EUROPEAN EQUITIES UPDATE: Indices mixed, LVMH & Kering both boosted after broker upgrades

STOXX 600: -0.2%

• European bourses opened mostly lower, albeit with very marginal losses. Sentiment dipped soon after the cash open, but more recently, this downside has since reversed to display a mixed picture in Europe.


• French politics remains at the forefront of traders’ minds; in the prior day, President Macron asked outgoing PM Lecornu to hold final talks with political partners to stabilise the country – he has been given 48 hours. Politico reported that the President thinks the current political situation can be turned around.


• On the data front, German Industrial Orders printed below expectations; ING writes that the recent positive momentum seen at the start of the year was seemingly front-loading of US tariffs. Elsewhere, UK Halifax House Prices M/M slowed more than expected.


• Docket for the remainder of the day is light, aside from speak via the ECB's Lagarde and Nagel.

Sectors: Negative bias

• European sectors are showing a slightly more negative picture vs initially opening mixed.


• Food Beverage & Tobacco takes the top spot, boosted by a couple of reasons. Firstly, Imperial Brands (+3%) helps to prop up the sector after the Co. announced a GBP 1.45bln share buyback and confirmed its FY25 guidance. Secondly, alcohol names opened higher in a read-across following strong Q2 metrics from US-listed Constellation Brands (+3.2% pre-market); the Co. beat on its top- and bottom-lines, where it cited continued demand for its beer portfolio. The likes of Diageo (+1%) and AB InBev (+0.7%) both move higher.


• Energy and Telecoms complete the top three; the former is helped by Shell (+1.7%) after the Co. said it expects “significantly higher” gas trading in Q3, with its outlook for that quarter also positive. Though the Co. did highlight that it expects a USD 600mln hit from cancellations related to a project in Rotterdam.


• Consumer Products is found in the green, albeit marginally so. For the Luxury sector, there were a few broker moves, with LVMH (+1.3%) and Kering (+1.9%) both receiving an upgrade whilst Hermes (-1.4%) received a downgrade. In detail, analysts at the bank see a “creative supply shock” across the Luxury sector, where “supply could create its own demand”; analysts made Kering its new top pick, praising the new CEO and recent launches at Gucci/Bottega Veneta. As for Hermes, the bank sees the recent double-digit growth to soon normalise to a high single-digit percentage.


• Basic Resources if found at the foot of the pile, joined closely by Healthcare and then Retail. For Healthcare specifically, Bayer (-4%) moves lower, potentially on reports that the Missouri Supreme Court rejected the Co’s appeal against the USD 611mln Roundup related judgement. Another factor could be attributed to a recent GS Q3 earnings preview note, which suggested that it expects EPS to be 45% below consensus. There is also some pressure seen in heavy-weight Novo Nordisk – potentially linked to a report which suggested that the Co. had fired “several dozen” staff at a US Wegovy manufacturing site. Pressure may be related to the potential pharma tariff-related implications of cutting staff in the US.

Movers:

• Naturgy -2.9%; sells 3.5% of its share capital.


• Orsted +0.7%; Co. completed its planned capital increase of EUR 8.04bln and was oversubscribed. Sydbank analyst Pederson said "it is even a roaring success. At the very least, it is a significant success".


• B&M European -11%; sales growth slows and warns on profits.

US Equity Futures: ES U/C, NQ -0.1%, RTY -0.2%

• Futures are modestly flat/lower, following a similar theme seen in the European morning.


• The North American day sees the release of Canada trade stats for August, where the deficit is expected to widen to 5.55bln from 4.94bln. The Ivey PMI and Canadian Leading Index are also due. The US Day features the weekly Redbook data for the October 4th week, RCM/TIPP's gauge of economic optimism, NY Fed's Survey of Consumer Expectations (previously, median inflation expectations one-year ahead ticked up 0.1ppts to 3.2%, 3-5yr expectations unchanged at 3.0%, and 5yr+ unchanged at 2.9%

07 Oct 2025 - 10:15- ForexEU Research- Source: Newswires