EUROPEAN EQUITIES UPDATE: European indices mostly in the green; Tech supported after Hon Hai posts record Q4 revenue

STOXX 600: +0.3%

• European bourses are almost entirely in positive territory (ex-FTSE 100), with sentiment lifted by strength in Tech names.


• Sentiment slipped a touch just after the cash open, but this managed to stabilise alongside generally constructive PMI figures from Italy (climbing into expansionary territory) and revisions from Germany and France (revised higher than expected). For Germany specifically, state Hesse reported CPI Y/Y at 2.7% (prev. 2.0%); the national prelim figure is expected at 2.4% Y/Y (prev. 2.2%).

Sectors: Mixed

• European sectors initially opened with a slight positive bias, but now displays a bit more of a mixed picture.


• Tech is by far the clear outperformer today, for a couple of reasons. Firstly, Hon Hai reported strong December sales figures, helping to lift sentiment in the section. Elsewhere, reports suggest that Microsoft plans to spend USD 80bln to build out AI this FY; ASML (+4.8%), and Infineon (+6.2%). Away from Tech, other cyclical stocks are towards the top of the pile, with Autos and Consumer Products completing the top 3.


• Travel & Leisure is found at the foot of the pile, with losses around a similar magnitude to Optimised Personal Care and Food Bev. & Tobacco; the latter seemingly continuing the losses from Friday, where it was reported that the US surgeon general called for cancer warnings on alcoholic drinks.

Majors DAX 40 +0.4%, CAC 40 +0.7%, FTSE 100 -0.2%

• The CAC 40 is one of the better performers in Europe today, with Luxury names doing much of the heavy lifting, but with strength in tech-name STMicroelectronics (+4.6%) also trading higher alongside peers. Chinese stocks traded mostly lower in overnight trade, but late reporting via Reuters suggested that China’s stock exchanges asked mutual funds to restrict stock selling this year; this, alongside the higher than expected Caixin Services PMI, may have helped prop up sentiment in China-exposed names such as LVMH (+1.7%) – Hermes (+2.1%) gains after receiving an upgrade at Stifel.


• The FTSE 100 is the worst performer in Europe, and the only index is the red. In terms of stock specifics, Rolls Royce (-3.2%) slips after receiving a downgrade at Citi; Unilever (-1.5%) is also softer after a downgrade at RBC. For the UK more broadly, the British Chambers of Commerce released a survey which showed UK business morale hit a two-year low; it also indicated that the number of UK businesses planning to raise prices in the next three months rose to about 55% (prev. 39%); this has helped to lead the outperformance in yields, propping up banking names such as Barclays (+0.9%). The UK's PMI release saw slight revisions lower; the inner release noted that "Rising input price inflation added to the gloomy near term outlook for service providers, with overall cost pressures reaching an eight-month high in December".


• Of note for the DAX 40, companies are projected to achieve over 10% EPS growth in 2025, despite challenges like elections, rising unemployment, and a struggling automotive sector, Bloomberg reports; this is the highest among European benchmarks, surpassing the Stoxx Europe 600's 7.1% and France's CAC 40's 8.8%. As for stock specifics, Volkswagen (+2.5%) gains after announcing a partnership with XPeng to build a charging network in China; tech-giant Infineon (+6.2%) gains in tandem with peers.

US Equity Futures: ES +0.2%, NQ +0.5%, RTY +0.1%

• Futures are entirely in the green, with slight outperformance in the tech-heavy NQ, taking impetus from the sectoral strength seen in Europe thus far.


• The US Day sees the release of final services and composite PMI data from S&P Global. Factory orders are seen declining by -0.3% M/M in November (prev. +0.2%), while durable goods revisions are also due. On the speakers' slate, Fed's Daly (2027 voter) will speak at an event celebrating former Fed Chair Ben Bernanke's contributions to economics.

06 Jan 2025 - 09:50- EquitiesData- Source: Newsquawk