Tesla Inc. vehicle deliveries fell quarter-over-quarter for the first time in more than two years, reflecting an extended shutdown in China, supply-chain disruptions and challenges associated with opening two new factories. Elon Musk’s electric-vehicle maker said that it had delivered 254,695 vehicles to customers in the three months ended in June, down from 310,048 in the prior quarter. Deliveries were up roughly 27% from last year’s second quarter, when Tesla handed over 201,304 vehicles. Analysts surveyed by FactSet forecast that Tesla would deliver around 264,000 vehicles in the second quarter. Many analysts in recent weeks had lowered their expectations after the company had to temporarily shut down its largest factory, in Shanghai, because of local Covid-19 restrictions. Tesla also has had trouble getting its new factories in Germany and Texas up to speed, Mr. Musk has said, calling the plants “gigantic money furnaces.”

The Swiss stock market had a successful start to the new week. With a plus of 1.0 per cent to 10,882 points, the SMI led the list of winners among European stock market barometers. Among the 20 SMI stocks, there were 18 price gainers and 2 price losers. 21.42 (Friday: 28.03) million shares were traded. Some tailwind came from the franc, which lost some ground against the euro. The euro recovered to 1.0025 francs after falling to almost 0.9950 in the previous week. This improves export opportunities for Swiss companies. Bank shares were among the bigger winners. They benefited from a significant rise in market interest rates across Europe. In addition, they were brought into focus by a report that the ECB may want to prevent banks from making profits in the interest rate business with the ECB's targeted longer-term refinancing operations (TLTRO). The ECB had discounted TLTROs during the pandemic. According to analysts, rising interest rates could now give banks additional income of up to 24 billion euros if they simply deposit the cheap loans back with the central bank. UBS gained 2.5 per cent and topped the SMI. Credit Suisse gained 2.3 per cent and Julius Baer 1.4 per cent. Geberit (+2.3 per cent to CHF 468.80) also ranked high. UBS recommended the share as a buy.

With the notable exception of Frankfurt, the European stock markets closed slightly higher on Monday, at the end of a session marked by the absence of American investors due to the bank holidays in the United States. The Stoxx Europe 600 index gained 0.5% to 409.3 points. In Paris, the CAC 40 and the SBF 120 gained 0.4% and 0.3% respectively. However, in Frankfurt, the DAX 40 weakened by 0.3%. In London, the FTSE 100 gained 0.9%. Germany swung to a trade deficit in May as exports fell and imports grew amid high energy costs. Germany’s trade deficit--the balance of exports and imports of goods--stood at 1 billion euros ($1.04 billion) in calendar and seasonally adjusted terms in May after recording a EUR3.1 billion surplus the previous month, data from German statistics office Destatis showed Monday. Economists polled by The Wall Street Journal were expecting a surplus of EUR3.0 billion for May. Uniper SE said Monday that regional authorities in Germany have given the go-ahead for the construction of a liquefied natural gas terminal on the North Sea coast, as the country seeks to curb its dependence on Russian gas. Authorities in the northern German city of Oldenburg gave Uniper permission in a fast-tracked process to start building a LNG terminal in the town of Wilhelmshaven, the energy company said. Construction can start immediately, with commissioning of the terminal aimed for this winter, it said. The takeover of UK Power Networks, Britain's largest electricity distribution company, has collapsed just after regulator Ofgem published its draft proposals for the sector, RBC Capital Markets says in a note. The watchdog last week proposed to cut allowed returns for electricity distribution companies in the 2023-28 period to a baseline Return on Equity ratio of 4.75% from 7.0%-7.4% currently, the bank notes. Ofgem had also proposed to cut UK Power Networks's total expenditure allowance to GBP5.5 billion, 11% lower than the company's business plans, RBC says. The Financial Times reports that the potential buying consortium walked away as current UKPN owner CKI Holdings tried to increase the price of the deal to reflect higher inflation.

Wall Street was closed yesterday for the Independence Day.

Stock markets in East Asia and China are mostly up on Tuesday. Investors are buying in the hope that US President Joe Biden will announce an easing of punitive tariffs on Chinese goods this week. However, in Shanghai of all places, this hope does not sustain. The composite index gives up initial gains and is currently down 0.2 per cent. The Caixin Purchasing Managers' Index for the Chinese service sector, which rose sharply in June and has clearly returned to expansionary territory, is also unable to brighten the mood.

On the bond market, prices fell sharply and interest rates rose accordingly, for example by 10 basis points to 1.33 per cent in the German ten-year range.

UBS lowers the Rolls-Royce target to 102 (144.50) p – Neutral
UBS lowers the Danske target to DKK 143 (160) – Buy
Citi lowers the Scor target to EUR 27 (31.20) – Buy

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