EUROPEAN EQUITIES UPDATE: Bourses move lower ahead of key risk events, Luxury names benefit from upgrades

STOXX 600: -0.7%

• European bourses opened mixed, trading on either side of the unchanged mark. But sentiment took a hit seemingly after UK assets (GBP/Gilts) took a beating (see FX/Fixed). As it stands, bourses are lower across the board and trading at lows – the CAC 40 manages to hold afloat, with the Luxury sector doing much of the heavy lifting.


• Nothing really behind the dip in sentiment aside from the sell-UK theme, but more broadly trades will be focused on the lack of development on Ukraine-Russia, trade angst as the US court of appeals deemed Trump’s tariffs as illegal; focus will also be on US revoking waivers for some companies to produce chips in China, which may be seen as an escalation against China. It is also worth highlighting the key risk events that are dotted throughout the week, starting with ISM Manufacturing, into jobs data which precede the highly anticipated NFP report on Friday.


• In Europe, a couple of ECB speakers; Kocher advocated for caution ahead of the next meeting, whilst Simkus said "additional negative information might lead us to discuss a cut again in October", via EconoStream. On data, EZ HICP printed, a touch above expectations - market pricing in the immediacy was little moved given high probability assigned to a hold at the next meeting (99%).


• Looking ahead from a European perspective, some ECB speak from Elderson, Muller and Nagel.

Sectors: Negative

• European sectors hold a strong negative bias; initially opening with a very narrow breadth, but has widened, particularly as the losers slip further.


• Real Estate is found right at the foot of the pile, dragged lower by the higher yield environment, which has been sparked by continued pressure in UK Gilts. Thereafter, a couple of cyclical sectors (Retail / Travel & Leisure) take a beating amidst the risk-off tone.


• Despite the subdued sentiment, Consumer Products tops the pile – this is thanks to a couple of broker upgrades for the Luxury sector. HSBC upgraded both LVMH (2.8%) & Kering (+3.3%), whilst Hermes (U/C) was downgraded. Energy and Healthcare complete the top three – the former boosted by strength in underlying oil prices.

Movers:

• Nestle -1.8%; Co. ousts CEO for having an affair with a company employee; Navratil will replace, who has over two decades of experience at the Co.


• Airbus -0.8%; delivered 60 jets in August, leaving it 3% behind last year. Analysts see total 2025 deliveries between 720-800, which would be below the target of 820.


• BMPS (-2%) / Mediobanca (-1.7%); BMPS raises its offer for Mediobanca by adding about EUR 750mln in cash (raises by around 5.6%).


• Euro Stoxx 50 Composition changes: Euro Stoxx 50 will add Deutsche Bank (-0.2%), Siemens Energy (-0.9%) and Argenx (+0.8%), while removing Nokia (-1.5%), Stellantis (-1%) and Pernod Ricard (+0.5%); the changes are effective from September 22nd.

US Equity Futures: ES -0.4%, NQ -0.5%, RTY -0.8%

• Futures are lower across the board, with some underperformance in the RTY given the higher yield environment. US traders return from Labor Day holiday, and have a number of moving parts to digest, including; a) US court ruling Trump tariffs as illegal, b) geopolitical uncertainty, c) Bessent suggesting there is a good chance Miran will be seated at the Fed for the September meeting, d) US Commerce Department revoked waivers for Intel/Samsung/SK Hynix, making it harder to produce chips in China.


• The US Day sees the release of the ISM manufacturing report for August, which is expected to rise to 49.0 from 48.0 (primer below). RCM/TIPP's economic optimism data will be released shortly afterwards. Construction spending data for July is also due for release today. After today's data, the Atlanta Fed will update its GDPnow tracking estimate for Q3, which is currently modelling growth of 3.5%.

02 Sep 2025 - 10:20- ForexEU Research- Source: Newsquawk