• Equity Markets: Equity markets had a broadly positive day yesterday with the S&P500 +0.34% and the Nasdaq +0.42%, despite the raft of poor macro data and government shutdown, as healthcare stocks led the market up following Pfizer’s agreement on pricing and tariffs with the Trump administration. Europe was particularly strong at +1.15%. In the US, only four sectors were in positive territory with 43% of stocks ended higher. Healthcare was the standout (+3.01%) and Utilities (+0.93%) was second best. Materials (-1.17%) and Financials (-0.92%) were weakest. In Europe, ten of the eleven sectors were in positive territory, with Healthcare (+5.34%) and Utilities (+0.92%) best, with Consumer Staples (-0.36%) and Communication Services (+0.22%) worst. AstraZeneca was up +11% after the FDA announced it was due to review one of its new drug to treat breast cancer, and Merck was up over 10%, but the move in healthcare names was broad-based.
• Macro: On the macro data front, in the US, the ADP employment change data surprised negatively with September seeing -32K change in jobs, deteriorating from August which was revised from +54K to -3K. MBA Mortgage application fell -12.7% from roughly flat in the prior week. September’s ISM Manufacturing index improved to 49.1 from 48.7, but New Orders index declined to 48.9 from 51.4. Finally, despite poor macro data, Wards September total vehicle sales rose to 16.39m from 16.07m previously. In Europe, Ireland’s manufacturing PMI rose to 51.8 in September from 51.6 previously and unemployment rate was steady at 4.7%, the UK’s September Nationwide House Price index rose 2.2% YoY beating expectations of 1.8%, Eurozone core CPI was stable and inline at 2.3% for September, and Germany’s finalised Sept Manufacturing PMI increased to 49.5 from 48.5, beating estimates for unchanged. The Fed’s Logan said the Fed should proceed cautiously with further rate cuts, given concern over inflation remaining above 2% target. Goolsbee also said the Fed should be careful about overly frontloading rate cuts, as services inflation remains an area of concern. The ECB’s de Guindos stated that the current level of ECB rates is the correct one.
• Stocks: Ryanair: (Overweight PT €29.70 +19% upside): September passenger volume update. JPMorgan Emerging Market Investment Trust (JMG): (Preferred list): Comment on FY results, name change and new dividend policy. Supermarket Income REIT: (Overweight. PT 90p: 15.7% upside). Summary of our positive meeting with the CEO and CFO.
• Debt: UK and European yields were little changed yesterday, but the negative ADP employment data had a larger impact driving US Treasury yields down 5bps on the day.

Opportunities this week:

• Rio Tinto has made a number of announcements since the start of May; therefore, we are providing a summary of these as well as updating our PT to 5590p. Given the 22% upside, we reiterate our Overweight rating on the stock.
• Despite last week's disappointing news that Flutter had lost out on its bid for the Italian lottery license, we retain our overweight rating on the stock. Given there is over 20% upside to our price target of $293.
• Following a review of our valuation metrics and rolling the estimate year forward to 03/27, we marginally raise our PT on DCC to £70.70 from £70.30 previously. Thus with 56% upside, we reiterate our Overweight rating.