Wall Street ended Friday on a mixed note, after starting the session with a bang. The S&P500 lost 0.3%, but the Nasdaq held on to 0.1% gains. Investors are still struggling between their natural appetite for risk and fear of the consequences of continued high interest rates on the economy. The sharp drop in oil prices on Friday (they have since rebounded slightly) weighed on a number of indices, including the Dow Jones.

The budget dispute between Democrats and Republicans, which could have led to a shutdown of non-essential government departments, was resolved on Saturday, thanks to an agreement between the two clans. But it's only for 45 days, and left everyone wanting more. Isn't that the essence of compromise? The Republican right wing is furious and looking to bring down its own House leader, Kevin McCarthy. The Democrats, for their part, are sorry that the way out of the crisis was to cut aid to Ukraine. Everyone must meet again between now and November 17 to avoid a new drama. In the meantime, the prevailing mood is one of relief, which should make for a better start to the week, month and quarter.

Because the third quarter has now ended, let’s review the performance of certain assets over the past three months:

  • Oil (Brent): +22.6% (+7.1% in 2023). Doubts about US and Chinese growth persist, but Saudi Arabia's production cuts are keeping oil prices high.
  • Nasdaq 100: -3.06% (+34.51%). Proportional to its rise in the first half, the tech index held up very well in Q3. It continues to be underpinned by the digital giants, who once again look set to be the winners of the AI revolution - a theoretical revolution at this stage, but one that is expected to create profound economic and social upheavals.
  • S&P 500: -3.65% (+11.7%). The US broad index did pretty well, also thanks to big tech.
  • Stoxx Europe 600: -2.5% (+5.96%). The European broad index stalled over the summer, but is still holding on to some of the gains made at the start of the year.
  • Gold: -3,7% (+1,3%). Ten days ago, the precious metal was not at the bottom of the pack. But it fell sharply at the end of September, as US bond yields reached levels not seen since the 2008 crisis.

In other news, Chinese PMI Caixin activity indicators for September were a little disappointing. True, they show an expansion, but a very weak one, and at a slower pace than both expectations and August's data. Once again, the Chinese economy is showing that it is unable to accelerate. The week ahead won't help much, except on the consumer front, as it is a national holiday. Mainland Chinese stock exchanges are closed until next Monday. In Hong Kong, markets are closed today but will resume tomorrow, in a still grim atmosphere for the real estate sector and its listed representatives. Other highlights of the day include PMI indicators for other economies, notably in Europe and the USA. Germany’s manufacturing PMI was disappointing and so was France to an extent. The rest of European PMIs were slightly better than expected. In addition, Fed Chairman Jerome Powell is scheduled to take part in a round-table discussion later today, with potential indications on monetary policy.

Economic highlights of the day:

Manufacturing PMIs for France, Germany, the Eurozone and the UK are on the agenda in Europe today, as well as the Eurozone unemployment rate. In the US, we have the S&P Global manufacturing PMI, construction spending and the ISM manufacturing index, along with comments from Jerome Powell. The full agenda is here. 

The dollar is up 0.3% against both the euro and the pound to EUR 0.9500 and GBP 0.8228.  The ounce of gold is down to USD 1835. Oil is stable, with North Sea Brent at USD 92.59 a barrel and US light crude WTI at USD 90.94. The yield on 10-year US debt reached 4.61%. Bitcoin is trading at USD 28,300.

In corporate news:

  • Walmart announced on Saturday that it would be streamlining job titles within its workforce, in some cases accompanied by pay rises.
  • European competition authorities have not opened a formal investigation into chips used for artificial intelligence, the European Commission said on Monday, following raids in France targeting Nvidia for possible anti-competitive practices.
  • Viatris - On Sunday, the pharmaceutical company announced agreements to divest some of its activities for a total of up to $3.6 billion, as part of its long-term strategy to focus on three therapeutic areas.
  • MGM - Employees at three Detroit casinos, including one owned by MGM, voted to authorize a strike, if necessary, the United Auto Workers (UAW) and Teamsters announced on Saturday.
  • Eli Lilly - The US Food and Drug Administration has refused to approve the group's drug to treat a type of skin disease. The group lost 0.6% before the opening.
  • Hollysys Automation Technology, a Chinese manufacturer of automation and control systems, announced on Monday that it had set up a special committee to examine a $1.55 billion takeover offer and launch a sales process.

Analyst recommendations:

  • 888 holdings: Investec maintains its buy recommendation and reduces the target price from GBX 190 to GBX 140.
  • Abbott lab: Citi maintains its buy recommendation and reduces the target price from USD 130 to USD 122.
  • Amgen inc: Barclays maintains its underweight recommendation with a price target raised from USD 210 to USD 230.
  • Antofagasta plc: Citi upgrades to buy from neutral with a price target raised from GBP 15 to GBP 17.
  • Bae systems plc: Berenberg upgrades to buy from hold with a price target raised from GBX 1050 to GBX 1170.
  • Baxter int: Citi maintains its neutral recommendation with a price target reduced from USD 45 to USD 41.
  • Best buy: Baptista Research upgrades to outperform from hold with a price target reduced from USD 83.10 to USD 82.20.
  • Bristol-myer: Barclays maintains its equalweight recommendation and reduces the target price from USD 62 to USD 60.
  • Bt group plc: Berenberg maintains its hold recommendation with a price target reduced from GBP 1.50 to GBP 1.35.
  • Carnival corp: Susquehanna maintains a positive recommendation with a price target reduced from USD 17 to USD 16.
  • Celanese corp: BMO Capital Markets maintains its market perform recommendation with a price target raised from USD 119 to USD 138.
  • Comcast corp-a: Goldman Sachs maintains its buy recommendation and raises the target price from USD 51 to USD 52.
  • Cooper cos inc: Citi maintains its buy recommendation with a price target reduced from USD 440 to USD 420.
  • Datadog inc-a: Piper Sandler & Co upgrades to overweight from neutral with a price target raised from USD 88 to USD 115.
  • Dexcom: Citi maintains its buy recommendation with a price target reduced from USD 150 to USD 115.
  • Edwards life: Citi maintains its buy recommendation and reduces the target price from USD 110 to USD 94.
  • Expeditors: BNP Paribas Exane maintains its neutral recommendation with a price target raised from USD 108 to USD 109.
  • Fedex corp: BNP Paribas Exane maintains its neutral recommendation with a price target raised from USD 220 to USD 280.
  • Gamma communicat: Numis maintains its buy recommendation with a price target reduced from GBX 2070 to GBX 2025.
  • Ig group holding: Canaccord Genuity upgrades to buy from sell with a price target raised from GBX 667 to GBX 801.
  • Imi plc: Investec maintains its buy recommendation and raises the target price from GBX 1900 to GBX 1950.
  • Insulet corp: Jefferies upgrades to buy from hold with a price target reduced from USD 260 to USD 240.
  • M&g plc: Deutsche Bank maintains its hold recommendation with a price target raised from GBX 220 to GBX 230.
  • Moody's corp: Goldman Sachs maintains its neutral recommendation with a price target reduced from USD 375 to USD 350.
  • Mosaic: Berenberg maintains its hold recommendation with a price target raised from USD 38 to USD 41.
  • Natwest group pl: Morgan Stanley downgrades to equalwt from overwt with a target price reduced from GBX 320 to GBX 310.
  • Next plc: Investec maintains its hold recommendation with a price target raised from GBX 6802 to GBX 7175.
  • Nextera energy: Goldman Sachs maintains its buy recommendation with a price target reduced from USD 83 to USD 72.
  • Nike inc -cl b: KGI Securities Co Ltd maintains its outperform rating and reduces the target price from USD 144 to USD 130.
  • Nvidia: Goldman Sachs added Nvidia to its 'Americas Conviction List', a step up from the 'buy' rating it assigned to the stock in late August. The price target is at $605.
  • Okta: Morgan Stanley maintains its equalwt/attractive rating and reduces the target price from USD 89 to USD 85.
  • Pagegroup plc: Jefferies upgrades to hold from underperform with a price target raised from GBX 375 to GBX 420.
  • Pfizer: Barclays maintains its equalweight recommendation and reduces the target price from USD 38 to USD 35.
  • Philip morris in: SBG Securities (Pty) Ltd maintains its buy recommendation with a price target reduced from USD 112 to USD 108.
  • Playtech plc: Investec maintains its buy recommendation and raises the target price from GBX 838 to GBX 870.
  • Qualcomm: JP Morgan maintains its overweight rating and reduces the target price from USD 148 to USD 135.
  • Renew holdings: Peel Hunt maintains its buy recommendation with a price target raised from GBX 900 to GBX 950.
  • Rtx: Bernstein maintains its market perform recommendation and reduces the target price from USD 91 to USD 77.
  • S&p global: Goldman Sachs maintains its buy recommendation and raises the target price from USD 456 to USD 457.
  • Schlumberger: JP Morgan maintains its overweight recommendation with a price target raised from USD 60 to USD 65.
  • Solaredge techno: Barclays downgrades to equalweight from overweight with a price target reduced from USD 274 to USD 152.
  • Splunk inc: Piper Sandler & Co downgrades to neutral from overweight with a target price of USD 157.
  • Stryker corp: Citi maintains its buy recommendation with a price target reduced from USD 342 to USD 330.
  • T-mobile us: Goldman Sachs maintains its buy recommendation and reduces the target price from USD 194 to USD 191.
  • United parcel-b: BNP Paribas Exane maintains its underperform recommendation with a price target reduced from USD 166 to USD 130.
  • Zimmer biomet ho: Citi maintains its neutral recommendation with a price target reduced from USD 146 to USD 125.
  • Zscaler: Piper Sandler & Co upgrades to overweight from neutral with a price target raised from USD 160 to USD 190.