Work is good for your health (stock market)

The first week of September did not go down as one of the best stock market performances of the year - on the contrary. Financiers are once again shaking their heads over global growth and their favorite bets: goodbye calves, cows, pigs, Nvidia and Hermès. Unless the last US statistic of the week puts the bull market back on track?

The US markets remained gloomy, with both the S&P 500 and Dow Jones continuing to decline in a persistently bleak climate. However, the Nasdaq managed to recover slightly, thanks to buybacks in Nvidia following a sharp drop, and a 2.6% gain for Amazon, boosted by a positive recommendation from research firm Cantor Fitzgerald. Despite the slight uptick, the mood remained far from optimistic. After the close, Broadcom, another major AI-focused stock, fell almost 7% despite posting strong results, particularly in AI, signaling that investor sentiment is still quite negative.

The most anticipated event of the day is the U.S. employment report for August, set to be released at 8:30 am. Investors are hoping for a “tepid” report—not too strong, to sustain hopes for a Federal Reserve rate cut on September 18, but not too weak to stoke fears of a recession. Based on recent market trends, a slightly better-than-expected report could actually boost stocks by week's end. Such a result wouldn't drastically alter the Fed’s outlook, but it could temporarily allay fears of an economic hard landing in the US, which has become the top concern for financiers.

Meanwhile, OPEC+ has postponed its planned production increase by two months, aiming to stabilize oil prices, which have fallen back to their summer 2023 levels. While the announcement didn't spark a major rebound, it seems to have set a floor for prices. Brent crude has dropped 5.5% since early September, following a 10% decline over June and July.

After much anticipation, France finally has a Prime Minister. While opinions differ on Emmanuel Macron's selection, one point of consensus in the international press is that Michel Barnier has accepted one of the toughest jobs on earth, likened to being Donald Trump’s hairdresser or head of compliance at Credit Suisse. That said, his prior role managing Brexit gives him the reputation of a political "Captain Flam," the go-to person when hope seems lost. Despite his extensive experience, Barnier already holds the title of the oldest Prime Minister of the Fifth Republic. The real question now is whether he’ll also earn the distinction of being the most short-lived, given that prime ministers appointed in early September often have short tenures. In 2022, Liz Truss became the U.K. Prime Minister on September 6, only to leave office a month later after nearly collapsing her country’s public finances.

Barnier’s appointment hasn't done much to help the French stock market, which was already struggling. After LVMH, it was Hermès that took a hit yesterday. The so-called KHOL quartet (LVMH, Hermès, L'Oréal, Kering) has seen its collective weight in the CAC 40 index drop from 25% at its peak to just 20%, a significant decline driven by fears of a global economic slowdown (as mentioned in a previous report). The Paris index fell 0.9%, marking its fourth consecutive decline.

In Asia-Pacific, Tokyo experienced its fourth consecutive session of losses, down 0.7%. Mainland China dipped 0.3%, and the Hong Kong Stock Exchange cancelled its morning session due to a typhoon warning. India (-0.9%) and South Korea (-1.3%) also saw declines, while Australia (+0.3%) and Taiwan (+1.1%) managed to end the week on a positive note, though they couldn't reverse their overall weekly losses. European markets also opened slightly in the red this morning, reflecting ongoing nervousness ahead of the U.S. jobs report.

Economic highlights of the day:

At 8:30 am, investors in the United States will focus on August employment figures. Full agenda here.

The dollar is up to EUR 0.9004 and GBP 0.7591. The ounce of gold is trading at USD 2515. Oil is holding steady, with North Sea Brent at USD 73.04 a barrel and US light crude WTI at USD 69.18. The yield on 10-year US debt trades at 3.71%. Bitcoin is trading at USD 55,900.

In corporate news:

• Alphabet: The British antitrust regulator said on Friday it had provisionally concluded that Google abused its dominant position in digital advertising to restrict competition. The British competition authority, the CMA, announced on Friday that it had provisionally concluded that Google abused its dominant position by exploiting both its ad server and buying tools to restrict competition in the UK. In the U.S., YouTube, a subsidiary of Alphabet, terminated the channel Tenet Media and four channels operated by Lauren Chen, the owner of Tenet, following a complaint from the U.S. Department of Justice (DOJ) against two employees of the Russian state media group RT as part of an investigation into several disinformation operations targeting the U.S. presidential election.
  
• Amazon.com: The White House held a meeting on Thursday with representatives of American tech giants and civil society activists to encourage companies in the sector to provide more digital bandwidth for government-funded internet censorship circumvention tools. These tools are increasingly used in Russia, Iran, Myanmar, and other authoritarian states that severely infringe on internet freedom.
  
• Bank of America: Berkshire Hathaway announced on Thursday that it sold about 18.7 million shares of the bank for $760 million. BofA fell 0.46% in pre-market trading.
  
• Bloom Energy: Jefferies downgraded its recommendation from "buy" to "hold." The stock fell 4.1% in pre-market trading.
  
• Booking Holdings: Truist Securities initiated coverage of the stock and recommends "hold."
  
• Broadcom: The chipmaker said on Thursday it expects fourth-quarter revenue to be slightly below expectations, hurt by weakness in its broadband segment. The stock fell more than 9% in pre-market trading.
  
• JetBlue Airways: A federal judge in Boston on Thursday rejected a $34.1 million legal fee request from a group of lawyers who filed a lawsuit to block the merger between JetBlue Airways and Spirit Airlines, which called off their merger last March.
  
• Marathon Petroleum: The largest independent U.S. refiner has refused to negotiate with union members from its Detroit refinery since more than 200 workers went on strike, the Teamsters union said on Thursday, adding that the action could spread to the group's other plants.
  
• Paramount Global: Shari Redstone, who controls entertainment giant Paramount through her stake in its parent company, National Amusements, will receive $180 million in severance and other benefits, in addition to millions from the sale of her shares to Skydance Media, Bloomberg reported on Thursday.
  
• Qualcomm: Qualcomm has explored the possibility of acquiring parts of the design activity of chipmaker Intel to strengthen the company's product portfolio, according to two sources familiar with the matter.
  
• Salesforce: Salesforce announced on Thursday that it would acquire data protection and management solutions provider Own Company for $1.9 billion as it seeks to accelerate the growth of its data security and privacy products.
  
• Smith & Wesson: The quarterly revenue of the firearms manufacturer released on Friday was deemed disappointing, as demand during the quarter was weaker than expected. The stock fell 7.3% in pre-market trading.
  
• Spirit Airlines: A federal judge in Boston on Thursday rejected a $34.1 million legal fee request from a group of lawyers who filed a lawsuit to block the merger between JetBlue Airways and Spirit Airlines, which called off their merger last March.
  
• Super Micro Computer: JP Morgan downgraded its recommendation from "overweight" to "neutral." The stock fell 2.8% in pre-market trading.
  
• U.S. Steel: The proposed acquisition of the American steelmaker by its Japanese competitor Nippon Steel for $14.9 billion could harm the supply of steel for essential projects in transportation, construction, and agriculture, the Committee on Foreign Investment in the United States (CFIUS) warned in a letter sent to the companies and seen by Reuters. Shigeru Ishiba, one of the candidates for the Japanese prime ministership, also said on Friday during an interview with Reuters that any U.S. decision to block the Japanese group from buying the American steelmaker for national security reasons would be "very destabilizing" and could shake confidence between the two allies.

Analyst recommendations:

• Associated British Foods: Deutsche Bank maintains its sell recommendation and reduces the target price from 2190 to GBX 2130.
• Broadcom: Fubon Securities maintains its buy recommendation and reduces the target price from USD 1850 to USD 170.
• Carrier Global Corporation: Wells Fargo maintains its equalweight recommendation and raises the target price from USD 66 to USD 73.
• Diploma: Davy initiates an Outperform recommendation with a target price of GBP 50.00.
• Docusign: Citigroup maintains its buy recommendation with a price target raised from USD 86 to USD 87.
• Domino's Pizza: Oppenheimer maintains its outperform rating and reduces the target price from USD 510 to USD 490.
• Guidewire Software: RBC Capital maintains its outperform rating and raises the target price from USD 170 to USD 180.
• Heico Corporation: Baptista Research downgrades to hold from underperform with a price target raised from USD 232.70 to USD 271.90.
• HP: Baptista Research maintains its hold recommendation with a price target raised from 37.90 to USD 38.10.
• Lululemon Athletica: First Shanghai Securities maintains its buy recommendation and reduces the target price from 385 to USD 306.
• Qualcomm: William O'Neil & Co Incorporated drops coverage on the stock.
• Sentinelone: Baptista Research maintains its buy recommendation and raises the target price from 22.80 to USD 28.70.
• Severn Trent: Kepler Cheuvreux maintains its hold recommendation with a price target raised from 2650 to GBX 2700.
• The Cooper Companies: Baptista Research downgrades to hold from outperform with a price target raised from USD 108.90 to USD 115.30.
• Tractor Supply Company: Loop Capital Markets maintains its hold recommendation and raises the target price from USD 250 to USD 260.
• Trane Technologies: Wells Fargo maintains its underweight recommendation with a price target raised from 315 to USD 320.
• V.F. Corporation: Wells Fargo maintains its equalweight recommendation with a price target raised from USD 15 to USD 16.
• Vertex Pharmaceuticals: William O'Neil & Co Incorporated drops coverage on the stock.
• Watsco: Wolfe Research maintains its underperform recommendation and raises the target price from USD 410 to USD 445.