Flash boursier

Key data

Highlights:

1° US rate hike a dead cert
2° Political hazards in Europe

First stumbling blocks encountered

The surge on share prices and commodities year to date came somewhat a cropper last week, with oil prices slipping by 9% in the space of three days on publication of record reserve numbers. Concurrently, US equities experienced their first week this year in the red. In the coming days, a quick succession of events is likely to act as stumbling blocks for investors, starting with a tightening of borrowing terms by central banks.

Upward wage pressure in the US, combined with rugged job figures, is likely to coax the Fed into raising its policy rate at the culmination of its meeting on Wednesday. Though widely expected and deemed necessary, this decision could cut into recent market performance, especially since the Fed seems increasingly intent on a series of rate hikes throughout the year.

Additionally, policy meetings at the Bank of England and Bank of Japan are likely to follow in a similar vein, substantiating the message heard at the latest G20 summit (in Hangzhou) that fiscal policy should now take over from monetary stimulus.

In Europe, the highly upbeat message from Mario Draghi reassured investors about business trends. Even so, we continue to act cautiously because there are two factors that could spoil the party. First, the official Brexit process could be triggered as early as tomorrow. Secondly, a likely populist-oriented outcome at the Dutch elections could jeopardise the EU’s political future.

Aside from the potential political repercussions for Europe, these events would also impact interest rates by instilling volatility into the market.

Logitech (ISIN: CH0025751329, price: CHF 29.90)

Logitech last week held an investor conference in New York to provide an update on its corporate strategy and business climate.

The accessory maker is reaping the rewards of its overhaul, whereby it has streamlined its product offering and lightened the cost base. Latest quarterlies – reported in late January – point to stable growth in all end-markets and in the three operating regions.

Growth nowadays is mainly powered by webcams, gaming accessories, wireless loudspeakers and headphones, all of which are expanding in double digits. The acquisition of US firm Jaybird has got off to a promising start.

Rising revenues and widening margins are a sign of a strong bill of financial health at the group, and there is still scope for fatter margins through design improvements and optimised production.

The share continues to trend upwards, and the planned share buyback (CHF 250m over three years) is also likely to underpin the market price.

Buy with a target of CHF 35.

Hugo Boss (ISIN: DE000A1PHFF7, price: EUR 67.84)

The German ready-wear group, which has been facing declining sales, this year hopes to reap the initial benefits of its restructuring drive.

Since becoming CEO last May, Mark Langer (who was previously CFO) has been working hard to slash costs. Savings exceeded EUR 100m last year, and he will continue running a very tight ship this year as well.

Hugo Boss last autumn launched a series of measures to boost sales. This included closing unprofitable stores and refocusing distribution in general.

The group expects flat sales this year but higher margin, with double-digit increases in net profit and earnings per share this year.

After a tough 2016, Hugo Boss’ attempts to get its house in order are starting to pay off. Its strategy of focusing on high-end goods, while aiming to be more competitive on price, is a shrewd one.

Hold with a target of EUR 82.

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