European investors returned from their summer break yesterday, while their American peers enjoyed another day in the sun for Labour Day. The absence of Wall Street was reflected in weak trading volumes on the Old Continent. Several markets ended the day around the break-even point, including Zurich, Paris and London. Germany fared well, helped by its defence sector, notably Rheinmetall and Airbus. This sector is buoyed by plans for a European military presence in Ukraine and by the still unclear case of alleged GPS jamming of Ursula von der Leyen's plane, attributed to Russia.

Outside of defence, the previous day's fluctuations were relatively anecdotal, following a weekend marked by renewed tension. The arrival of September - notoriously complicated for equity markets - the lack of progress in Ukraine, the political chaos in France, the countdown to the US Federal Reserve's decision in the middle of the month and the solidarity expressed between Modi, Putin and Xi in the face of the White House have all contributed to rising tensions. Several risk barometers have been on the rise. It is still subtle, but it is visible. For example, the price of gold reached a new high of USD 3,508 this morning. The VIX volatility index also rose slightly from its annual low reached last week. Tension is also evident in European debt spreads.

Faced with these turning points, the United States continues to set the pace. This is particularly evident in the quiet strength of Scott Bessent, the Secretary of the Treasury, who, as I regularly point out, is Donald Trump's A-Team when it comes to the financial markets. Bessent did not really take advantage of yesterday's Labour Day in the United States, as he made his voice heard loud and clear. In particular, he stated that the Fed must remain independent, which is a strong message following recent rumours. But he also criticised what he considers to be monetary policy errors. At the same time, the US finance chief expressed great confidence that appeals against the president's customs policy would be rejected, despite the recent setback in a federal appeals court.

To round off this morning's newsletter in the absence of any other Made in USA news and to avoid the gossip topic of the moment, the sacking of Nestlé's boss for fooling around with a subordinate, I am going to quote some interesting figures from a list compiled by Bank of America a few days ago. The 28 August edition focuses quite a bit on debt. For example, I learn that Italy's last budget surplus dates back to 1905, which means that no one alive today has ever experienced one. For France, we have to go back to 1974, and to 2001 for the United Kingdom and the United States. The US, which last had a trade surplus in 1975, now has a public debt of $37 trillion, which is more than the combined annual GDP of China, Japan, Germany and India.

Today's session will therefore be marked by Wall Street's return to business and the publication of three major statistics. First, European inflation for August, published later this morning, which is expected to remain close to the ECB's 2% target. Next, the August manufacturing PMI and ISM indices in the United States, which are expected to improve compared to July. In Asia-Pacific, the Nikkei 225 is flat after already losing ground yesterday. Mainland China and Hong Kong are reversing course after yesterday's gains. India and South Korea are up 0.4% and 0.8% respectively during the session.

Australia ended down 0.3% despite gains in its financial and mining stocks. European leading indicators are slightly bearish, as are those on Wall Street.

Today's economic highlights:

Today's agenda includes: the Eurozone Consumer Price Index; in the United States, the S&P Global US Manufacturing PMI, construction spending, and the ISM Manufacturing Index. See the full calendar here.

  • GBP / USD: US$1.35
  • Gold: US$3,495.39
  • Crude Oil (BRENT): US$68.43
  • United States 10 years: 4.26%
  • BITCOIN: US$110,382

In corporate news:

  • Wise is considering applying for a banking licence in the United Kingdom.
  • Avacta Group has finalized the sale of Coris Bioconcept to 3B BlackBio.
  • Nestle has appointed Philipp Navratil as the new CEO following Laurent Freixe's dismissal due to a breach of conduct.
  • Gazprom has signed a 30-year agreement with China's CNPC to increase gas supplies through the Power of Siberia-2 pipeline.
  • eDreams ODIGEO reported a Q1 net profit of 13.6 million euros, with an adjusted net profit of 23.6 million euros.
  • InPost reported a 12.6% to 13% increase in Q2 earnings and a revenue of PLN 3.53 billion.
  • Rheinmetall is under consideration by the German government for defense industry funding, with sufficient raw material stockpile for five years.
  • Tesla faces declining sales in European markets for the eighth consecutive month due to increased competition and backlash against Elon Musk's politics, despite sales growth in Portugal and initial deliveries of Model Y L in China.
  • Amazon plans to invest NZ$7.5 billion (approximately $4.4 billion) in building data centers in New Zealand.

See more news from UK listed companies here

Analyst Recommendations:

  • Anglo American Plc: Oddo BHF maintains its neutral recommendation and reduces the target price from GBP 24 to GBP 23.50.
  • B&M European Value Retail S.a.: Shore Capital initiates coverage with a hold rating and a target price of GBX 250.
  • Barclays Plc: Morgan Stanley maintains its overweight recommendation and raises the target price from GBX 400 to GBX 420.
  • British American Tobacco P.l.c.: RBC Capital downgrades to underperform from sector perform with a price target raised from GBX 3000 to GBX 3400.
  • Sse Plc: JP Morgan maintains its overweight recommendation and raises the target price from GBP 23 to GBP 24.25.
  • Wise Plc: Goldman Sachs maintains its buy recommendation and raises the target price from GBX 1400 to GBX 1550.
  • Diageo Plc: AlphaValue/Baader Europe maintains its add recommendation and raises the target price from GBX 2595 to GBX 2693.
  • Hsbc Holdings Plc: Zacks maintains its outperform recommendation and raises the target price from USD 71 to USD 74.25.
  • Legal & General Plc: AlphaValue/Baader Europe downgrades to reduce from add and reduces the target price from GBX 297 to GBX 235.
  • Centrica Plc: AlphaValue/Baader Europe maintains its add recommendation and reduces the target price from GBX 188 to GBX 173.