese also make access to the Google system Android more difficult. Huawei has therefore already announced its intention to push ahead with its own operating system for smartphones.

New York economic barometer signals slowdown in US manufacturing

The Federal Reserve of New York's business activity indicator for the industrial sector in the greater New York area collapsed surprisingly sharply in June, indicating a downturn in the regional industrial sector. In May, the so called Empire State Index fell by 26.4 points to minus 8.6, its weakest level since October 2016. A value of over zero points signals an expansion, an index level below it a contraction.



Economic Indicators June 18

MEZ Country Indicator Last
08:00 EU Car registrations (m/m) -0.4%
11:00 GE ZEW economic expectations -2.1
11:00 GE ZEW current situation +8.2
11:00 EZ ZEW economic expectations -1.6
11:00 EZ Consumer prices (m/m) +0.2%
11:00 EZ Consumer prices (y/y) +1.2%
11:00 EZ Core consumer prices (y/y) +0.8%
14:30 US Housing starts (m/m) +5.7%
14:30 US Building permits (m/m) +0.2%

Earnings Calendar June 19

Country Corporate Period
US Oracle Q4

 

 

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Editor: Alessandro Fezzi, +41 44 250 78 59, E-Mail: lgt.navigator@lgt.com
Source: LGT Bank (Switzerland) Ltd.

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Herausgeber: LGT Bank (Schweiz) AG, Glärnischstrasse 36, CH-8027 Zürich
Redaktion: Alessandro Fezzi, +41 44 250 78 59, E-Mail: lgt.navigator@lgt.com
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