China's central bank cut rates, a little earlier than expected after another series of unfavorable statistics and the tensions created by developers' difficulties in repaying their debts. As a result, markets stalled, judging the PBOC's reaction to be weak in view of the worsening situation in China.

In the United States, production is suffering but consumption is holding up well. As a result, interest rates remain high, anticipating further monetary tightening. Investors are wondering whether, after all, truth can be found in bonds (That's where it always is, according to our bond specialist at MarketScreener, Yves Sanquer).

The US banking sector suffered a setback following comments by a Fitch analyst, who reminded us that his agency is vigilant about the health of the financial sector. The market quickly concluded that Fitch could pull a Moody's. On August 9, the rival agency had slashed some of the US bank's credit ratings, prompting renewed caution.

On the corporate front, The Home Depot and Carlsberg have reassured investors that they can drown their sorrows in DIY and beer. Warren Buffett invested in US homebuilders.

Overall, the big black spot at the moment is the Chinese patient. Bad statistics are piling up and investors are waiting for strong political support for a recovery. Beijing is stuck between a rock and a hard place. On the one hand, authorities are reluctant to use the lever of debt when public finances are already heavily burdened. Nor do they want to offer a too-easy lifeline to companies that have overindulged for years, particularly in real estate and finance. On the other hand, with an ageing population, rising youth unemployment and pressure on business due to the slowdown in globalization, solutions must be found to revitalize the economy and create a flourishing domestic market. And then there's the political dimension: as soon as they make a mistake, Western investors turn to public authorities for help. And it usually works. Perhaps Beijing doesn't want to fall into that trap.

Nonetheless, China is at a crossroads and is sending out a less than reassuring image to international investors, who are still hoping for a rebound. As a symbol, the MSCI China has fallen back to its level of last autumn, when Beijing decided to end its zero covid policy, creating a bullish call for Chinese equities.

China is so worrying that financiers are starting to look at local statistics they didn't even know existed a few weeks ago. This is a sure sign. This morning, the decline in new property prices in July - the first of its kind this year - added further fuel to the fire. At the same time, asset manager Zhongrong, which is heavily exposed to real estate, was unable to meet its debt repayments.

In Europe, stronger-than-expected wage growth in Britain fueled worries that more rate hikes are on the way from the Bank of England. A 25bps rate hike is widely expected in September, and another one in November. The mood hasn’t improved today after data from the Office for National Statistics revealed that underlying inflation stayed high last month in the UK, although the overall consumer price index slowed to 6.8% year-on-year, down from 7.9% in June - in line with expectations.

In other news, we have the entry of Vietnamese electric vehicle manufacturer Vinfast on the Nasdaq, through a merger with SPAC Black Spade Acquisition. USD 10 per share initial valuation. Opening at 22 dollars. Closing at 37. That's an increase of 270%.The merger agreement with SPAC stated an equity value of 23 billion dollars. This gives a capitalization of $85 billion. A tad more than Mercedes. And a hair less than Ford and General Motors combined. Still, it's a high price to pay for a company that produced 19,000 vehicles in the 1st half of the year. Unless you imagine that this is the future Tesla.

US equity futures were struggling for a direction this morning ahead to the release of the minutes from the Federal Reserve's July meeting at 2 pm ET.

Today's economic highlights:

UK inflation data, Industrial production in Europe, US building permits and industrial production, as well as oil stocks are on the agenda, before the minutes of the latest Fed meeting. The full agenda is here.

The dollar is little changed at EUR0.9169 and GBP 0.7857. An ounce of gold is trading at USD 1901. Oil is contracting, with North Sea Brent at USD 85.03 a barrel and US light crude WTI at USD 81.06. The yield on 10-year US debt remains stuck at 4.20%. Bitcoin is trading at around USD 29,133.

In corporate news:

  • Intel announced on Wednesday that it was abandoning its planned $5.4 billion acquisition of Israeli company Tower Semiconductor, after failing to obtain regulatory approvals in time. The Group will pay Tower Semiconductor a termination fee of $353 million. New York-listed Tower Semiconductor shares were down 9% in pre-market trading.
  • Target jumped around 8% in pre-market trading after better-than-expected quarterly results overshadowed downward revisions to sales and earnings forecasts for the current year. Competitor Walmart is due to publish its results on Thursday.
  • Coinbase announced on Wednesday that it had received regulatory approval in the USA to offer cryptocurrency futures contracts to retail investors. Coinbase shares gained 5.5% in pre-market trading.
  • Carlyle - The investment fund is to sell its Gabon-focused oil and gas company Assala Energy to French producer Maurel & Prom for $730 million, the two companies announced on Tuesday. Maurel & Prom expects the transaction to close in the first quarter of next year.
  • Tesla has lowered the price of existing stocks of its Model S and Model X in China by up to 6.9%, the company announced on Wednesday. Its New York-listed Chinese competitors, such as XPeng , Li Auto and Nio, are down between 1.7% and 5.2% in pre-market trading.
  • General Motors - South Korean carmaker Hyundai Motor announced on Wednesday that its Indian subsidiary had bought out General Motors' Talegaon plant in the state of Maharashtra.
  • Boeing announced on Wednesday the appointment of Alvin Liu as head of its activities in China.
  • Occidental Petroleum announced on Tuesday evening that it had purchased Carbon Engineering for $1.1 billion to support its development in carbon capture technology.
  • AMC Entertainment a "meme" stock that was the subject of a 2021 retail investor craze, is the subject of a lawsuit by shareholders challenging its share conversion plan designed to strengthen its finances. Only a few days ago, the cinema operator reached an agreement with another group of investors who were also contesting the plan.
  • Southwest Airlines said on Tuesday evening that it had reached a wage agreement with the union representing 17,120 employees, notably in procurement and cargo.

Analyst recommendations:

  • Antofagasta: RBC upgrades from sector performer to underperform, targeting GBp 1,200.
  • Applovin: Morgan Stanley upgrades PT to $40 from $17.50. Maintains equal-weight rating.
  • Callon Petroleum: Citi upgrades to buy from neutral. PT up 26% to $45.
  • Chesapeake Energy: J.P. Morgan downgrades to neutral from overweight. PT up 16% to $96.
  • Home Depot: Morgan Stanley raises PT to $350 from $320. Maintains overweight rating.
  • Legal & General: Berenberg maintains its "Hold" rating with a price target raised from GBp 254 to GBp 258.
  • News Corp: Morgan Stanley resumed coverage with a recommendation of overweight. PT set to $27.50.
  • Nvidia: Piper Sandler raised the target to $500 from $450. Maintains overweight rating.
  • Pioneer Natural: J.P. Morgan upgrades to overweight from neutral. PT up 13% to $264.
  • Segro: Barclays upgrades from Overweight to Underweight, targeting GBp 775 .
  • SM Energy: J.P. Morgan upgrades to overweight from neutral. PT up 20% to $47.
  • Tanger: Goldman Sachs downgrades to neutral from buy. PT up 5.8% to $26.
  • TT Electronics: Peel Hunt upgrades from accumulate to buy, targeting GBp 240 .
  • Vesuvius: Jefferies remains Buy with price target raised from GBp 585 to GBp 620.
  • ViaSat: J.P. Morgan moves to neutral from rating suspended. PT up 12% to $35.