Anglo American (+3.2%) on Friday rejected a $39 billion takeover proposal from rival BHP (-2.6%), saying the bid “significantly undervalues” the company and setting the stage for a potential bidding war. London-listed Anglo American said the unsolicited proposal, which was made earlier this month, and which became public this week, features an unattractive structure that is too uncertain and complex. Some analysts had predicted Anglo would find the bid too low and are expecting BHP to return with another. BHP has until May 22 to make a firm offer, though the deadline can be extended. Industry participants expect other large miners to also take a run at Anglo, whose share price has dropped since 2022 as lower commodity prices have ripped through the industry. Anglo American has been reviewing its assets in recent months and has held early conversations with potential buyers for its storied De Beers diamond unit, which it values at more than $7 billion, The Wall Street Journal reported Thursday. Anglo’s stock on Friday traded above the implied value of BHP’s offer, indicating the market expects a higher bid to emerge.

On Friday, the SMI gained 0.7 per cent to 11,344 points. Among the 20 SMI stocks, there were 16 gainers and 3 losers, while Swiss Re closed unchanged. A total of 20.58 (previously: 27.87) million shares were traded. Among the individual stocks, the shares of food giant Nestle recovered slightly from the significant losses of the previous day. The shares rose by 0.7 per cent. Nestle presented its first-quarter figures on Thursday, which were received cautiously by the market. Among the two pharmaceutical giants, Novartis fell by 0.6 per cent. Here, some investors are likely to have taken profits accumulated at the end of the week, after the share price had risen significantly since the presentation of good first-quarter results on Tuesday. Roche, on the other hand, rose by 1.0 per cent following the strong losses in the wake of the quarterly report on Wednesday. Kühne & Nagel (+1.8 per cent) was also in high demand among investors. The share thus recovered to some extent from the price slump on Tuesday following the presentation of weak figures for the first quarter. Sika (+3.0%) and Lonza (+2.7%) also recorded significant gains.

European shares advanced on Friday, with investors' attention being focused on the latest U.S. PCE print, the Federal Reserve's preferred inflation gauge. The Stoxx Europe 600 index gained 1.1% to 508 points. In Paris, the CAC 40 and the SBF 120 each rose by 0.9%. The DAX 40 in Frankfurt jumped 1.4% and the FTSE 100 in London advanced 0.8% to 8,139.83 points, after setting a new session record of 8,146.79 points. Over the week, the Stoxx Europe 600 added 1.7%. Eramet gained 11.3% to 88.25 euros, with the mining sector in turmoil after Anglo American (+3.2% in London) rejected a 36.3 billion euro bid from BHP (-2.6% in London), the world leader in the industry. Alten (-11.4%) said it expected business to slow in the first half of the year and reported first-quarter sales slightly below analysts' expectations. Nexity (+7.2%) confirmed that 2024 should represent a financial ‘low point’ and reported a 14% fall in first-quarter sales. Building materials manufacturer Saint-Gobain (+6.9%) was confident in its outlook for 2024, despite a fall in business in the first quarter. Amundi (+3.3%) registered an adjusted net profit of 318 million euros in the first quarter, apparently 2% higher than analysts' estimates. CVC Capital Partners surged on its first trading day in Amsterdam. The share closed at 16.50 euros, 17.9% above its IPO price of 14 euros. Thyssenkrupp (+6.2% in Frankfurt) has reached an agreement to sell a 20% stake in its steel business to EP Corporate, owned by Czech billionaire Daniel Kretinsky.

Nearly $1 trillion in market value across the Magnificent Seven evaporated last week, part of a dayslong stock selloff. This week, the highflying group of tech companies gained much of it back, leading a broad rally. Their gains accelerated Friday after Microsoft and Alphabet posted quarterly earnings that beat Wall Street’s expectations. At the sound of Friday’s closing bell, the Magnificent Seven had collectively added $654 billion in market capitalisation, the largest weekly sum since November. That helped all three major indexes log weekly advances. On Friday, the Nasdaq Composite recorded a 2% gain. The S&P 500 added 1%, while the Dow Jones Industrial Average rose 0.4%, or 154 points. Friday’s leg higher came despite another round of federal data suggesting that inflation remains hotter than the Federal Reserve would like and that the interest-rate cuts investors hope will arrive in the coming months are slipping further out of reach. That has dragged on stocks lately, with all three indexes in the red this month. Alphabet stock surged 10% on Friday after the Google parent posted a jump in quarterly profit and announced its first cash dividend. At Microsoft, artificial intelligence bolstered demand for software and cloud services. Its shares rose 1.8%. Facebook parent Meta Platforms, the lone member of the Magnificent Seven to fall this week, eked out a 0.4% increase Friday. The other members of the Magnificent Seven— Tesla, Apple, Nvidia and Amazon.com —joined Alphabet and Microsoft in rising for the week. One of Friday’s biggest laggards was Intel, which notched a 9.2% decline after reporting a first-quarter loss and disappointing outlook. Shares have slumped by 37% this year amid the chipmaker’s turnaround bid. The S&P 500 energy sector also edged lower. Exxon Mobil and Chevron raked in $13.7 billion in total first-quarter profits, but their run of record-setting results appears to be tapering off due to lower refining margins and some of the cheapest natural-gas prices on record. Exxon stock retreated 2.8%, while Chevron ticked 0.4% higher.

In Asia, major indexes broadly closed with gains on Monday. There is no trading in Japan due to a public holiday. In China, the HSI in Hong Kong and the Shanghai Composite rise by 1.3 and 0.8 per cent respectively. In addition to technology stocks, property stocks are also in demand. CIFI Holdings soared by over 18 per cent in Hong Kong, supporting the entire crisis-hit sector. Longfor Group and Country Garden Services gain 5.8 and 4.1 per cent accordingly. AIA Group rises 6.7 per cent due to a strong first-quarter. The Kospi in South Korea increases by 0.9 per cent. After a positive outlook, SK Innovation climbs 2.8 per cent in the energy sector.

Long-dated U.S. government debt yields finished off their highest levels of the year on Friday after the Federal Reserve’s preferred inflation gauge matched expectations, but they still notched their fourth straight week of advances. The 10-year Treasury note yield eased by 4 basis points to 4.667%, after reaching its highest level since the start of the year on Thursday. At 5.002%, the 2-year Treasury note yield remained close to equilibrium.

UBS lowers Roche target to CHF 238 (248) - Neutral
Stifel raises Sika target to CHF 275 (245) - Hold
Baader upgrades Nestle target to CHF 105 (104) - Add

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