EUROPEAN EQUITIES UPDATE: Indices mostly lower as focus turns to ECB, Autos tops pile following tariff reprieve

STOXX 600: -0.3%

• European bourses opened with a clear positive bias, but as the morning progressed, indices gradually drifted lower to display a more negative picture in Europe.


• Early morning sentiment was lifted as markets digested the latest trade updates and strength in Chinese stocks; on the former, US President Trump provided the markets with some reprieve by exempting autos coming through USMCA for a month. Whilst the pressure in the complex today lacks a fresh catalyst, overarching themes may still take focus; economic growth woes, trade uncertainty and with focus on looming risk events which include the ECB.


• On the ECB, the Bank is expected to announce a 25bps cut to its Deposit Rate, reducing it to 2.50%. Attention will focus on whether the Governing Council still considers its policy restrictive, and whether there are any signals regarding a pause in the rate-cutting cycle. Traders will also closely examine the ECB’s updated macro projections, particularly for inflation, to assess how they align with the ECB’s 2% target.


• On the data front, EZ Construction PMI fell from the prior; EZ Retail Sales came in shy of expectations, but had little impact on price action.

Sectors: Mixed

• European sectors are mixed vs initially opening with a positive bias.


• Autos is the clear outperformer today with optimism stemming from the White House, which said it will give one month exemptions on any autos coming through USMCA; Stellantis (+2.3%), Porsche AG (+2%).


• Travel & Leisure was the initial outperformer but is now towards the middle of the pile; for travel specifically, Air France and Deutsche Lufthansa both reported strong results. For the Leisure side, Entain (+2.9%) gains after it returns to organic growth.


• Real Estate is once again towards the foot of the pile, as yields continue to tick higher in the fallout from Germany’s spending plans and the latest reports around potential EU-wide adjustments.

Others: FTSE 100 -0.7%, DAX 40 +0.6%

• The FTSE 100 is the clear European underperformer today; Melrose (-9.5%) sits at the foot of the pile after missing on H2 sales. Schroders (+5.2%) tops the index after its metrics, which were strong across the board and set out a cost-saving plan. Mining names are broadly on the front foot, given the risk tone and after the PBoC Governor said it will cut rates and RRR at the appropriate time. Entain (+3.2%) tops the pile after it saw its profit jump owing to online rev. growth. For the UK more broadly, the UK Construction PMI was dire; the BoE DMP showed 1yr inflation expectations rise, 3yr unchanged.


• The DAX 40 continues to build on the prior day’s strength which saw the index close higher by 3.55%. For stock movers, DHL (+1.5%) moves higher after its results; the Co. beat on its headline metrics, and announced that it will cut 8k jobs which will see cost-savings of around EUR 1bln. Outside of the DAX 40, Lufthansa (+7%) soars after reporting better than expected results and forecasts continued earnings growth in 2025.

US Equity Futures: ES -0.9%, NQ -1.2%, RTY -0.9%

• Futures are entirely in the red, with clear underperformance in the tech-heavy NQ; sentiment for the index is hit following Marvell results; the co. beat on headline metrics but its Q1 guidance disappointed – shares are lower by 15% in pre-market trade.


• The US Day features weekly initial jobless claims (seen at 235k from 242k) and continuing claims (seen at 1.88mln from 1.862mln) - neither coincide with the BLS survey window for Friday's official February jobs data. US international trade stats for January are expected to show the deficit widening from USD 98.4bln to USD 127.4bln. Q4 unit labour cost revisions are expected to be unrevised (at 3.0%) and productivity is seen unrevised (at 1.2%). Wholesale inventory and sales data are out as well. The Atlanta Fed is due to update its GDPnow model after today's data; on March 3rd, it was tracking growth of -2.8% in Q1.

06 Mar 2025 - 10:20- EquitiesData- Source: Newsquawk