Italy’s UniCredit (-3.3%) moved to buy another big chunk of Commerzbank (-5.7%), shrugging off German opposition to a possible takeover and upping the ante in its attempt to create a European banking champion with nearly $1.5 trillion in assets. UniCredit, led by experienced financial dealmaker Andrea Orcel, on Monday said it bought financial contracts that could raise its stake to 21%. The Italian bank bought 9% of Commerzbank earlier this month. That unexpected move got a hostile reaction from some German officials and union leaders, who said a full acquisition could cut jobs, cede financial clout to Italy and deprive smaller German businesses of funding. The European Central Bank, which regulates major European lenders, has to approve any purchase of a bank stake of 10% or more. UniCredit said Monday it had submitted filings to buy up to 29.9% of Commerzbank, and had bought financial instruments to cap any possible losses on its shareholding. UniCredit’s new move signals Orcel’s determination to plow through German opposition to pull off the biggest cross-border European banking acquisition in years.

The Swiss stock market started the new week having recovered slightly from the significant declines on Friday. The SMI gained 0.3 per cent to 11,965 points. Of the 20 SMI stocks, there were 12 gainers and 8 losers. A total of 16.14 (previously: 52.49) million shares were traded. The luxury goods stocks Richemont (-0.4%) and Swatch (-0.6%) suffered losses. A negative sector study by Bank of America (BoA) weighed on the segment, after various analysts had already expressed scepticism for the sector at the end of the previous week. The BoA analysts have lowered numerous shares and price targets in the sector, including the price targets for Swatch and Richemont. Logitech shares lost 1.0 per cent. However, this was only of an optical nature, as the shares were traded ex-dividend.

The European stock markets started the week on a positive note. The Stoxx Europe 600 index gained 0.4% to 516.3 points on Monday. In Paris, the CAC 40 and the SBF 120 both picked up 0.1%, held back by the downturn in the banking sector. The DAX 40 in Frankfurt climbed 0.7% and the FTSE 100 added 0.4% in London. French bank BNP Paribas (-3.7%) announced on Monday that it had signed an agreement with British banking group HSBC (+1.5% in London) to acquire its private banking business in Germany. Terms of the deal were not disclosed. Kering lost 1.5% to €221.90. Bank of America lowered its recommendation on the luxury group from ‘buy’ to ‘neutral’, while reducing its target price from €400 to €265. TotalEnergies (+0.2%) and Air France-KLM (-4.9%) announced on Monday that they had signed a new contract to supply sustainable aviation fuel (SAF) to the airline group. Under this contract, the financial details of which were not disclosed, the energy producer will supply Air France-KLM with a maximum of 1.5 million tonnes of fuel over a ten-year period, i.e. until 2035, the two groups specified in a press release.

Investors got a fresh look Monday at the health of the global economy. U.S. business activity stayed strong in September but ticked slightly lower, S&P Global surveys showed. Services remained stronger than manufacturing, which has been weakening. The report appeared to reinforce the soft-landing narrative that U.S. equity investors have latched on to. Major U.S. stock indexes traded modestly higher after hitting records last week following the Federal Reserve’s jumbo interest-rate cut. The picture looked worse in Europe, where monthly purchasing managers indexes showed a bigger-than-expected contraction in major economies. Investors snapped up bonds in response. Among single stocks, Intel shares rose again. The Wall Street Journal reported Friday that rival Qualcomm had expressed interest in buying the storied chip maker. Apollo Global Management also approached the chip-maker about making an equity investment, according to reports. The S&P 500, Nasdaq Composite and the Dow Jones Industrial Average all rose modestly. Tesla shares jumped. The electric-vehicle maker rose more than 4%, making it the S&P 500’s best performer. Johnson & Johnson (-0.6%) on Friday filed for the third time for Chapter 11 bankruptcy in the United States for its subsidiary Red River Talc, in order to put an end to litigation concerning its talc-based products.

In Asia, major indexes broadly closed with gains on Tuesday. The Chinese stock markets in particular rose sharply after Beijing adopted a new package of measures aimed at boosting the flagging domestic economy. In Shanghai, the Composite Index gained 2.4 per cent as a result. The Hang Seng Index in Hong Kong jumped by 3.3 per cent. The main beneficiaries of the new stimulus are shares in the property sector. China Vanke rose by 2.6 per cent and Longfor Group by 4.5 per cent. China Resources Land improved by 5.2 per cent. On the Tokyo Stock Exchange, the Nikkei 225 index climbed 0.8 per cent to 38,039 points on the first trading day after the long public holiday weekend. The Kospi in Seoul advanced by 0.4 per cent.

Long-dated U.S. government debt yields drifted higher on Monday as traders bet that the Federal Reserve would deliver the “soft landing” that investors have been hoping for. The 10-year Treasury note yield rose by 2 basis points to 3.749%. The 2-year Treasury note yield recovered 1 basis point to 3.587%.

RBC lowers Nestle target to CHF 93 (96) - Sector Perf.
Price target Swiss Re: Octavian raises target to CHF 135 (115) - Buy
Target price Holcim: UBS lifts target to CHF 85 (80) - Neutral

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