STMicroelectronics slashed its sales and margin forecasts for the year once again as it continues to face lackluster demand for chips from the automotive industry. The European chip maker said it now expects revenue of $13.2 billion to $13.7 billion this year compared with a previous range of $14 billion to $15 billion. Meanwhile, its gross margin is now expected at about 40% compared with a previous forecast in the low 40s. The downgrades come three months after the group initially cut its forecasts due to slow demand, particularly from the automotive industry.

The Swiss stock market ended notably lower on Thursday, in line with markets across Europe, as worries about the outlook for global economic growth, and a slew of disappointing earnings reports from major U.S. and European companies rendered the mood bearish. The benchmark SMI ended down 97.63 points or 0.8% at 12,105.54. The index touched a low of 12,026.63 and a high of 12,138.78 in the session. Julius Baer tanked 9.05%. The lender reported that its first-half net profit, on IFRS basis, fell 15% to 452 million Swiss francs from last year's 531.4 million francs. IFRS earnings per share were 2.20 francs, down 15% from last year. Nestle ended down 5.1% after reporting a net profit of CHF 5.644 billion or CHF 2.16 per share for the first half, compared with CHF 5.649 billion or CHF 2.13 per share in the same period a year ago. Partners Group, ABB, VAT Group, Logitech International and Richemont lost 1.6 to 2.7%. Sika, SIG Group, UBS Group and Geberit ended lower by 1 to 1.4%. Swiss Life Holding ended nearly 1% down. Straumann Holding and Holcim also closed notably lower. Lonza Group rallied more than 7%. For the six-month period to June 30, the company registered a net profit of CHF 329 million or CHF4.61 per share, lower than CHF410 million or CHF5.54 per share, posted for the same period last year.

Europe
European stocks closed lower on Thursday, weighed down by losses in technology sector following a sell-off in U.S. heavyweight stocks a day earlier due to disappointing quarterly earnings. Concerns over Chinese demand and weak German business sentiment data weighed as well on markets. The pan European Stoxx 600 ended flat. The U.K.'s FTSE 100 gained 0.4%, while Germany's DAX and France's CAC 40 ended down 0.48% and 1.15%, respectively. Switzerland's SMI dropped 0.8%. Among other markets in Europe, Austria, Denmark, Greece, Iceland, Netherlands, Norway, Poland, Portugal, Russia, Spain, Sweden and Turkiye closed weak, while Belgium and Finland ended higher. In the UK market, Centrica plunged nearly 10%. The integrated energy company announced that Scott Wheway would step down as Chair of the Company and would not seek re-election as a director. Airtel Africa, Endeavour Mining and Pershing Square Holdings lost 6.7 to 7.1%. Fresnillo and Howden Joinery ended down 4.1% and 3.7%, respectively. Lloyds Banking Group shares ended notably lower after the lender reported a 14% fall in first half pretax profit. In the German market, Infineon tumbled 6.5%. Rheinmetall ended down 5% and Siemens Energy closed lower by about 3.3%. Henkel, HeidelbergCement, Siemens, Adidas, Puma and BMW lost 1 to 2.2%.

United States
The Dow Jones Industrial Average bounced after fresh data showed the U.S. economy humming along in the second quarter. The blue-chip index added 81.20 points, or 0.2%. The S&P 500 fell 0.5%, bringing its losses over the past three days to almost 3%, the biggest such decline since October. The tech-heavy Nasdaq Composite fell 0.9%, after dropping 3.6% in the prior session—its biggest decline since 2022. The Russell 2000 index of small companies jumped 1.3%, continuing its banner stretch. Data Thursday showed the U.S. economy has remained surprisingly resilient despite higher interest rates. Gross domestic product - the value of all goods and services produced in the U.S., adjusted for inflation and seasonality - rose at an annual rate of 2.8% for April through June, the Commerce Department said. Shares of energy companies, financials and smaller companies, whose fortunes tend to be especially tied to the economy, were among the biggest gainers in trading after the report. The S&P 500 suffered its first pullback of at least 2% of 2024. Individual companies recorded giant moves under the stock-market’s surface. And some investors said they expected the bout of volatility to continue, and for major indexes to transition to a new phase marked by bigger swings. In addition to a packed stretch of U.S. corporate earnings, traders have also been parsing economic data and developments tied to the U.S. election. Ford Motor shares plunged 18%, their biggest decline since November 2008, after the automobile company said vehicle-launch and warranty costs both weighed on profit, while its electric-vehicle business lost $1.1 billion. Super Micro Computer, the poster child for the artificial-intelligence trade - which has gotten crushed lately - fell 2.2%, its ninth consecutive session of losses.

Asia
At the end of the week, most East Asian stock markets have recovered slightly from the recent sharp falls. Taiwan was the only market to fall sharply. After trading was suspended here for two days due to a typhoon, the latest losses are being retraced, according to reports. The Taiex falls by 3.4 per cent.

Bonds
U.S. Treasury yields finished mostly lower on Thursday as long-term government debt rallied, even after data on the second quarter showed the U.S. economy still has surprising strength left.

Analysis
HSBC lowersRepsol target to EUR 14.40 (15.50) – Hold
Barclays lowers Universal Music to Equalweight (Overweight) – Target EUR 26 (31)
Citi raises Unilever target to GBP 52 (50) – Buy

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