Nestle’s shares dropped nearly 3% as the markets opened on Tuesday after the Swiss food and beverage giant dismissed its chief executive, Laurent Freixe, following an internal probe into an undisclosed relationship with a subordinate.

However, the stock was able to recover some losses by 10 am, and was down by about 1.5% at 10:15 am.

The company said the affair breached its code of business conduct, prompting his immediate removal late on Monday.

The abrupt ouster deepened concerns over leadership instability at the Vevey-based group, which has now replaced its top executive twice in little over a year.

The latest upheaval comes as Nestlé continues to struggle with weak sales and persistent investor dissatisfaction with its shares, having lost almost a third of their value over the past five years.

Nestlé named Philipp Navratil, head of its Nespresso business since July 2024 and a company veteran since 2001, as the new chief executive.

Freixe’s leadership: a turbulent chapter for Nestlé

Freixe had been appointed only the previous year, following the sudden departure of long-serving Chief Executive Mark Schneider.

However, his brief tenure failed to stem Nestlé’s slide, with the group’s shares declining a further 17% during his leadership.

Maurizio Porfiri, chief investment officer at Maverix, said Freixe’s tenure was marked by delays in restructuring.

“Another fresh start is needed, and it is time for more stability to return to the management at this global corporation,” he told Reuters.

“The market did not particularly like Freixe, and the restructuring goals were also put on the back burner,” Porfiri added.

The turmoil comes just months after Nestle launched a review of its vitamins and supplements business, signalling that divestments could be on the horizon following disappointing first-half results.

“Nestle has received much unwanted scrutiny over the past 13 months after the departure of Freixe’s predecessor—also unexpected—and the poor share performance of the preceding 2.5 years,” Bernstein analysts wrote in a note.

Investor sentiment remains cautious

The latest change is likely to leave questions unanswered about Nestle’s mid-term direction and “keep a lid on the equity story until we hear more about Mr Navratil’s plan,” JPMorgan analysts said in a research note.

They added that the latest move was unlikely to reassure investors, noting that it was the second time in a year that the company had chosen a new chief without a wide search process.

They also cautioned that Navratil risked being “boxed in” by his predecessor’s turnaround plans at a time when the market remained unconvinced about the group’s prospects.

Bernstein also expressed concern that Navratil would inevitably seek to put his own stamp on strategy despite initially signalling alignment with the company’s current direction.

“This adds an element of uncertainty around the future direction of the business in the near term, which is unlikely to be helpful toward investor sentiment,” the analysts said.

Analysts hope for a ‘generational reset’ with Navratil’s appointment

At 48, Navratil represents a generational shift in leadership and will be tasked with restoring investor confidence in a company whose shares have lost almost a third of their value over the past five years.

Analysts at Baader Helvea described Navratil’s appointment, alongside the planned succession of chair Paul Bulcke by former Inditex executive Pablo Isla in 2026, as a long-awaited generational handover.

“We see Mr. Navratil’s appointment–born 1976–, together with the change at the chairman position next year with Mr. Pablo Isla as the real generational step that should probably have happened 12 months earlier,” Baader Helvea’s Andreas von Arx said.

He added that Navratil could bring fresh ambition to underperforming divisions such as frozen foods, infant nutrition, generic milk products, and water.

“The reasons for these issues seem structural, but Freixe’s view was that they were due to mismanagement,” the analyst says.

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A quiet and tentative optimism is gracing European markets at the start of the new trading week, with stocks poised for a slightly higher open on Monday.

This fragile calm comes after a turbulent end to the previous week and against a complex global backdrop, as investors digest conflicting economic signals from China and the lingering echo of a pivotal policy hint from the US Federal Reserve.

With US financial markets closed for the Labor Day holiday, Europe is left to set its own tone, and early indications point to a cautious but positive start.

Data from IG suggests Germany’s DAX and Italy’s FTSE MIB will both open around 0.12% higher, with France’s CAC 40 up 0.1%.

The Asian ambiguity: a conflicting signal from China

The session is unfolding against a mixed and somewhat confusing picture from the Asia-Pacific region. The key data point overnight was a set of dueling manufacturing reports from China.

The private RatingDog survey—formerly the Caixin PMI—showed a welcome return to expansion, with a reading of 50.5. However, the official government data, released on Sunday, remained in contraction territory at 49.4.

This divergence paints an ambiguous picture of the health of the world’s second-largest economy, leaving investors to wonder which signal to trust.

The diplomatic thaw: a new partnership in the east

On the geopolitical front, a more clearly positive narrative is emerging. Investors are continuing to assess the significant warming of relations between India and China.

Following a landmark meeting at the Shanghai Cooperation Organization summit, leaders from both nations agreed that they are “development partners, not rivals,” a major diplomatic breakthrough that could have long-term positive implications for regional stability and trade.

The shadow of the Fed: a dovish echo lingers

While the immediate economic calendar in Europe is light, the market is still very much operating in the shadow of last week’s events.

Regional markets closed lower on Friday as traders wrestled with a volley of inflation data.

But the week’s defining moment was a speech from Fed Chair Jerome Powell, which was widely interpreted as dovish-tilting and significantly stoked expectations for an interest rate cut at the central bank’s next meeting on September 16-17.

It is this prospect of easier monetary policy that is providing a quiet, underlying support for equities as a new and uncertain week begins.

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The Dow Jones, S&P 500, and Nasdaq 100 indices and their ETFs moved sideways last week as investors focused on monetary policy and Nvidia earnings. The S&P 500 Index pulled back to $6,460 from the year-to-date high of $6,500.

Similarly, the Dow Jones Index was trading at $45,545, while the Nasdaq 100 fell from $23,965 to a low of $23,415. This article looks at the top catalysts for the indices and the ETFs like VOO, DIA, and QQQ.

US nonfarm payrolls data

The most important catalyst for the Dow Jones, S&P 500, and Nasdaq 100 indices is the upcoming US nonfarm payrolls (NFP) data scheduled on Friday.

This is an important report that will provide more color on the health of the American economy and will help to determine what the Federal Reserve will do in the next meeting. 

In a recent statement at the Jackson Hole Symposium, Jerome Powell, the Fed Chair, hinted that the bank will cut interest rates in September, citing the deteriorating labor market. 

The last report showed that the economy created just 73,000 jobs in July, much lower than what analysts were expecting. This figure will likely be downgraded further based on what happened recently. Traders will want to see the revision. 

The indices and their ETFs will also react to the unemployment rate. Data shows that analyts anticipate that the jobless rate rose to 4.3% in August as the economy created 78k jobs.

A weak jobs report will confirm that the Federal Reserve will cut interest rates in September, which most analysts already expect. The stock market tends to do well when the Fed is cutting interest rates.

Donld Trump tariffs in limbo

The other major catalyst for the Dow Jones, S&P 500, and the Nasdaq 100 is the latest appeal decision on Donald Trump’s tariffs. In a ruling, a bench found that most of Trump’s tariffs are illegal, a move that the stock market would welcome. 

However, the court allowed the tariffs to remain, and the Trump administration appealed. Most analysts believe that the case will go all the way to the Supreme Court, which may side with the administration. 

Corporate earnings

The other minor catalysts for the indices and their ETFs will be corporate earnings. Just a handful of companies will publish their earnings, including names like Carnival, McCormick, Nike, Constellation Brands, and Lamb Weston.

The recent earnings season was highly successful. A report by FactSet shows that 98% of all companies in the S&P 500 Index have published their earnings. Of these 81% of them published an earnings beat, while the earnings growth was 11.9%. This was the third straight quarter of double-digit growth.

Top economic data

Another minor catalyst for the US stock market will be macro data from the United States and other countries. The top data to watch will be the final manufacturing and services PMI, JOLTs job vacancies, and ADP private sector data. 

While important, their impact on the stock market will be muted since all eyes will be on the nonfarm payroll (NFP) data.

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