Mercedes-Benz Group unwound a bet on China’s electric-vehicle market, selling its remaining 10% stake in premium EV and hybrid maker Denza to BYD in the wake of disappointing sales locally. The decision adds to challenges facing Mercedes, which has struggled to make inroads in what for years had been one of the world’s fastest-growing auto markets. Luxury spending in China has taken a hit from the downturn in its property sector and a lackluster economy. At the same time, an intensifying price war among Chinese EV makers has led to a loss of market share for foreign automakers, with Porsche, Ferrari and BMW all reporting reduced sales in China earlier this year. There are also signs that the technological edge enjoyed by foreign automakers in China is being blunted, with Chinese EV producers spending more on developing in-car software and autonomous-driving systems that have proven to be popular with mainland consumers. Against this backdrop, Mercedes in July cut the outlook for its mobility business, citing its difficulties in China and higher costs of charging infrastructure. The company has faced headwinds elsewhere, including trade tensions between Europe, China and the U.S., which have driven profits lower in recent quarters.

The Switzerland market ended modestly higher on Tuesday, tracking positive cues from markets across Europe, amid continued optimism about an interest rate cut by the Federal Reserve on Thursday. The benchmark SMI, which moved in a tight band between 12,040.76 and 12,120.01, ended the day's session with a gain of 37.31 points or 0.31% at 12,042.78. Julius Baer climbed 4.65%. Straumann Holding and SIG Group gained 2.76% and 2.25%, respectively. ABB and Geberit, both closed nearly 2% up. Lindt & Spruengli, Holcim and Sika ended up 1.6 to 1.75%, and Logitech International gained 1.41%. UBS Group, Swiss Life Holding, Richemont, Roche GS, VAT Group, Schindler Ps, Roche Holding and Partners Group also ended on a firm note. Barry Callebaut shares moved up after Barclays double-upgraded the stocks to 'overweight' from 'underweight'. Barclays said the Swiss chocolate maker should benefit from cocoa price normalisation on the back of a more favourable crop outlook. Lonza Group ended with a loss of about 2.1%. Sonova, Givaudan, Alcon, Novartis, Swisscom and Nestle drifted down 0.3 to 0.6%.

Europe
European stocks closed higher on Tuesday amid optimism the Federal Reserve will announce an interest-rate cut on Wednesday. Investors also looked ahead to inflation data from the U.K., and the Bank of England's monetary policy announcement, due on Wednesday and Thursday, respectively. The U.K. CPI report may significantly influence market speculation for BoE's interest rate path for the last quarter of the year. The pan European Stoxx 600 climbed 0.4%, the U.K.'s FTSE 100 gained 0.38%, Germany's DAX ended 0.51% up, and France's CAC 40 settled higher by 0.51%, while Switzerland's SMI closed with a gain of 0.31%. Among other markets in Europe, Finland, Greece, Iceland, Netherlands, Poland, Portugal, Russia, Spain, Sweden and Turkiye closed on firm note. Austria and Belgium edged up marginally, while Denmark and Norway closed weak. In the UK market, Kingfisher surged 11.25% after raising the lower end of its fiscal 2025 profit guidance. EasyJet climbed more than 6%. JD Sports Fashion, IAG, Ashtead Group, Burberry Group, Mondi, Howden Joinery, Prudential, Marks & Spencer, Diageo, Croda International, Pershing Square Holdings, Whitbread, Frasers Group and Entain ended higher by 2 to 3.5%. BAE Systems ended down 4.7%. British American Tobacco closed 2.36% down, and Hikma Pharmaceuticals ended nearly 2% down. Pearson, Segro, Imperial Brands and GSK also ended notably lower. In the German market, Zalando rallied more than 7%. Siemens Energy gained about 4.3%. Daimler Truck Holding, Infineon, Bayer, Deutsche Bank, Siemens, Continental and Sartorius advanced 2 to 3.5%. BASF, HeidelbergCement, Brenntag, Volkswagen, Siemens Healthineers, Symrise, Fresenius and Mercedes-Benz climbed 1 to 2%. Rheinmetall lost nearly 6.5%. MTU Aero Engines closed lower by about 2.5%, while Hannover Rueck and Munich RE, both closed down by about 1.6%.

United States
After moving mostly higher early in the session, stocks gave back ground over the course of the trading day on Tuesday. The Dow and the S&P 500 reached new record intraday highs in early trading but subsequently pulled back near the unchanged line. The major averages ended the day narrowly mixed. While the Dow edged down 15.90 points or less than a tenth of a percent to 41,606.18, the S&P 500 inched up 1.49 points or less than a tenth of a percent to 5,634.58 and the Nasdaq rose 35.93 points or 0.2 percent to 17,628.06. Optimism about the outlook for interest rates contributed to early strength on Wall Street, but buying interest waned over the course of the session. Stocks ended the day little changed following the release of a Commerce Department report unexpectedly showing a modest increase by U.S. retail sales in the month of August. The Commerce Department said retail sales inched up by 0.1 percent in August after surging by an upwardly revised 1.1 percent in July. The uptick surprised economists, who had expected retail sales to dip by 0.2 percent compared to the 1.0 percent jump originally reported for the previous month. JPMorgan Chase is talking with Apple about taking over the tech company’s credit-card program. Discussions started earlier this year and have advanced in recent weeks, but a deal could still be months away, according to people familiar with the matter. It isn’t guaranteed a deal will come together, given key details, including the price, are still to be negotiated. Philip Morris International expects to take a $220 million loss on the sale of its inhaled-therapeutics unit to Molex Asia Holdings as it retools its pharmaceutical business.

Asia
Very little is happening on the East Asian stock markets on Wednesday. In Tokyo, the Nikkei index is little changed at 36,207 points, although it had already gained a good 1 per cent in the meantime. The yen, which weakened again compared to the previous day, provided support, particularly at the beginning.

Bonds
In the U.S. bond market, treasuries showed a modest move back to the downside ahead of the Fed announcement. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, rose 2.1 basis points to 3.642 percent.

Analysis
Citi raises the Sanofi target to 130 (125) EUR/Buy – Trader
JPM lowers the LVMH target to 720 (790) EUR/Neutral – Trader
Barclays raises Barry Callebaut to Overw (Underw)/target CHF 1,800 (1,450) – Trader

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