Unilever shares tumbled 6.9% after the consumer-goods giant said over the weekend that it had approached GlaxoSmithKline and Pfizer about buying their consumer-health joint venture. Its latest proposal valued the unit at $68.4 billion. U.K.-listed GlaxoSmithKline shares rose 4.1%. Unilever PLC announced its intention to push further into health, beauty, and hygiene products at the expense of slower-growing food brands. The maker of Dove soap and Ben & Jerry’s ice cream said Monday that buying GSK Consumer Healthcare, which sells everything from Aquafresh toothpaste to Advil painkillers, would be accompanied by significant divestitures as it looks to rejigger its portfolio toward higher-growth categories. Unilever on Saturday stated it had made a takeover approach for the business, which is 68% owned by Glaxo and 32% by Pfizer Inc. A successful deal would be Unilever’s largest-ever acquisition and greatly expand its presence in oral care and vitamins, as well as give it a new foothold in over-the-counter medicines. Glaxo said Saturday that Unilever had made three proposals late last year, which it rejected on the basis that they undervalued the business and its prospects. The latest proposal, received on Dec. 20, valued the business at £50 billion - equivalent to about $68.4 billion - and was made up of £41.7 billion in cash and £8.3 billion in shares, it said. Unilever in recent years has sold off big chunks of its food business. It sold its spreads unit for about $8 billion in 2018, and in November struck a roughly $5 billion deal to sell the bulk of its tea business. That effort would follow Unilever’s 2020 consolidation of its longstanding dual British and Dutch corporate structure into a single company based in the U.K.—a restructuring that it said would make it easier to do big deals. For Glaxo, the planned spinoff of its consumer-healthcare business comes as the pharmaceuticals giant looks to focus more on drug and vaccine development.

On Monday, the SMI gained 0.9 percent to 12,633 points. Among the 20 SMI stocks, there were 16 price gainers and 4 price losers. 29.98 (previously: 29.75) million shares were traded. Credit Suisse shares declined 2.3% after the bank's chairman resigned following an investigation into his personal use of a corporate jet and breaching of Covid-19 quarantine rules. Credit Suisse Chairman Antonio Horta-Osorio's departure leaves the company with a lack of strong characters at the top and could prompt leadership questions, Citi analysts say as shares in the Swiss bank slip. The scandal-ridden bank has named Axel Lehmann, who only joined the bank in November to chair the risk committee, as its new chairman. Lehmann has already backed the strategic course set by his predecessor, "which we understand, as a period of continuity is now a must for the bank," Citi said. The U.S. bank expects Lehmann to adopt a more traditional, less hands-on approach to his role, in contrast with Horta-Osorio. Apart from personnel turbulences, Credit Suisse shares had recently suffered from the losses of the Archegos Capital collapse and the Greensill scandal. As a result of positive China data, Richemont (+3.6%) and Swatch (+2.2%) were sought after in the luxury goods sector. For both companies, China represents an important sales market. After a positive analyst commentary by Berenberg, Swiss Re climbed 1.3 percent. Among small caps, Cicor rose 2.3 percent, the development and manufacturing partner plans to expand in Germany. Meanwhile, Leonteq (+1.3%) launched a cooperation with VP Bank.

European equity indices rose on Monday, buoyed by the announcement that China will cut two benchmark interest rates to support a flagging economy. Trading was nevertheless rather slow due to the U.S. markets being closed in observance of the Martin Luther King Jr. Day holiday. The Stoxx Europe 600 index gained 0.7% to 484.5 points. In Paris, the CAC 40 and SBF 120 gained 0.8% each. In Frankfurt, the DAX 40 advanced 0.3%, and the FTSE 100 in London gained 0.9%. The oil and gas group CGG (+8.3%) was the biggest gainer on the SBF 120, closely followed by Vallourec (+6.4%). Rémy Cointreau gained 2.9% after Bryan, Garnier & Co. raised its recommendation on the spirits producer from "sell" to "neutral" and raised its price target from 145 to 197 euros. Renault (+1.5%) expects its worldwide sales to remain relatively stable this year, whereas they fell by 4.5% last year in a market still penalized by the health crisis and shortages of electronic components. The energy companies TotalEnergies (+0.3%), Engie (-0.3%), BP (+1.3% in London), Shell (+1.2% in London) and Iberdrola (+1.1% in Madrid) announced on Monday that they had won concessions from the Scottish authorities to develop wind power projects off the country's coast. Banco Bilbao Vizcaya Argentaria (+0.3% in Madrid) plans to distribute more than 7 billion euros to its shareholders for 2021 and 2022, the Spanish bank's chief executive announced Monday.

On Monday, the U.S. markets were closed in observance of the Martin Luther King Jr. Day holiday. Australia’s S&P/ASX 200 index suffered a midday reversal of fortunes to close 0.1% lower at 7408.8, reflecting a mixed performance by financial stocks and the absence of leads from Wall Street. CBA fell 0.4% to A$100.79 and Westpac dropped 0.3% to A$21.41, with ANZ the only riser among the major retail banks, logging a 0.1% improvement to A$28.75. Rio Tinto dropped 0.4% to A$109.65 after missing analysts’ expectations for 4Q production and offering a weak outlook. However, JB Hi-Fi rose 6.9% to A$49.84 after it recorded like-for-like sales growth at its Australian businesses as major states emerged from lockdowns.

In Asia, stocks are mixed in morning trade. The stock exchange in Shanghai, however, was slightly up. In Tokyo, the Nikkei index gives up initial slight gains and now declines by 0.3 percent. In Hong Kong, the Hang Seng Index is down 0.4 percent. In the real estate sector, Country Garden recover from the significant losses at the beginning of the week. The shares rise by 5.6 percent, Longfor Group advance 1.7 percent. In South Korea, the Kospi loses 0.9 percent. Some investors seem to sell shares regarding the upcoming mega IPO of battery cell maker LG Energy Solution. Daewoo Shipbuilding & Marine Engineering loses another 5.9 percent, after the stock had already slumped 6.9 percent the previous day.

The yield of the ten-year German Bund closed at -0.023%, compared to -0.045% on Friday night. It should only be a matter of time for 10-year German Bund yields to bounce to positive territory, for the first time in nearly three years, LBBW’s senior fixed-income analyst Elmar Voelker says. Bonds’ weak start to 2022 points the way for this, he says. “Under the assumption that weakness will remain valid overall for the month of January, the ideal historical progression over the year...suggests that yields will increase further over the following months,” he says. The yield of the ten-year U.S. Treasury bond ended at 1.792% Friday night. Trading was nevertheless subdued on Monday due to the closing of Wall Street for a holiday in the United States.

Jefferies lowers Swisscom target to CHF 413 (427) - Underperform
Citi raises Thales target to EUR 108 (104) - Buy
Berenberg raises target Hannover Re to EUR 197 (186) - Hold

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