Swiss Re earned markedly more in the first half of 2023 than a year ago. Back then, turbulence on the stock market and provisions for the Ukraine war had weighed heavily upon the financial results. So far this year, there have been no very large, loss-generating natural catastrophes. Swiss Re's net profit climbed to 1.45 billion US dollars in the months of January to June after a small plus of 157 million a year ago, the reinsurance group announced on Friday. Analysts on average had expected an increase to 1.46 billion dollars. In property and casualty reinsurance (P&C Re), Swiss Re improved its combined ratio to 94.7 per cent (PY 98.5 per cent), despite several catastrophes impacting the financial statements, such as the earthquake in Turkey and Syria and the floods in New Zealand and Italy. On the US hurricane front, however, things have remained fairly quiet so far. Greater risk awareness and rising interest rates have led to favourable market conditions for the industry, notes Group CEO Christian Mumenthaler in the press release. For the current year, Swiss Re is aiming for a group profit of over 3 billion dollars. To achieve this, Swiss Re will benefit from further increases in reinsurance cover prices. In the July contract renewal round, rates were again raised sharply (+21%).

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On Thursday, the SMI lost 1.1 per cent to 11,087 points. Among the 20 SMI stocks, there were 17 price losers and 3 price winners. 16.44 (previously: 22.45) million shares were traded. Swisscom was down by 4.5 per cent. According to Citi, Swisscom's second-quarter results put it on track to meet its 2023 forecasts. However, the company is facing headwinds. The pricing environment for consumers is becoming more favourable in Swisscom's home market, but this has yet to be reflected in the average revenue per user for contract customers, which fell 2.1 per cent in the second quarter, Citi noted. Adecco's shares jumped 6.5 per cent in response to its second-quarter results. After holding up quite well the previous day, the heavyweights now also dropped more markedly. Roche lost 1.1 per cent and Novartis 1.9 per cent. Nestle fell by 1.8 per cent after the previous day's gains. Amid rising market interest rates, financial stocks outperformed the overall market. UBS gained 0.7 per cent and Swiss Re 0.5 per cent.

European stocks retreated again on Thursday as America's credit downgrade continued to rattle markets and as investors were coping with yet another interest rate rise from the Bank of England. The Stoxx Europe 600 index fell by 0.6% to 457.9 points. In Paris, the CAC 40 and SBF 120 lost 0.7% each. The DAX 40 in Frankfurt was down 0.8% and the FTSE 100 in London weakened by 0.4%. Satellite operator SES (+15.2%) confirmed its financial targets for 2023, after a first half buoyed by the commercial success of its Networks division, and announced the launch of a share buyback programme worth up to €150 million. Elior lost 5.9% as Stifel lowered its recommendation on the stock from "hold" to "sell" and reduced its target price from €3.3 to €1.9, following the new profit warning issued by the group last week. Société Générale (+3.5%) presented quarterly results penalised by a fall in revenues in its French retail banking and investment banking businesses. Veolia (-3.5%), the group providing services to local authorities, reported sharply higher half-year results on Thursday and a favourable outlook for 2023, but its good performance had already been taken into account by the market. Call centre operator Teleperformance (+2.4%) announced the launch of a €500 million share buyback programme to run until the end of 2024. German semiconductor manufacturer Infineon (-9.3% in Frankfurt) delivered forecasts deemed disappointing for the fourth quarter. Lufthansa dropped 5.5% in Frankfurt, despite higher-than-expected results, as the airline's costs rose and capacity was squeezed this year by labour shortages at air traffic control as well as supply disruptions.

U.S. stocks edged lower Thursday, extending their recent slide as a jump in bond yields weighed on the market’s appetite for risk. The S&P 500 fell for a third consecutive day, bringing its losses in the first three days of August to 1.9%. Investors said it made sense that stocks might pull back after a rally that catapulted the broad U.S. index up nearly 20% in the first seven months of the year. The S&P 500 dropped 0.3%, while the Dow Jones Industrial Average declined 0.2%, or 66.63 points. The tech-heavy Nasdaq Composite slipped 0.1%. Earnings reports drove moves among individual stocks. PayPal Holdings shares declined 12% after a key metric showed that much of the payments company’s growth is coming from lower-margin sources. Shares of Robinhood Markets dropped 7.2% after the online broker reported a drop in monthly active users. Qualcomm shares fell 8.2% after the maker of mobile-phone chips reported disappointing sales and said it plans more layoffs. With about four out of five companies in the S&P 500 having reported earnings, analysts expect that profits fell 5.8% in the second quarter compared with a year earlier, according to FactSet. They are predicting that earnings for 2023 as a whole will come in about flat.

In Asia, major indexes broadly closed with gains on Friday. China has taken further measures to stimulate its sluggish economy and is thus supporting the country's stock exchanges. In China, the Shanghai Composite climbs 0.5 per cent and the HSI in Hong Kong advances 1.0 per cent. In Hong Kong, Longfor and Country Garden jump 6.1 and 5.5 per cent, respectively. The Nikkei-225 in Tokyo is largely unaffected by the Chinese measures and gains a meagre 0.1 per cent. After a slump in profits during the first half of the year, Kyowa Kirin plummets by 6.7 per cent. The Kospi in South Korea is also not strengthened by the Chinese steps - it remains unchanged. The shares of the ship engine builder STX Heavy Industries recover by 7.8 per cent after the recent markdowns.

Long-term U.S. Treasury yields finished at fresh year-to-date highs on Thursday as worries about persistent U.S. inflation re-emerged ahead of July’s official jobs report on Friday. The 10-year Treasury note yield jumped by 10 basis points to 4.183%. The 10-year Treasury note yield closed virtually unchanged at 4.88%.

Roche price target: Société Générale downgrades to CHF 375 (385) - Buy

Zehnder rating: Jefferies starts at Hold - target CHF 66

Interroll target price: UBS downgrades to CHF 2314 (2445) - Sell

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