Michelin (+1.4%) confirmed aiming to achieve higher profitability and cash generation by 2026.
The French tire maker said at its capital markets day on Tuesday that it expects to achieve a segment operating income of 4.2 billion euros ($4.56 billion) in 2026, compared with EUR3.6 billion--at constant exchange rates--in 2023. Segment operating margin is expected to increase to 14% from 12.6%. The group's free cash flow is targeted to be a cumulative EUR5.5 billion by 2026. This compares with EUR.4.4 billion in 2023. Michelin expects a return on capital employed--which measures profitability after factoring in the capital used--of more than 10.5%. In 2023, the group reported a ROCE of 11.4%. The group also backed its long-term guidance for shareholders' returns, continuing to see a payout ratio of around 50% of its net result. By 2030, the company added that it expects non-tire activities to be above 20% of its total revenue.

On Tuesday, the SMI lost 0.9 per cent to 11,855 points. Of the 20 SMI stocks, there were 17 losers and two gainers, with only Richemont closing unchanged. A total of 18.21 million shares were traded (Monday: 13.06 million). Among the individual stocks, heavyweights Nestle (-0.8%), Novartis (-1.0%) and Roche (-0.5%) weighed on the SMI. However, investors also disposed of cyclical stocks such as ABB (-0.4%), Geberit (-1.4%), Holcim (-1%) and Sika (-3.1%). Richemont fared better than the market. The positive Chinese economic data from the beginning of the week may have had an impact here. China is the most important sales market for the luxury industry. In the second tier, a buy recommendation from Bank of America supported Lindt & Sprüngli, gaining 0.4 per cent. Barry Callebaut closed unchanged. Although Deutsche Bank had lowered its price target, the ‘Buy’ rating was confirmed. Julius Baer (-1.7 per cent) was again moved by speculation about a potential takeover of its domestic competitor EFG International.

Stocks in Europe struggled for direction on Tuesday as traders looked to this week's inflation data and central bank speakers for clues on the timing of interest-rate cuts. The Stoxx Europe 600 index fell by 0.6% to 519.1 points. In Paris, the CAC 40 and SBF 120 lost 0.9% each. The DAX 40 in Frankfurt shed 0.5%, while the FTSE 100 declined by 0.7% in London, after a long weekend following a bank holiday in the UK. Shopping centre operator Klépierre (+0.4%) completed the acquisition of RomaEst, one of Rome's largest shopping centres, for an undisclosed sum. Oddo BHF has raised its target price for Klépierre from €27 to €28.50, while maintaining its recommendation on the stock at ‘outperform’. Investment company Eurazeo (+0.2%) and its partners Goldman Sachs, BPI France and Iris Capital have announced the sale of their stake in French employee experience specialist LumApps to UK asset manager Bridgepoint. Dutch banking group ABN Amro (+0.9% in Amsterdam) has reached an agreement to acquire German private bank Hauck Aufhauser Lampe, or HAL, from Chinese conglomerate Fosun International for €672 million.

Nvidia shares surged again Tuesday, adding to their outsized recent gains on an otherwise lackluster day for stocks. Still riding high after another blockbuster earnings report last week, Nvidia’s stock climbed 7%, bringing its month-to-date gain to 32% and year-to-date gain to 130%. News that Elon Musk’s xAI had raised $6 billion in private financing provided an extra boost to Nvidia shares, highlighting the frenzy of artificial-intelligence investment that has turned the chip maker into a market behemoth. Shares of other chip producers also rose, helping lift the tech-heavy Nasdaq Composite 0.6%. The S&P 500 ticked up less than 0.1%, and the Dow Jones Industrial Average dropped 0.6%. With most S&P 500 companies having reported their first-quarter results, earnings are on track to climb 6% from the previous year, the biggest jump since the first three months of 2022, according to FactSet. Most sectors in the S&P 500 fell Tuesday. That included financials, with Citigroup slipping 1.8% and Wells Fargo dropping 1.2%. The S&P 500 is still up 11% this year and 5.4% this month, a rebound from a 4.2% decline in April when investor concerns about inflation were resurgent. Meanwhile, T-Mobile US has secured a large part of U.S. Cellular's business. For USD 4.4 billion, the US subsidiary of Deutsche Telekom will obtain mobile customers, branches and certain frequencies and will also shoulder up to USD 2 billion in debt. T-Mobile US closed 0.8 per cent higher, Verizon lost 1 per cent and U.S. Cellular rose by 12.2 per cent. In the oil sector, oil giants Hess and Chevron were in focus. Hess shareholders voted on the $53bn sale of Hess to Chevron - a deal complicated by an arbitration claim filed by Exxon Mobil. The three shares gained between 0.4 and 1.3 per cent. Gamestop jumped 25 per cent. The video game retailer announced late Friday that it had raised nearly $1 billion from the placement of up to 45 million shares. AMC Entertainment - also a meme share - closed up 0.8 per cent, having rallied significantly in the pre-market on the back of Gemastop. Calliditas Therapeutics shot up by almost 70 per cent, driven by a takeover bid from Japan's Asahi Kasei.

Stocks in Asia mostly fell in the middle of the week. The Shanghai stock exchange, meanwhile, rose slightly after the Chinese government announced further measures to support the ailing property sector. The Shanghai Composite recovered from a slight initial fall and rose by 0.3 per cent. In Tokyo, the Nikkei-225 dropped by 0.5 per cent. Among individual stocks, Lenovo shares shed 1.7 per cent. The PC manufacturer issues convertible bonds with a volume of 2.0 billion US dollars and will hand them over to Alat. Alat is a wholly-owned subsidiary of the Saudi Arabian Public Investment Fund.

U.S. Treasury yields were higher Tuesday after relatively weak 2-year and 5-year auctions and as traders weighed comments from Minneapolis Federal Reserve Bank President Neel Kashkari about him not yet ruling out the potential for further rate hikes. The 10-year Treasury note yield climbed by almost 8 basis points to 4.545%. The 2-year Treasury note yield recovered 3 basis points to 4.983%.

Price target Richemont: Bernstein SG upgrades to CHF 169 (165) - Outperform
Rating Allreal: UBS starts with Buy - Target CHF 167
Target price Swatch: Bernstein SG lowers to CHF 247 (256) - Outperform
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