The ways of the market can often be unpredictable. Take, for instance, how investors can end a tumultuous week on Friday feeling down, only to see markets spring back to life by Monday morning. This was precisely the case in most stock markets yesterday. After four or five sessions of steep declines, there was a modest rebound. While the equity market was volatile, the bond market remained calm. The yield on 10-year U.S. debt, which has been rising sharply since the beginning of the month, has stayed below 3.75% for several days. Financial professionals seem to have stopped worrying about the U.S. Federal Reserve's next moves. The Fed is expected to start its rate-cutting cycle on September 18, with a typical 25 basis point reduction. Meanwhile, the European Central Bank (ECB) is likely to follow suit with a similar 25 basis point cut on Thursday. However, this will be the ECB's second cut since July, drawing criticism from some who argue that it could have moved faster, as inflation in Europe has been falling more quickly than in the U.S.
 
With no major data releases until tomorrow’s U.S. inflation report for August, markets have been focused on three key events. First, Apple’s unveiling of its new iPhones, which failed to stir much excitement. Although management highlighted that the iPhone 16 models were "built from the ground up" for AI, it is widely understood that Apple is still playing catch-up in this field, despite its recent progress. The second event was Oracle’s earnings report after the market close, which sent its stock up nearly 9% in after-hours trading. Investors have been debating whether AI is a threat or an opportunity for Oracle, and the stock's rise suggests a positive outlook. Finally, there’s tonight’s televised debate between Kamala Harris and Donald Trump, which will be a pivotal moment in the close race for the White House.

In Paris, the CAC40 rose by 1%, but without any help from luxury brands like Hermès and Kering, which continue to struggle. While LVMH and L'Oréal managed to stabilize, it was TotalEnergies, Schneider, and Air Liquide that led the recovery. In the U.S., the three major indices rebounded by about 1.2% each. Stocks that had been sold off in last week's market slump regained ground. Financial insiders refer to this as "buying the dip," though there is skepticism about whether these rebounds are sustainable.
 
China, on the other hand, continues to show signs of economic weakness. The MSCI China Index entered negative territory for 2024 after a string of losses since the beginning of the month. The picture remains bleak: deflation persists, and August’s economic data is mixed. Exports surged when they were expected to decline, while imports remained stubbornly low. This is little comfort to the luxury sector, which is struggling to find stability. Meanwhile, the U.S. Congress passed a bill aimed at protecting Americans' genetic data, clearly targeting Chinese biotech firms. This caused a selloff in Hong Kong, with sectors like real estate, semiconductors, and biotech facing mounting pressure.
 
In the Asia-Pacific region, the recovery in U.S. and European markets provided some relief, though the mood remains cautious. Japan, India, and Australia saw slight gains, while South Korea and Taiwan were still down by 0.7%. As for China, although Hong Kong saw a small uptick, thanks in part to Alibaba, the mainland markets continued to slide. European markets are opening with little change, leaning slightly negative.

Today's economic highlights

Few major indicators today, with the second estimate of German inflation for August (02:00am) and the UK unemployment rate (02:00am). Full agenda here.

The dollar is worth EUR 0.9057 and GBP 0.7632. The ounce of gold remains firm at USD 2,507. Oil is down, with North Sea Brent at USD 71.16 a barrel and US light crude WTI at USD 67.98. The yield on 10-year US debt is at 3.71%. Bitcoin is trading just under USD 57,200.

In corporate news:

  • Alphabet - The Court of Justice of the European Union (CJEU) confirmed on Tuesday the €2.4 billion fine imposed on Google, a subsidiary of Alphabet, for abuse of dominant position with its product comparison service.
  • Anglogold Ashanti - Anglogold Ashanti will acquire Centamin in a $2.5 billion cash and stock deal, the two companies announced on Tuesday.
  • Apple - The Court of Justice of the European Union (CJEU) confirmed on Tuesday that Apple had benefited from illegal state aid granted by Ireland in tax matters, which the country must recover. The Chinese company Huawei unveiled a new $2,800 smartphone on Tuesday, just hours after Apple introduced a new iPhone. Apple is down 1.2% before the market opens.
  • Bank of America - Bank of America raised its minimum hourly wage in the United States to $24, the group announced on Tuesday.
  • Boeing - Boeing has informed its suppliers that it will delay a key production stage of its 737 MAX by six months, three industry sources told Reuters, indicating that the aircraft manufacturer is struggling to ramp up production of its best-selling twinjet.
  • Centene - The health insurer announced on Tuesday that it expects third-quarter profit to be lower than Wall Street estimates.
  • Goldman Sachs - Revenue from market activities is likely to drop by 10% in the third quarter, the group's CEO, David Solomon, said on Monday. The stock is down 0.7% before the market opens.
  • Hewlett Packard Enterprise - Hewlett Packard Enterprise fell 6.4% in after-hours trading, as the server manufacturer for artificial intelligence (AI) announced a $1.35 billion convertible bond offering to finance its acquisition of Juniper Networks.
  • Oracle - Oracle exceeded expectations on Monday with its quarterly results and announced it expects revenue growth for the current quarter to exceed estimates, driven by increasing demand for its cloud computing services. The stock rose 8.7% in after-hours trading.
  • Tesla - The European Union (EU) will reduce the proposed additional tariffs on Tesla and other electric vehicles made in China, a source familiar with the matter said on Tuesday.
  • Under Armour - Under Armour announced on Monday that it expects higher-than-anticipated restructuring costs, causing the stock to fall by 3% in pre-market trading.

Analyst recommendations:

  • Apple: Wedbush maintains its outperform rating and raises the target price from USD 285 to USD 300.
  • Applovin: Jefferies maintains its buy recommendation and raises the target price from USD 105 to USD 108.
  • Crh: HSBC maintains its buy recommendation with a target price raised from 103 to USD 110.
  • Dollar Tree: Goldman Sachs maintains its buy recommendation and reduces the target price from USD 145 to USD 90.
  • E.l.f. Beauty: B Riley Securities initiates a Buy recommendation with a target price of USD 175.
  • Estee Lauder: B Riley Securities initiates a neutral recommendation with a target price of USD 95.
  • Extra Space Storage: RBC Capital initiates a sector perform recommendation with a target price of USD 180.
  • Inspire Medical Systems: Leerink Partners maintains its market perform recommendation and raises the target price from 167 to USD 197.
  • J Sainsbury: JP Morgan maintains its underweight recommendation and raises the target price from 2.62 to GBP 3.04.
  • Mckesson: Citigroup maintains its buy recommendation with a price target reduced from USD 670 to USD 630.
  • Oracle: Jefferies maintains its buy recommendation and raises the target price from USD 150 to USD 170.
  • Progressive: Wells Fargo maintains its overweight rating and raises the target price from USD 281 to USD 282.
  • Tesco: JP Morgan maintains its underweight recommendation and raises the target price from 2.40 to GBP 2.70.
  • The Berkeley Group Holdings: Morgan Stanley maintains its underweight recommendation and reduces the target price from 4527.GBX 9302 to GBX 4369.
  • The Cooper Companies: Morgan Stanley maintains its market weight recommendation and raises the target price from 95 to USD 104.
  • The Liberty Siriusxm Group: Seaport Global drops coverage on the stock.
  • Tritax Big Box Reit: Goldman Sachs maintains its buy recommendation and raises the target price from GBX 190 to GBX 200.
  • Ulta Beauty: B Riley Securities initiates a Sell recommendation with a target price of USD 300.
  • Vaxcyte: Mizuho Securities maintains its outperform recommendation and raises the target price from USD 113 to USD 163.
  • Western Digital: Citigroup maintains its buy recommendation and reduces the target price from USD 95 to USD 85.
  • Zimmer Biomet Holdings: Canaccord Genuity maintains its hold recommendation with a price target reduced from USD 120 to USD 115.
  • Zscaler: Daiwa Securities maintains its buy recommendation and reduces the target price from USD 245 to USD 200.