EUROPEAN EQUITIES UPDATE: Cautious risk tone as markets await US trade policy

STOXX 600: -0.9%

• European bourses opened lower, despite a mostly positive picture in APAC trade and as traders remain focused on the looming reciprocal tariff announcements on “Liberation Day”. (See the US section below for trade details).


• Price action has really only been downwards today, with a more pronounced bout in pressure appearing in recent trade, which has since stabilised a touch.


• EZ developments has been relatively light today; a few ECB speakers are scheduled throughout the day, but will likely ultimately be overshadowed by trade updates.

Sectors: Negative

• European sectors hold a strong negative bias, in-fitting with the risk tone.


• Optimised Personal Care, Food Beverage & Tobacco and Utilities form the top three, but gains are very modest.


• Healthcare is the clear underperformer today, but with no clear stock driving the losses; the pressure is seemingly in tandem with the downside seen across US peers in the prior session, and perhaps some fears regarding pharmaceutical tariffs on “Liberation Day”.


• Banks are also underperforming today, giving back some of the upside seen in the prior session. For the sector there has been some M&A developments regarding Banco BPM / UniCredit / Credit Agricole. Italy’s watchdog Consob approved the offer document for takeover bid in Banco BPM; elsewhere, Credit Agricole (-1%) received ECB authorisation to increase its Banco BP stake to 19.9% - the French bank noted that its CET1 ratio is to be impacted by -20bps in Q2’25.


• Autos are also moving lower today, as traders remain mindful ahead of today's tariff updates; for the sector specifically, White House Press Secretary Leavitt said car tariffs go into effect on April 3rd and that Trump has made up his mind on tariffs. JPM writes that if tariffs go ahead, on avg. c. 25% earnings cut to its FY25 estimates for German OEMs and Stellantis. JPM add this is the lower bound of impact. Also impacting the sector today, is some pressure in Continental (-2%), which highlighted that North American light vehicle output fell by around 7% in Q1, citing economic uncertainty.

Majors: FTSE 100 -0.5%, DAX 40 -1.1%, IBEX 35 -0.1%

• The IBEX 35 is faring a little better vs peers, with Grifols (+11.5%) doing much of the heavy lifting. El Confidencial reported that Brookfield has resumed talks with Grifols; sources suggest it could launch a new takeover bid for EUR 7bln after the Board rejected a previous offer which valued the Co. at EUR 6.7bln.


• The FTSE 100 is on the backfoot with losses to similar magnitude as peers; stock-specifics for the index is relatively light today aside from a few broker movers. Diageo (+1.9%) tops the pile after being initiated with Buy at Berenberg; GSK (-3.5%) and AstraZeneca (-2.4%) sits at the foot of the pile, with the Healthcare sector broadly on the backfoot, following the declines in US peers on Tuesday.

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

• Futures are modestly lower across the board, giving back some of the upside seen in the prior session and as traders brace themselves for the looming trade updates on “Liberation Day”; US President Trump is set to announce reciprocal tariffs at 16:00 EDT / 21:00 BST – Commerce Secretary Lutnick will do the media rounds before this, and is scheduled to appear on Bloomberg TV at 08:30 EDT / 13:30 BST.


• In brief, there are three main options that US President Trump is looking at; 1) blanket 20% tariffs, 2) tiered system of three different rates, 3) country-by-country rates. Elsewhere, USTR has reportedly prepared "an across-the-board tariff on a subset of nations that likely would not be as high as the 20% universal tariff option", according to WSJ. A full analysis piece on tariff developments can be found on the Newsquawk headline feed.
  


• Trade aside, some focus will be on US data; The ADP's gauge of national employment is expected to post 115k in March (prev. 77k); attention will also be on the wages metrics, which stood at 4.7% Y/Y for job-stayers, and 6.7% Y/Y for job-changers. US factory orders are seen rising 0.5% M/M in February, while durable goods data revisions are also due. Fed’s Kugler is also due.

02 Apr 2025 - 10:00- ForexGeopolitical- Source: Newsquawk