Investors will focus primarily on Wednesday, when the Fed will make its interest rate decision, but the Bank of England, the Bank of Japan, and a host of other central banks, from Toronto to Taipei, will also make their decisions. European stock markets are expected to open slightly higher. At the Milan Stock Exchange, Leonardo and the banks will be keeping an eye on the market.

While markets await the decision of the Fed on Wednesday, today investors’ attention is focused on the stocks of France, which was hit on Friday evening by the downgrade by Fitch due to its political, fiscal and social situation: the futures on Oat at 10 years They are down this morning, while later today French short-term bonds will be auctioned. In China, T&C bonds are rising, while fears are being raised for the Labubu plush bubble with Pop Mart shares in free fall. European stock markets are expected to open slightly higher. At Piazza Affari, attention will be on banks and Campari.

Concerns for France: The issue of tax cuts

Fitch’s downgrade of France’s credit rating has cast a shadow over the newly installed Prime Minister. Sebastien Lecornu, which is starting budget talks, while unions prepare strikes against spending cuts and employers threaten protests against tax hikes. Fitch, citing political instability and rising debt, cut its rating on Friday evening from AA- to A+, giving France its lowest credit score on record, bringing it one notch below the United Kingdom and on par with Belgium.

Although analysts had widely predicted it, the timing couldn’t have been worse. France’s fifth prime minister in two years is preparing a first draft of the 2026 budget by October 7, with a possible extension until October 13: a daunting task, having to implement the cuts demanded by investors distressed by France’s excessive spending while simultaneously convincing three ideologically distinct parliamentary blocs with differing opinions on how to cut the budget.

There is also pressure on the streets: the unions have called national strikes on Thursday to protest against Lecornu’s plans to reduce the budget deficit, il larger than the euro zone, equal to 5,4% of GDP this year. On Saturday, in his first interviews since taking office, Lecornu said he would shelve his predecessor’s unpopular plans to eliminate two public holidays and said he was available to discuss higher taxes for the richThe Socialists are demanding a wealth tax on the super-rich as a condition for avoiding the government’s overthrow, while the president of the employers’ federation, Patrick Martin, said on Saturday that they would mobilize en masse against any such plan.

The yield of French government bonds, The 10-year OATs rise to 3,51%, that of the 10-year Bund to 2,71% and that of the 3,54-year BTP falls to XNUMX%.

The Week of Central Banks and the 3 Witches

Following last week’s ECB meeting, this week will see the focus shift to rate decisions by a large group of central banks: this week we’ll see the US Federal Reserve, the Bank of England, the Bank of Japan, and a host of other central banks, from Toronto to Taipei.

Certainly the most closely watched decision will be the Fed’s, which is also weighed down by the unprecedented challenge to its leadership in court and while a hasty attempt to confirm President Donald Trump’s nominee to fill a vacant seat on the Board of Governors is underway, which should provide a resolution to questions about the central bank’s independence that have lingered throughout the summer. According to CME Group’s FedWatch tool, markets are fully pricing in a 25 basis point rate cut on Wednesday, but have reduced expectations of a full 50 basis point reduction to just 3,8%.

Friday, the so-called “Three Witches Day,” is also a day to watch closely. This day marks the expiration of options on individual stocks, as well as futures and options on stock indices.

Chinese chips rise, but fears of the Labubu bubble arise.

Asia Pacific stocks started the week at record highs, with the area’s benchmark index gaining 0,2% and pushing beyond the previous record, reached in February 2021, after closing last week with a gain of 3,2%. Absent the Japan, closed today for the Day of Respect for the Elderly.

In China, the CSI 300 index of the Shanghai and Shenzhen stock exchanges is up 0,9%. Hong Kong’s Hang Seng is up 0,3%, and Taipei’s Taiex is down 0,2% after a series of records. Stocks of Chinese chip companies Rising after Beijing authorities launched an investigation into possible dumping practices by some U.S.-based analog semiconductor manufacturers. SG Micro rose 20%, OmniVision 4.4%, Suzhou Novosense Microelectronics 20%, 3Peak 20%, and Shanghai Awinic Technology 13%. Following the investigation, China could impose tariffs or restrictive measures on the use of U.S. chips, both of which would be “positive for Chinese suppliers,” Citi analysts wrote in a note.

Investors are looking with concern at the Labubu’s incandescent bubble which could start to explode. The actions of Pop Mart, Hong Kong-based plush toy maker shares they dropped by up to 9% after JP Morgan downgraded the shares to neutral, expressing disappointment over the lack of visibility on the brand’s upcoming actions.

According to data released this morning, surprisingly, they slow down in China Industrial production and retail sales increased in August. Annual growth in industrial production stood at 5,2%, up from 5,7% in July and against estimates of 5,8%, the weakest pace since August 2024, reflecting the slowdown in manufacturing activity (5,7% from 6,2% in July). Sales increased by 3,4%, compared to 3,7% in July and the expected 3,8%, the lowest level since November 2024 and marking the third consecutive month of slowdown. According to the National Statistics Office, the food sector slowed to 5,8% from 8,6% in July.

They started yesterday talks between China and the United States in Madrid and will continue this week. On the agenda are national security issues and the status of TikTok, which must reach an agreement this week to continue operating in the United States. Officials must also lay the groundwork for a potential meeting between Donald Trump and Xi Jinping as early as October, when they are scheduled to attend a summit in South Korea. China has formally invited Donald Trump to Beijing for a summit with President Xi Jinping. But the White House has not yet responded as the two countries remain far apart on trade issues and fentanyl trafficking.

La Seoul Stock Exchange The stock market is up 0,45%, within sight of a new record, as the government shelved plans to increase capital gains taxes. Indian and Singapore stocks are at par. The S&P ASX200 index in Sydney is down slightly.

European stock markets opened higher. At Piazza Affari, attention was focused on Leonardo and the banks.

European stock markets are expected to open slightly higher based on indications from Eurostoxx 50 index futures of +0,2%.

banksThe League intends to ask major national banks—including Intesa Sanpaolo, UniCredit, and Banco BPM—to contribute at least €1 billion to the 2026 budget law, political sources reported Friday. Leader Matteo Salvini plans to meet with the heads of the institutions involved in the coming days, the sources added. Economy Minister Giancarlo Giorgetti stated that Italian banks must consolidate to meet the challenges posed by tech giants, which are preparing to compete for market share in the financial sector.

CampariRBC Capital upgrades the stock to Sector Perform with a target price of €5,8.

LeonardoEuropean aerospace groups, including the Italian company, Thales and Airbus, are accelerating plans for the €10 billion joint venture that would combine their satellite activities and are aiming for a first agreement in the coming weeks. This was reported by Reuters sources close to the dossier.
In an interview with Corriere della Sera Airbus Defence and Space CEO Michael Schoellhorn said yesterday that the three companies could sign an initial agreement as early as this year.

Snam Rete Gas. The closing of the purchase from Infinity Investments of 25% of the capital of Vier Gas Holding, the company that indirectly owns the entire capital of Open Grid Europe, expected at the end of September, is moving towards a postponement, writes Il Sole 24 Ore
Saturday. The transaction, completed by former CEO Stefano Venier, is the subject of “thorough consideration” by the company and its shareholders. The German government is also concerned about the presence of Chinese State Grid in CDP Reti, which in turn controls just over 30% of Snam.

StellantisU.S. brand Ram announced on Friday that it has abandoned development of a fully electric version of the Ram 1500 pickup truck, in response to customer feedback and rapidly declining demand for such vehicles.

Desio Bank The bank is ready to proceed with the reorganization of the non-life insurance branch and is looking for new alliances, writes MF-Milan Finance over the weekend. The newspaper reports that invitations to participate in the tender would have been sent out before the summer break, with non-binding offers expected between the end of September and the beginning of October. It adds that a dozen companies are studying the dossier, which is worth €50 million in damage premiums.

Intercos launched a buyback plan on 4% of the capital.

In early European trading, pan-regional futures rose 0,11%, German DAX futures were unchanged, and FTSE futures fell 0,1%. OAT futures extended their decline for a second day after Fitch downgraded France’s credit rating on Friday.

Key developments that could impact markets on Monday:
Economic data:
Debt Auctions:
France: Auctions of 4-, 5-, 6-, and 1-year government bonds
Germany: 1-year government debt auction