This is worked for me : back to the previous quest, before you triggered this bug, while going to the needle's area, don't directly encounter him face to face, because once you did this, after the CG, his guards will spot you immediately, I think this causes the bug. So just approach his area from the rooftop, right above him, then the CG will automatically play, after he stabbed the merchant, nobody spots you, bug will not occur so you can assassinate him from the rooftop.

I paly it on PS4 slim, hope this can help you guys