The billionaire entrepreneur said he is moving the headquarters of two of his companies, X Corp. and SpaceX, to Texas from California. The moves, announced days after he endorsed Donald Trump for president, further illustrate how Musk has increasingly aligned himself with conservative stances on social issues. His disclosures followed the move by California Gov. Gavin Newsom, a Democrat, to sign a new law Monday that aims to prevent schools from informing families if their children identify as gay or transgender. After X and SpaceX move, Musk’s brain-chip startup, Neuralink, and his xAI venture will be the only two of his companies still with headquarters in California.

The Swiss stock market ended trading on Tuesday with small losses. Market participants spoke of scepticism with a view to the upcoming earnings season. The SMI lost 0.2 per cent to 12,261 points. Among the 20 SMI stocks, there were ten losers and eight gainers, while two stocks closed unchanged. A total of 13.87 (previously: 14.2) million shares were traded. The shares of luxury goods group Richemont climbed 0.9 per cent. The company recorded a slight decline in sales in the first quarter of the financial year, mainly due to a significant downturn in its Chinese business. Overall, however, the financial results were not as dismal as had been feared. In addition, the Richemont share had already fallen significantly on Monday in the wake of the weak Swatch figures. The Swatch share (-0.2%) did not recover from its slump of almost 10 per cent on Monday, as numerous analysts lowered their estimates and price targets following the reporting of the financial results. The SMI was held back by the heavyweights Nestlé (-0.6%) and Novartis (-0.2%). Roche closed up 0.1 per cent. Swiss Re (-1.4%) is likely to have been weighed down to some extent following the profit warning issued by French reinsurer Scor. Geberit rose by 1.5 per cent and Sika by 0.7 per cent. Shares in the construction sector were among the leading performers across Europe.

Europe
European stocks extended their recent losses as disappointing earnings, particularly in the luxury sector, continued to weigh on sentiment. The Stoxx Europe 600 index fell by 0.3% to 517.3 points. In Paris, the CAC 40 and SBF 120 were each down 0.7%. The DAX 40 declined by 0.4% in Frankfurt and the FTSE 100 dropped by 0.2% in London. Scor slumped 24.6% as the reinsurer issued a warning on Monday evening about its targets for this year, due to provisions in its L&H life and health reinsurance business. Retirement home and clinic operator Emeis (+2.3%) announced on Monday that it had signed a commitment to sell property in Portugal worth a total of €24 million. Luxury goods stocks with the greatest exposure to China fell, including Kering (-3.1%), Burberry (-5.3% in London) and L'Oréal (-1.6%).

United States
Major U.S. stocks indexes notched new highs Tuesday, while small-cap stocks extended their outperformance over megacap technology shares. The S&P 500 rose 0.6%, clinching its 38th record close of the year. The Dow Jones Industrial Average advanced 743 points, or 1.8%, also securing an all-time high. That marked the blue-chip index’s biggest one-day percentage gain since June 2023. The Nasdaq Composite edged 0.2% higher. Stock-market leadership has shifted in recent sessions as investors rotate from shares of AI-focused tech behemoths, which dominated the first half of the year, into the relative laggards, such as industrials and small companies. The Russell 2000, a benchmark of small-cap stocks, rose 3.5% Tuesday for its fifth consecutive session of gains. The small-cap index has outperformed the Nasdaq Composite by about 11 percentage points over the past five trading days, the largest degree of outperformance since December 2020, according to Dow Jones Market Data. The Russell 2000 has beaten the S&P 500 by about 10 percentage points over the same period, the widest five-day outperformance on record, based on data going back to 1986. The move into beaten-down segments of the market reflects increased confidence that the Federal Reserve is on track to potentially begin cutting interest rates in September as inflation cools. Investors are also recalibrating expectations for the 2024 election, after Republican presidential nominee Donald Trump survived an assassination attempt over the weekend. Bets on a Trump election victory have grown, according to PredictIt data. The former president favours policies like tax cuts that some investors believe could encourage spending and boost the economy. In economic news, June retail-sales data showed American shoppers are remaining resilient. Retail sales were unchanged in June from the prior month, the Commerce Department said, while economists expected a 0.4% decline. Spending in May was also revised higher. A number of strong earnings reports from banks and other bellwether companies also boosted stocks. Shares of UnitedHealth Group rose 6.5%, boosting the Dow industrials. The company reported stronger-than-expected earnings and revenue and held its 2024 guidance steady. UnitedHealth suffered a cyberattack in February that weighed on quarterly results. Bank of America’s shares jumped 5.3% after the lender reported quarterly results that beat Wall Street estimates and said its income on lending would improve during the second half of the year. Shares of Morgan Stanley gained 0.9% after the bank posted a 41% year-over-year increase in profit, boosted by an increase in investment-banking revenue. Meanwhile, shares of Charles Schwab declined 10% after the brokerage reported a decline in bank deposits and net interest revenue, along with an increase in short-term borrowing. Overall, analysts are expecting companies in the S&P 500 to report second-quarter earnings growth of more than 9%, according to a FactSet blend of reported results and consensus estimates. That could mark the biggest quarter of year-over-year earnings growth since the end of 2021.

Asia
Asian stocks were mixed on Wednesday. China’s Shanghai Composite fell by 0.3 per cent, while the Hang Seng Index in Hong Kong stabilised after the recent significant losses and rose by 0.1 per cent. The Nikkei-225 in Tokyo added 0.2 per cent, but gave up some of its initial gains. In Sydney, the S&P/ASX 200 is up 1.0 per cent, moving away from the 8,000 mark, which was exceeded for the first time on Monday. Shares in the mining group BHP fell by 0.1 per cent, although recovering from initial substantial losses. The production forecast for the full year 2025 is largely in line with expectations, according to analysts. By contrast, shares in commodities group Rio Tinto rebounded slightly from their significant losses of the previous day and climbed 0.7 per cent.

Bonds
Yields on U.S. government debt held mostly steady on Tuesday after retail sales came in unchanged for June. Traders are pricing in near-certain odds of a rate cut in September, up from about a 73% probability a week ago, according to CME Group’s FedWatch. The 10-year Treasury note yield shed 7 basis points to 4.162%. The 2-year Treasury note yield dropped 3 basis points to 4.424%.

Analysis
JP Morgan downgrades Swatch to CHF 180 (210) - Neutral
Price target Adecco: Jefferies lowers to CHF 31 (33) - Hold
Target price Emmi: UBS raises to CHF 855 (840) - Sell

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