Novartis delivered a solid second quarter. The six key in-market growth drivers with multi-billion sales potential (Cosentyx, Entresto, Zolgensma, Kisqali, Kesimpta, Leqvio) each grew at least double digits. The mid-stage pipeline remains on-track for 20+ potential significant pipeline assets with approval by 2026. Sandoz performance allows Novartis to increase its guidance for the full-year and the strategic review is on track. Implementation of the streamlined organizational model is progressing well and is now expected to deliver approximately USD 1.5 billion in savings. Novartis reconfirms the 2022 Group guidance and its confidence in delivering consistent growth and margin expansion. Net sales were USD 12.8 billion in the second quarter, driven by volume growth of 12 percentage points, price erosion of 4 percentage points and the negative impact from generic competition of 3 percentage points. Operating income was USD 2.2 billion, mainly due to lower product divestment gains (USD 0.4 billion), higher impairments (USD 0.4 billion) and higher restructuring costs (USD 0.3 billion) primarily related to the implementation of the new organizational model. Net income was USD 1.7 billion, mainly due to lower operating income. Excluding the impact of Roche income, net income declined -29%. EPS was USD 0.77. Excluding the impact of Roche income, EPS declined -27%.

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On Monday, the SMI gained 0.3 per cent to 11,010 points. Among the 20 SMI stocks, there were 14 price gainers and five price losers, and one share closed unchanged. 30.16 million shares were traded (previously: 43.2 million). Banking stocks were sought after across Europe. "After Citi, Goldman Sachs has now also published strong business figures," said a market participant. UBS and Credit Suisse rose 2.9 and 3.3 per cent respectively. Pharmaceutical stocks did not do well: Roche fell 0.9 per cent, Novartis 0.6 per cent ahead of Tuesday's results. In the luxury goods sector, Richemont (+4%) and Swatch (+2.4%) were noticeably firm. So far, the quarterly reports of luxury goods groups have not indicated weakening demand, Deutsche Bank judged. Concerns about China in particular had weighed on Richemont on Friday - despite appealing business figures. UBS confirmed its buy recommendation for Richemont, as did Goldman Sachs, and Bernstein was optimistic for Swatch. Among the second-line stocks, GAM Holding was 3.1 per cent firmer despite a profit warning. In view of the market environment, traders spoke of a warning that was to be expected, and other asset managers had already issued similar words of caution.

European shares extended recent gains on Monday after expectations of an aggressive Federal Reserve interest rate hike eased and as hopes rose that U.S. earnings season would not disappoint. However, the week ahead in Europe could be a fraught one for investors with Thursday seen as a pivotal day. The Stoxx Europe 600 index gained 0.9% on Monday to 417.7 points. In Paris, the CAC 40 and the SBF 120 gained 0.9% and 1% respectively. In Frankfurt, the DAX 40 gained 0.7% and the FTSE 100 in London advanced 0.8%. McPhy (+16.6%) and Gaztransport & Technigaz (+8.1%) shares topped the SBF 120 on Monday, after the two groups were selected as part of the European Union's major project of common European interest (PIIEC) for hydrogen. Chemicals group Solvay (+4.5%) reported significantly better-than-expected second-quarter results and said it expects to raise its targets for 2022 when it publishes its full first-half results at the end of July. Carmaker Stellantis (+2.4%) has decided to terminate its joint venture in China with China's Guangzhou Automobile Co (GAC) and will take a charge of 297 million euros in its first half results. Stellantis has also signed a memorandum of understanding with Dongfeng Motor Group concerning the Chinese group's 3.16% stake in the company created by the merger between PSA and Fiat Chrysler. S&P Global Ratings on Monday raised the long-term issuer rating of electrical equipment distributor Rexel (+1.2%) from "BB" to "BB+", with a stable outlook. Swedish clothing giant Hennes & Mauritz (+0.7% in Stockholm) announced its total withdrawal from Russia, given operational difficulties and an unpredictable future in the country, which will result in a one-off charge of around SEK 2 billion (EUR 189.5 million). Volkswagen subsidiary Porsche AG (+0.9%) expects to further increase its profitability thanks to its sales of 100% electric cars, the luxury car brand said on Monday at an investor day. The famous brand, which is due to be listed on the stock exchange at the end of the year, expects to achieve an operating margin of between 17% and 19% in the medium term, and above 20% in the long term. The new stand-alone company, called Haleon PLC, fetched a market value of about GBP30.5 billion, equivalent to $36.4 billion, at its stock-market debut Monday.

U.S. stocks dipped to start the week as investors considered another set of earnings reports from major companies and looked ahead to a slate of key central-bank meetings. Stocks were in the green for much of Monday’s session before turning downward in the afternoon. The S&P 500 fell 32.31 points, or 0.8%, to 3830.85. The broad index on Friday ended higher, snapping a five-day losing streak. The blue-chip Dow Jones Industrial Average lost 215.65 points, or 0.7%, to finish at 31072.61. The Nasdaq Composite Index shed 92.37, or 0.8%, to 11360.05. The technology-heavy index closed lower after rising at least 1% intraday for the 13th time this year, which happened only twice in 2021. Big financial firms kicked off a bumper week of earnings reports Monday. Goldman Sachs gained $7.39, or 2.5%, to $301.26 after reporting better-than-expected earnings. Synchrony Financial, which reported earnings per share that fell year over year but were better than analysts expected, gained 9 cents, or 0.3%, to $31.48. Bank of America finished up 1 cent, or less than 1%, after it said second-quarter profits declined 32%. Charles Schwab, which reported second-quarter profits rose by 42%, lost 94 cents, or 1.5%, to $61.24. Some traders attributed the afternoon’s market dip to a report that Apple plans to slow its hiring next year, news that was first reported by Bloomberg and which weighed on tech shares. The tech giant lost $3.10, or 2.1%, to $147.07. The S&P’s tech segment shed 1%. Other companies due to report this week include Johnson & Johnson on Tuesday, Tesla on Wednesday and Twitter on Friday. Among other tech giants, Google parent Alphabet fell $2.75, or 2.5%, to $109.03. The company’s shares split 20-for-1 after Friday’s close. Microsoft lost $2.47, or 1%, to $254.25.

In Asia, major indexes broadly closed with moderate losses on Tuesday. Against the trend, the Nikkei-225 in Tokyo rose by 0.8 per cent. In contrast, the Shanghai and Hong Kong stock exchanges are down 0.3 and 1.2 per cent, respectively. Country Garden slipped by 2.0 per cent, China Vanke lost 1.6 per cent, in the banking sector China Merchants Bank decreased by 0.2 per cent and Postal Savings Bank is down 0.6 per cent. BYD falls 1.9 per cent and SAIC Motor 0.8 per cent. The Kospi in Seoul edged 0.4 per cent lower. The two index heavyweights Samsung Electronics (-1.8 per cent) and SK Hynix (-1.3 per cent) weighed negatively on the index.

Long-dated U.S. government debt yields rose on Monday after Federal Reserve officials talked down the chances of a 100 basis point hike next week and the return of broader market risk appetite reduced demand for the perceived safety of government debt. The 10-year U.S. Treasury note was yielding 2.966%, up 6 basis points while the rate of the 2-year note rose by 5 basis points to 3.174%.

Jefferies cuts Ericsson target to SEK 80 (90) - Hold

Berenberg reduces Leifheit target to EUR 19.10 (26.20) - Hold

Jefferies lifts Airbus target to EUR 155 (145) - Buy

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