Markets & Economy – Outlook

US inflation in focus: On Friday the Core Personal Consumption Expenditures index (Core PCE) is due, the Fed’s preferred inflation measure. A stable year-on-year reading of 2.9% is expected.
Fed comments: More than a dozen Fed officials – including Jerome Powell – will speak this week, giving signals after the recent 25 bp cut.
Europe: The calendar features flash PMIs, the ifo business climate, ECB inflation expectations and consumer confidence. A rather quiet data week is expected.
Rate decisions: The Riksbank meets Tuesday, with a cut possible. The Swiss National Bank is likely to hold steady on Thursday.
Asia: Stock markets were mixed – the Nikkei rose, Taiwan hit a new record high, while India weakened under pressure from US visa restrictions.
Review: Wall Street ended last week at record highs, boosted by the Fed cut. Traders are pricing in further gradual easing into year-end.

Sector Focus – Beverage Industry Under Pressure

Many European beverage stocks are lagging. Reasons include weaker demand during the pandemic from hospitality closures, shifting consumption behavior – especially younger people increasingly abstaining from alcohol. In the US, inflation-adjusted spending on alcohol by under-25s fell by 60% between 2003 and 2023.
Demographics: The number of older people, who also consume little alcohol, is rising strongly.
Outlook: Demand for alcoholic drinks is likely to keep falling, further pressured by tariffs and economic uncertainty.
Conclusion: The sector is not among current favorites.

Earnings Season

Europe: Six companies from the STOXX 600 report, including H&M, JD Sports Fashion, Smiths Group, Kingfisher.
USA: Seven S&P 500 companies report earnings, including AutoZone, Micron, Cintas, Accenture, Costco.

Key Data Points

Tuesday – Eurozone
HCOB PMI (Sep): forecast 51.1 (prior 50.7)
Manufacturing: 50.8
Services: 50.5
➡️ Signals weak but slightly positive growth momentum

Tuesday – UK
S&P PMI (Sep): forecast 52.8 (prior 53.5)
Services: 53.5 (prior 54.2)
Manufacturing: 47.3 (prior 47.0)
➡️ Economy cooling, inflation still high at 3.8%

Thursday – USA
GDP growth (final, Q2): forecast +3.3% (prior −0.5%)
➡️ Confirms recession fears are easing
Durable goods orders: forecast −1.5% (prior −2.8%)
➡️ Any improvement could lift sentiment

Friday – USA
Core PCE (Aug): forecast 2.9% YoY, monthly 0.2% (prior 0.3%)
➡️ Fed’s key inflation gauge. Surprises could directly shift expectations for rate cuts (two vs. one step).

Corporate Headlines

Oracle (ORCL): In talks with Meta over a USD 20 bn cloud-AI deal.
Apple (AAPL): Plans to boost iPhone 17 production by 30–40% – strong demand driven by USD 799 price and China effects; also working on a touchscreen Mac for 2025.
Elon Musk: Denies that xAI is raising capital (rumored USD 10 bn at USD 200 bn valuation).
Fed meeting: Next month discussions with CEOs of Blackstone, Robinhood and Treasury Secretary Bessent about small banks.
Rupert Murdoch: Reportedly interested in TikTok US deal (via Fox Corp).
US Steel (X): Trump blocked plans for a new Illinois plant using a “golden share”.
Trump administration: Plans to claim that paracetamol (acetaminophen) could increase autism risk (per Washington Post).

DAX Technical Setup

The Germany 40 Index continues to trace a broad ascending triangle with higher lows since late June. Price recently bounced off the rising trendline near 23,300. Despite this bullish bounce, the index remains capped by a descending trendline acting as dynamic resistance. The EMA bands (20–200) are stacked bearishly, with price below all bands. The RSI is neutral around 50, showing no clear momentum, while the stochastic RSI is turning lower from overbought, suggesting recovery weakness. A breakout above 23,800–23,850 would shift sentiment short-term bullish, targeting 24,000–24,150. On the downside, a break below 23,300 would invalidate the triangle support and open the way to 23,000 or even 22,800.

Trade cautiously,

Big Phil