Weekly market update : The Fed goes quiet

New cuts in oil production and data confirming the economic slowdown in China and the eurozone have rekindled traders' risk aversion on the main financial markets this week. Volatility resurfaced in the run-up to central bankers' decisions, and equity markets suffered a few setbacks after a fairly calm summer period. In the US, the services sector performed better than expected in August, while weekly jobless claims were lower than expected, fueling fears of higher rates over a longer period.

Weekly variations* US 500 4457  -1.29% CENTENE CORPORATION +6.76% MARATHON PETROLEUM C... +6.41% VALERO ENERGY CORPOR... +6.35% ALIGN TECHNOLOGY, IN... -11.37% FMC CORPORATION -12.35% ORGANON & CO. -12.87% DOW JONES INDUST... 34576.59  -0.75% NASDAQ 100 15280.23  -1.36% FTSE 100 7478.19  +0.18% GOLD 1919.25$  -1.10% WTI 87.22$  +2.11% EURO / US DOLLAR 1.07$  -0.69%

This week's gainers and losers

Gainers: Luckin Coffee (+15%): A launch that doesn't go unnoticed! This week, the US-listed Chinese starbucks launched a latte infused with Moutai brandy, in partnership with Chinese spirits manufacturer Kweichow Moutai. Word spread like wildfire on the country's social networks, and the group sold over 5 million cups of the beverage in 24 hours, at a cost of around $14 million. A huge success for the largest coffee chain in the Middle Kingdom.  UI Path (+13.8%): The Romanian-born, NYSE-listed provider of robotic process automation software is unsurprisingly riding the wave of artificial intelligence. The new darling of investor Cathie Wood, the company reported solid quarterly results, with sales and EPS well ahead of expectations. On the strength of growth in all its segments, management raised its annual outlook and announced a $500 million share buyback.  Direct Line Insurance Group (+11.6%): The British insurer, which this week announced bigger losses for the first half of 2023, has reached an agreement to sell its commercial insurance brokerage business to RSA Insurance (a subsidiary of the Canadian insurance group Intact Financial) for at least 520 million pounds. This reassured the markets, which were also delighted by the increase in net investment income. As a reminder, the Group appointed a new CEO at the end of August: Adam Winslow, the former head of Aviva PLC UK.  Bridgepoint Group (+8.8%): The British asset management company enters the infrastructure sector. The group announced this week that it had acquired US firm Energy Capital Partners (ECP), which specializes in infrastructure transition, electrification and decarbonization, for £835 million. Management has also announced a further share buyback of £50 million, once the current program has been completed.  Centene Corporation (+8.5%): The US healthcare services specialist is withdrawing from the UK. The group announced that it was putting up for sale its chain of general practice clinics (some sixty in the UK) for around $65 million, and the UK's largest private hospital group Circle Health Group for an enterprise value of around $1.2 billion. In the meantime, several analysts have upgraded their recommendations on the company.  Airbnb (+8%): S&P Dow Jones Indices has announced that the accommodation rental company will join the S&P 500 on September 18, alongside investor Blackstone, and replacing Lincoln National and Newell Brands, which will join the S&P SmallCap 600. Airbnb stands to benefit greatly from this integration and from the notoriety of the American index, which is widely followed by index funds. Airbnb CEO Brian Chesky sold 30,000 Airbnb shares on September 1, and Chief Strategy Officer Nathan Blecharczyk sold 20,000 4 days later. Losers: Vinfast Auto (-39%): The euphoria was short-lived for the Vietnamese manufacturer of electric vehicles, which made a thunderous entry on Wall Street in August, placing itself on the podium of the most highly-valued automakers. The small number of shares available to the public (1%) pushed the stock's volatility to extremes, before speculation on the brand subsided. The Group is also suffering from the difficult environment and its lack of brand awareness.   CVS Group (-22.2%) & Pets at Home (-8.4%): The veterinary services sector in the UK has come under fire, as the CMA, the UK's competition and markets authority, has decided to look into the sector. Against a backdrop of inflation, a shortage of vets in the country, and after a wave of consolidation, the CMA has announced the launch of a review of the commercial practices of pet care groups, which share a cake worth £2 billion a year. Results expected early 2024. Manchester United (-16.6%): Severe setback for the company controlling the famous British soccer club. The Glazer family, who own the club, announced this week that they were withdrawing their shares from the stock exchange, as they had not received an offer that met their expectations. Unloved by fans, the Glazers are also suffering from the club's poor results: just one major trophy in the last six seasons. Skyworks Solutions (-9.4%): Semiconductor and chip stocks took a hit this week due to weakness in the tech sector. But its China's restrictions on iPhone use in the country that has especially weighed on Skyworks Solutions, since it provides semiconductor components for iPhones.

Commodities

Energy: Energy is back at the center of the economic game, as soaring oil prices accentuate the scenario of a return to inflation. Saudi Arabia and Russia are tightening their grip on world supply, with coordinated announcements of the extension of their voluntary production cuts until the end of the year. To give an order of magnitude, Saudi Arabia is cutting production by one million barrels a day, compared with 300,000 barrels a day for Russia. These announcements come at a time when the oil market has already been tightening for several months. This tightening is the result of OPEC's production controls, while demand for oil remains resilient. Against this backdrop, oil prices continue to rise, to USD 90.60 for Brent and USD 87.50 for WTI. On the natural gas front, strikes have begun at Chevron's LNG facilities in Australia. European benchmark prices are currently stabilizing. Dutch TTF continues to trade at around 36 EUR/MWh. Metals: A week of consolidation for industrial metals, which are suffering from both a strong dollar and further mixed data from China. As a result, copper lost ground this week on the LME, to USD 8,300 per metric ton. Nickel followed suit (USD 20,100), while aluminum and zinc treaded water at USD 2,200 and 2,480 respectively.  On the precious metals front, China continues to shop for gold, with reserves up for the tenth consecutive month. According to the World Gold Council, China's central bank increased its holdings by 23 tonnes in July. However, the ounce of gold is trading lower, at around 1,920 USD, still undermined by rising bond yields. Agricultural products: Volatility dropped another notch in Chicago, where grain prices generally stalled. A bushel of corn is trading at around 490 cents, compared with 600 cents for a bushel of wheat.

Macroeconomics

Atmosphere: A central bank cuts its key rates by 75 basis points. No, you're not dreaming, and it has to be said that this is the Polish central bank! As for the Fed and the ECB, we'll have to wait and see, even if most economists now seem to agree that the Fed's monetary tightening cycle has come to an end. Looking at the bond market, the situation is more mixed. Have US yields peaked? The question is on everyone's lips, in trading rooms the world over. Every new statistic is scrutinized to ensure that the central scenario - inflation under control, soft landing for the US economy - is not hit by any hiccups. Neither too hot to avoid further monetary tightening, nor too cold to avoid reviving fears of a recession. To gauge the mood, it's best to look at the evolution of the US 10-year. On an uptrend since last April, it has already tested its 2022 highs at 4.34%, but has failed to break through them. We'll be keeping a close eye on the 4.00% support to confirm a significant easing, which should logically fuel the recovery of equity indices. Conversely, a clear breach of the 4.34% level at the end of the week would open the way to the 5% level, while weighing on the stock market.  Crypto: Bitcoin is on course for its fourth consecutive week of decline, continuing to dig around the $25,800 mark at the time of writing. Ether, the market's second-largest cryptocurrency in terms of capitalization, is in a similar situation, falling back to around $1600. Still mired in an unfavorable economic climate for risky assets, the cryptocurrency market is running out of steam and failing to recapture investor fervor. An approval by the U.S. Securities and Exchange Commission (SEC) of a Spot Bitcoin ETF in the coming weeks could restore positive momentum. But for the time being, nothing is certain.

The Fed goes quiet The weekend kicks off with the G20 summit in India. As for US central bankers, they will have to keep quiet from Friday evening, to respect the embargo period preceding the monetary policy decision to be announced on September 20. But rates will be on the agenda when the ECB makes its decision on Thursday, September 14. At this stage, economists are anticipating a quarter-point hike. There will also be plenty of data from the United States: August consumer prices (September 13), followed by producer prices and retail sales (September 14), and ending with the Empire State and University of Michigan consumer confidence indices (September 15). And on Thursday night, industrial production and retail sales in China. Oracle, Associated British Foods, Inditex, Exor, Dollarama and Adobe are also on the agenda for corporate earnings releases.

Things to read this week

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*The weekly movements of indexes and stocks displayed on the dashboard are related to the period ranging from the open on Monday to the sending time of this newsletter on Friday. The weekly movements of commodities, precious metals and currencies displayed on the dashboard are related to a 7-day rolling period from Friday to Friday, until the sending time of this newsletter. These assets continue to quote on weekends.