Tesla (-1.6%) has likely benefited from China subsidies, a European Union investigation has reportedly found, and that could mean fines for the EV maker or other measures to level the playing field. Shares of Tesla Inc. TSLA were down 0.4% in early trading, albeit in an overall weaker market for technology stocks on Tuesday, as investors fretted over soaring bond yields. The revelation about Tesla was unearthed during evidence gathering ahead of the announcement of the surprise probe made public by European Commission President Ursula von der Leyen on Sept. 13, Bloomberg reported, citing sources. The sources said the investigation will be aimed at figuring out the depth of those Tesla subsidies, with BYD Co., SAIC Motor Corp. and Nio Inc., also named as getting those perks. Citing Schmidt Automotive Research, Bloomberg reported that Tesla sold 93,700 EVs in Western Europe that were made in China, around 47% of total deliveries. Among Tesla’s exclusive China perks include whole ownership of domestic operations, along with tax cuts and cheaper loans.

Looking for New Structured Product Ideas?
https://en.swissquote.com/trading/investment-products/yield-boosters

On Tuesday, the SMI lost 0.5 per cent to 10,954 points. Among the 20 SMI stocks, there were twelve price losers and seven price gainers, with Zurich Insurance closing unchanged. A total of 20.26 million shares were traded (previously: 18.09 million). The share of the pharmaceutical giant Novartis held up well with an increase of 0.5 per cent. The generics division Sandoz received approval from the European Commission for the marketing and distribution of Tyruko to treat relapsing forms of multiple sclerosis in the EU. Meanwhile, the shares of competitor Roche slipped 0.2 per cent. Swisscom (+0.7%) and Sonova (+0.6%) also recorded marked gains. The share of index heavyweight Nestle, on the other hand, lost 1.4 per cent and thus weighed significantly on the SMI. Richemont again fell sharply by 3.0 per cent. After analysts at Bank of America had downgraded the shares to "Neutral" the previous day, Morgen Stanley (MS) analysts cut Richemont shares to "Equalweight" (previously: "Overweight") in a sector report, and the price target was also adjusted downwards. For the shares of competitor Swatch (-1.5%), the rating "Equalweight" was confirmed, however, the price target was also lowered. Analysts have lowered their 2024 earnings expectations for the European luxury goods sector by around 6 per cent, based on rising capital costs. UBS (-0.4%) is considering a strategic cooperation with Chinese bank ICBC (Industrial & Commercial Bank of China). As the Swiss bank announced, both institutions have signed a corresponding memorandum of understanding (MoU). ABB lost 1.3 per cent. Deutsche Bank anticipates that order intake is now likely to weaken after a dynamic first half. However, sales should remain robust due to the order backlog.

European stock markets closed lower for the fourth consecutive session on Tuesday, as investors remained concerned about rising interest rates and weak growth prospects in the eurozone. The Stoxx Europe 600 index fell by 0.6% to 447.7 points. In Paris, the CAC 40 and SBF 120 lost 0.7% each. The DAX 40 in Frankfurt shed 1% while London's FTSE 100 ended flat. Air France-KLM (-1.1%) intends to place an order for 50 Airbus A350s to renew its long-haul fleet. The agreement envisaged will include options for the purchase of a further 40 aircraft. Airbus (+0.5%) has announced the appointment of Christian Scherer as Executive Chairman (CEO) of its commercial aviation division, replacing Guillaume Faury. Sanofi (+0.1%) reported that the US Food and Drug Administration (FDA) had agreed to review a supplemental new drug application for Dupixent in the treatment of eosinophilic esophagitis in children aged 1 to 11 years. Bouygues Construction, a subsidiary of the diversified Bouygues group (-0.6%), confirmed on Tuesday that it had won a €468 million contract to extend the Tung Chung line of the Hong Kong metro.

U.S. stocks fell sharply Tuesday, dragged down once again by investor concerns about rising bond yields and a strengthening U.S. dollar. The S&P 500 dropped 1.5%, extending its poor run since last week’s Federal Reserve meeting, when officials raised their interest-rate forecasts for 2024. The tech-heavy Nasdaq Composite shed 1.6%, while the Dow Jones Industrial Average slid 388 points, or 1.1%. Online retail giant Amazon counted among the worst performers, falling 4%, after the Federal Trade Commission filed a lawsuit alleging that the company wields illegal monopoly power. Cintas, the Cincinnati-based provider of uniform-rental and other services, was the leading laggard in the S&P 500, falling 5.3% after it released revenue guidance that failed to meet analysts’ expectations. Energy was the best-performing sector in the broad market index, falling 0.5%. But that reflected another uptick in oil prices, which has also concerned investors. Some investors said the threat of a government shutdown also might be starting to weigh on the market. US President Joe Biden joined auto workers on a picket line in Belleville, Michigan, on Tuesday, as industrial action continued at Ford (-1.2), General Motors (-2.4%) and Stellantis (-2.1%). Cosmetics group Coty (-1.8%) announced a capital increase as part of its IPO on the Paris Bourse, scheduled for Thursday. The company plans to issue 33 million new shares to investors in the United States and the European Union. Last May, Coty announced that it was considering a Paris listing in addition to its listing on the New York Stock Exchange.

Stocks in Asia mostly fell on Wednesday. The Nikkei index in Tokyo loses 0.3 per cent to 32,212 points. The Chinese stock exchanges in Hong Kong and Shanghai are able to escape the downward trend, recovering slightly up to 0.6 per cent from recent declines. Among the bigger losers in Tokyo are auto stocks, considered cyclical. Nissan is down 1.9, Honda 1.7, Mazda 1.7 per cent and Subaru 1.2 per cent. Toyota, on the other hand, is up 0.6 per cent. Oracle Corp. Japan surges 11.4 per cent after the company posted a 14 per cent rise in first-quarter profit. In Hong Kong, CIFI Holdings slumped a hefty 53 per cent. The investment company, which is heavily involved in the real estate sector, unexpectedly reported a loss for the first half of the year.

Long-dated U.S. Treasury yields once again saw their highest closing levels since 2007 and 2011 on Tuesday amid the higher-for-longer theme on interest rates in the wake of the Federal Reserve decision last week. The 10-year Treasury note yield ended slightly higher at 4.55%, having risen on Tuesday morning to almost 4.57%, its highest level since 2007. The 2-year Treasury note yield ended unchanged at 5.134%, also at its highest level in over sixteen years.

Target price Swatch: Morgan Stanley downgrades to CHF 275 (340) - Equal Weight

Target price Givaudan: Baader Helvea raises to CHF 3250 (3100) - Add

Rating Richemont: MS lowers to Equal Weight (Overweight) - Target 138 (180) CHF

Produced by MBI Martin Brückner Infosource GmbH & Co. KG on behalf of Swissquote. All news is acquired with journalistic accuracy. No liability is assumed for delays or errors.