In the meantime, the indices are holding steady in a kind of August slump. In Europe, private investors on vacation have had time to analyze and digest the outlines of the trade agreement between the European Union and the United States, which does not really favor the old continent. The agreement provides for a 15% tariff on most European exports to the United States, covering sectors such as automobiles, pharmaceuticals, and semiconductors, and does not yet include exemptions for specific sectors such as wine and spirits. This is therefore not great news for European exporters (and for US consumers, but that's another story), which explains Paris's poor performance yesterday compared to other European markets. The CAC40 fell 0.44%, weighed down by LVMH and Pernod Ricard. The DAX in Frankfurt ended virtually unchanged, while the FTSE 100 in London gained 0.20%. Across the Atlantic, Wall Street also had a gloomy day. The downward trend continued, with the S&P 500 falling for the fifth consecutive session. The S&P 500 dropped 0.40%. The Nasdaq, rich in tech stocks and a true barometer of risk appetite, lost 0.46%.
The markets are therefore navigating in troubled waters, especially as the latest economic data is clouding the picture. On the one hand, the US job market is showing signs of weakness, while on the other, PMI indicators continued to expand in August in both the services and manufacturing sectors. In this context, should investors focus on the economic resilience indicated by the PMI indices or worry about the signs of weakness coming from the job market? This dilemma puts investors in a delicate position and encourages caution. The strong PMI momentum in the US has somewhat weakened the camp of those advocating a 25 basis point rate cut by the Fed in September, but not enough to rule out the central scenario of monetary policy easing by the Fed.
The odds are still clearly in favor of this scenario: the probability of a rate cut stands at 70% according to the CME's FedWatch tool, down from 82% yesterday morning. Jerome Powell's speech today is therefore eagerly awaited.
He too is in a delicate, not to say uncomfortable, position. Although there is strong political pressure to stimulate the economy, fears of persistent inflation are complicating monetary policy decisions. A dovish tone could reassure the markets, although Jerome Powell is unlikely to make any drastic announcements. The US central bank is now accustomed to maintaining a “data-dependent” approach, which encourages caution before making any monetary policy decisions.
In Asia-Pacific, Japan's Nikkei remained stable at the end of trading, while the broader Topix index rose by around 0.5%. In Hong Kong, the Hang Seng rose modestly, gaining 0.4%. Elsewhere, South Korea's Kospi rebounded 0.8%, while Australia's ASX lost ground, as did India's Nifty. European leading indicators point to a hesitant opening.
Today's economic highlights:
On today's agenda: Germany's quarterly adjusted GDP; retail sales excluding automotive fuel in the United Kingdom; business confidence in France. See the full calendar here.
- GBP / USD: US$1.34
- Gold: US$3,328.54
- Crude Oil (BRENT): US$67.69
- United States 10 years: 4.32%
- BITCOIN: US$113,297
In corporate news:
- BAE Systems secured a contract from Lockheed Martin to supply RF sensors until 2030.
- Hunting PLC plans to shut down its Fordoun site as part of a restructuring effort in the EMEA region, aiming for $11 million in annualized savings by June 2026.
- WH Smith reported an accounting error, leading to a significant slump in its share prices.
- Savannah Resources shares climbed following the announcement of expected increases in resource estimates.
- Versarien sale of graphene assets to a Chinese-linked joint venture halted by the UK government citing national security reasons.
- Adidas issued an apology for culturally appropriating the design of traditional Indigenous Mexican sandals.
- Südzucker lowered its financial outlook for FY 2025/2026 due to declining sugar and ethanol prices.
- Skanska contracted to build a health sciences facility in Durham, North Carolina, for USD 69 million.
- Mediobanca CEO Alberto Nagel retains his position despite a negative shareholder vote on the Banca Generali acquisition.
- Synsam announced a plan to buy back up to 160 million Swedish kronor of its own shares after slightly exceeding second-quarter earnings expectations.
- Meta signed a cloud deal worth over $10 billion with Google, which is enhancing its new Pixel devices with AI.
- Nvidia halted production of its H20 AI chip due to market conditions and directives in China.
- BlackRock advises investors to boost their investments in hedge funds.
- Dynavax shingles vaccine demonstrated an immune response comparable to GSK's vaccine in a recent study.
See more news from UK listed companies here
Analyst Recommendations:
- Hays Plc: RBC Capital maintains its outperform recommendation and reduces the target price from GBX 100 to GBX 95.
- Airtel Africa Plc: HSBC upgrades to buy from hold with a price target raised from GBP 1.90 to GBP 2.60.
- Molten Ventures Vct Plc: Raymond James maintains its outperform recommendation and raises the target price from CAD 51 to CAD 57.
- Haleon Plc: Argus Research Company maintains its buy recommendation and reduces the target price from USD 12.25 to USD 12.
- Intercontinental Hotels Group Plc: Jefferies maintains its hold recommendation and raises the target price from GBP 84 to GBP 87.
- Alfen N.v.: Kempen downgrades to sell from neutral and reduces the target price from EUR 12.40 to EUR 7.20.
- Cts Eventim Ag & Co. Kgaa: Oddo BHF downgrades to neutral from outperform and reduces the target price from EUR 117 to EUR 86.
- Thyssenkrupp Nucera Ag & Co. Kgaa: Berenberg maintains its hold recommendation and reduces the target price from EUR 11 to EUR 10.
- Grand City Properties S.a.: Berenberg maintains its buy recommendation and raises the target price from EUR 14.50 to EUR 15.
- Alstom: Bernstein maintains its market perform recommendation and raises the target price from EUR 24 to EUR 25.
