Bristol Myers Squibb (-0.1%) will acquire Mirati Therapeutics (-5.3%) in a transaction that values the oncology developer at up to $5.8 billion, the latest example of a drugmaker targeting deals to replenish revenue as top-selling products face competition from generics. The biopharmaceutical company on Sunday said that it had entered into a definitive merger agreement with Mirati under which it would pay $58.00 per share in cash. Mirati stockholders will also receive one non-tradeable contingent value right per share, potentially worth $12.00 per share in cash. Mirati's board unanimously approved the transaction. Pharmaceutical companies, including Bristol Myers Squibb, have turned aggressive deal-makers over the past year as they seek to offset the loss of exclusivity on top-selling drugs. Bristol Myers Squibb expects the transaction to close by the first half of 2024. It expects to finance the acquisition with a combination of cash and debt.

On Monday, the SMI shed 0.1 per cent to 10,822 points. Among the 20 SMI stocks, there were 13 price losers and 6 price winners, and one share closed unchanged. A total of 16.11 (Friday: 22.78) million shares were traded. The leading SMI index benefited from the fact that its heavyweights are considered to be less cyclical as well as defensive, led by the two pharmaceutical stocks Novartis (-0.3%) and Roche (+1.1%), along with Nestle (+1.1%). In addition, Swisscom (+0.8%), a rather less cyclical share, was among the winners, as were the insurers Zurich Insurance (+0.5%) and Swiss Re (+0.6%). The rating agency Fitch confirmed Zurich's "AA" credit rating with a stable outlook. Sandoz, the biosimilar and generics subsidiary recently spun off from parent Novartis, saw its stock rise 0.8 per cent. Jefferies assigned its first "Buy" rating to the stock. At the bottom of the SMI, without news, were Richemont (-2.9%), ABB (-2.1%) and Sika (-2.1%).

The European stock markets retreated on Monday against a backdrop of geopolitical uncertainty following the deadly attack on Israel by the Palestinian organisation Hamas. The Stoxx Europe 600 index lost 0.3% to 443.8 points. In Paris, the CAC 40 and the SBF 120 each shed 0.6%. The DAX 40 in Frankfurt was down by 0.7%, while the FTSE 100 in London ended flat. Defence stocks were in demand amid escalating tensions in the Middle East. Saab shares jumped 9.1%, Rheinmetall gained 7.1%, BAE Systems gained 4.5% and Dassault Aviation 4.4%. Oil and oil-related stocks also advanced in the wake of the sharp rise in crude oil prices. In Paris, the CGG share rose by 5%, Vallourec climbed 4.5% and TotalEnergies added 1.7%. Airline stocks, on the other hand, fell in response to the surge in oil prices. The parent company of British Airways, IAG, lost 6.1% in London, while Air France-KLM tumbled 8.5% in Paris. Deutsche Lufthansa shed 4.3% in Frankfurt. Automotive supplier Schaeffler (+3.6% in Frankfurt) announced a €3.64 billion bid for Vitesco Technologies (+20.1%), a deal that aims to bring together two of Germany's biggest players in the sector.

Despite the surge in energy prices triggered by the war between Israel and Hamas, the New York Stock Exchange managed to close profitably on Monday. After opening lower on fears of an escalation of the conflict, the Dow Jones Industrial Average (DJIA) ended up 0.6% at 33,604.65 points. The broader S&P 500 index also advanced by 0.6% to 4,335.66 points, while the Nasdaq Composite gained 0.4% to 13,484.24 points. Escalating geopolitical tensions are boosting defence stocks. RTX gained 4.7%, while Lockheed Martin climbed 8.9%. Oil stocks also rose sharply, buoyed by the surge in crude oil prices. Exxon Mobil rallied by 3.5%, Chevron by 2.8%, Occidental Petroleum by 4.5% and Marathon Oil by 6.6%. Meanwhile, the prospect of higher fuel prices is weighing on the air transport sector. Delta Air Lines plunged 4.7%, American Airlines lost 4.1% and United Airlines 4.9%. Trian Fund Management, one of Disney's largest shareholders (+2.1%), intends to apply for several seats on the entertainment group's board of directors, sources close to the matter informed the Wall Street Journal. The bank Citigroup (+0.4%) announced the sale of its retail wealth management business in China to HSBC Bank China.

In Asia, major indexes broadly closed with gains on Tuesday. In Tokyo, the Nikkei 225 index rises by 2.4 per cent after the long holiday weekend. On the Hong Kong stock exchange, the Hang Seng Index climbs by 1.3 per cent. The Shanghai stock market, on the other hand, is down 0.5 per cent. In Seoul, the Kospi is only 0.2 per cent higher after a holiday in South Korea on Monday. The war in Israel boosts the share prices of defence companies. In Seoul, shares of ammunition manufacturer Poongsan rose by 4.9 per cent and those of guided missile manufacturer LIG nex1 by 8.2 per cent. On the Tokyo Stock Exchange, Mitsubishi Heavy Industries is up 5.4 per cent. Shares in the oil sector are sought after following a sharp rise of the oil price the previous day. The price of South Korean S-Oil increases by 3.8 per cent. In Tokyo, Inpex climbs by 8.5 per cent.

On Monday, there was no bond trading on Wall Street due to "Columbus Day". The Swiss bond market was firmer at the beginning of the week. Today, Tuesday, the Federal Finance Administration will announce which bonds are to be increased or newly issued. At the auction in September, the Swiss Confederation had raised a total of CHF 717.6 million by increasing the 2038 and 2043 bonds. The yield of two-year Confederation bonds was meanwhile quoted at 1.260% and the yield of ten-year Confederation bonds at 1.126%. The yield of the German ten-year Bund fell to 2.776%, compared with 2.888% on Friday evening.

Rating Sandoz: Jefferies starts with Buy - Target 30.80 CHF
Price target Holcim: JPMorgan downgrades to 64 (65) CHF - Neutral
Price target Medacta: UBS lowers to 119 (120) CHF - Neutral
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