Market Review

  • EU Markets jumped (EuroStoxx 50 +1.50%), as the Eurozone’s economy grew 2.2% in Q3, closing the gap with the US and Chinese recoveries and keeping the block on track to regain its pre-pandemic level of output later this year.
  • The ECB said it will keep its vast bond-buying program running at a high pace despite rapidly rising inflation, setting it apart from other major central banks that are shifting towards tighter monetary policy.
  • Oil prices rose above $85 for the 1st time in 7 years, as traders bet that crude supplies would not keep pace with fast-rising global demand and analysts said a wider energy crunch was spreading to oil markets.
  • G20 countries agreed on a climate deal that fell short of expectations, leaving it to negotiators at the COP26 summit to try to achieve a breakthrough.

Equity Top News

  • BNP Paribas announced a €900M stock buyback after posting a 79% jump in equities trading. Net income beat analysts’ estimates, in part because the bank set aside less money than expected for bad loans.
  • EssilorLuxottica raised its FY forecasts for profitability and sales growth amid strong demand in the US and Latin America. Q3 sales reached €5.5bn, beating estimates and helped by the acquisition of Dutch optical chain GrandVision. Excluding the purchase, sales were 9.3% higher than in the same period in 2019.
  • SchneiderElectric posted better-than-expected Q3 earnings while reiterating its 2021 fiscal target.
  • Airbus boosted its earnings and cash-flow targets for the 2nd time this year, banking on a recovery in air travel to support its push to boost jetliner output.
  • Iberdrola published a 71% growth in its renewable sector in 2021, exceeding analysts’ estimates. On the other hand, profit fell due to higher energy costs.
  • TotalEnergies’ Q3 profit rose by more than expected, making it the latest beneficiary of high energy prices.
  • Universal Music Group reported a 21% rise in Q3 earnings to €461M, in line with company forecasts. Revenue rose 16%, with growth in recordings, publishing and merchandising.
  • Novartis’ sales in Q3 increased by 6%. They also announced that they were studying various options, including that of a spin-off, for its generic division Sandoz.
  • Royal Dutch Shell’s earnings fell 25% in Q3, below expectations, as Hurricane Ida hurt its operations.
  • Santander suffered from costs being pushed up by inflationary pressures. However, its Q3 net income had a 24% increase thanks to soaring demand for mortgages and good performances in the US and UK.
  • Volkswagen lowered its delivery target, revising its sales forecast and stressing the need to cut costs due to the semiconductor shortage, which weighed on its Q3 operating profit.
  • Heineken’s results were lower than expected, as its sales fell with lockdowns resurfacing in Asia.

Portfolio Strategy and Activity

  • The Fund had a positive performance, similar to its benchmark.
  • The stock basket was positive, similar to its index.
  • Our prudent exposure during the week added a negative contribution.
  • We partially sold Universal Group Music (-1%) to cover some redemptions and to make its weight closer to Vivendi’s weight.
  • The Fund beta was nearly unchanged at 88.6%.

Source Union Securities Switzerland S.A., a FINMA Securities Firm and Authorized Fund Manager