• Equity Markets: Equity markets ended negatively yesterday as investors look for new catalysts amid risks of a weakening job market and stubborn inflation. The S&P500 finished down -0.28%, and the Nasdaq fell -0.37%, Europe was down -0.19%. In the US, four of the eleven sectors were in positive territory and 43% of stocks ended higher. Energy (+1.23%) and Utilities (+0.73%) were the best performers. Materials (-1.59%) and Real Estate (-1.01%) were weakest. Micron Technology fell (-2.82%) as the company’s forecast underwhelmed investors, despite its better than expected first quarter revenue and profit estimates. In Europe, four of the eleven sectors were positive, with 38% of stocks ending higher. Energy (+1.48%) and Utilities (+0.61%) were strongest, while Consumer Discretionary (-0.90%) and Health Care (-0.73%) were weakest. LVMH fell (-2.69%) yesterday, after a broker mentioned that its third-quarter revenue forecast for LVMH is 2% below the market consensus and that it has also cut its full-year outlook for the luxury goods company.
• Macro: In economic news out of Europe yesterday, the IFO business climate index fell to 87.7 in September from a revised 88.9 in August, coming in below estimates of 89.4. supporting the view that higher U.S. tariffs are putting pressure on Germany’s economy. This morning, Germany’s Consumer Confidence came in at -22.3 (vs -23.3 est.). In the US, MBA mortgage applications rose for the third consecutive week to (+0.6%), after rising (+29.7%) in prior week. U.S. new-home sales jumped 20.5% to 800k (650k est.) in August to their highest level since early 2022, fuelled in part by builder's discounts and buyer incentives. For economic releases today, in the US we have Initial Jobless Claims, Durable Goods Orders and Existing Home Sales. From the central bankers, we will hear from the Fed’s Goolsbee, Williams, Schmid, Bowman, Barr, Logan and Daly as well as the ECB’s Kazimir.
• Stocks: Cairn Homes: (Overweight PT: €2.46: 27% Upside): Glenveagh / Cairn Homes H1 results read across. PayPal (Overweight PT: $97: 44% Upside): Details relating to a two-year agreement with Blue Owl Capital. Nestle (Overweight PT: CHF88.67: 24% Upside): Update on the strategic review of Vitamins business segment. TotalEnergies (Overweight PT:€62: 16% Upside): TotalEnergies has been chosen by the French government to operate the “Centre Manche 2” offshore wind farm.
• Debt: Despite a weaker than expected German IFO yesterday morning European bonds remain in a tight range with 10-year Bunds stuck around 2.75%.

Opportunities this week:

• Following on from Roche’s mixed set of full year results at the end of January, but also with a solid guide for 2025 we reiterate our BUY rating on the name with an updated price target of CHF 330.
• We continue to believe there is potential for IRES REIT to reduce the wide discount (26%) it trades at relative to its Net Aset Value (NAV). We have now added IRES to the ACL. BUY PT: €1.19.
• Shares in LVMH are down 9% since its FY24 earnings release a couple of weeks ago, which now means there is 16% upside to our €790 price target. As such, on weakness, we are upgrading the stock to BUY.