EUROPEAN EQUITIES UPDATE: Mixed performance as markets await trade letter details

STOXX 600: U/C

• Began the session with modest gains, which have since reversed as we await trade updates.


• On the trade front, US President Trump said tariff letters to 12 countries will be sent from midday Eastern on Monday, with possible deals or letters to most nations by July 9th. Treasury Secretary Bessent said letters will notify trading partners that if no deal is reached, tariffs will revert to April 2nd levels from August 1st. Bessent added that several deals are near, with big announcements expected soon, and about 100 smaller countries will receive tariff rates, many of which have not previously contacted the US.


• On EU-China, the latter said it would impose import restrictions on EU medical devices which exceed USD 6.3mln in value, in retaliation to the Bloc’s own curbs it placed last month. Note, this also surrounds Friday’s Cognac ruling, which was framed as a measure to retaliate against EV measures. The next steps for EU-China relations could be dictated by their end-of-the-month summit, which has also been cut short, it's unclear the specific reason.


• For UK specifics, Chancellor Reeves told the cabinet that tax hikes in the Autumn budget will be more challenging than last year’s GBP 40bln package; she indicated smaller increases but limited options, as higher taxes are needed to fund the reversal of the poorly-executed welfare reforms.


• Ahead, the Europe-specific docket is light with just EZ retail sales scheduled.

Sectors: Mixed

• Sectors are split down the middle, the market showing a gradually widening breadth amid broader energy losses after OPEC+ sources.


• Energy shows the deepest losses after OPEC+ increased oil output more than expected at its weekend meeting, sources signalling further supply increases at the upcoming August meeting.


• Also of note, and with a 30% weighting in the sector, Shell is trading lower by 3.3%, trimmed Q2 guidance for integrated gas output to 900–940k BOE/D (prev. saw 890–950k BOE/D), and LNG production to 6.4–6.8mt (prev. saw 6.3–6.9mt); it said that integrated gas and chemicals trading is expected to be significantly lower vs Q1, while marketing adj. earnings are expected to be higher.


• At the top of the pile is Insurance, which benefits from a Generali upgrade from JPMorgan. Closely behind lies Travel and Leisure, benefiting from lower oil prices.

Individual Movers

• Prosiebensat.1 +0.6%: Upgraded at JPMorgan.


• Siemens Healthineers -0.9%: China imposed import restrictions on EU medical devices.


• Capgemini -4.1%: To acquire WNS for USD 76.50/shr, total cash consideration of USD 3.3bln.


• Generali +1.1%: Upgraded at JPMorgan.


• Ferrexpo -1.9%: Q2 Production Update: total commercial production 1.3mln/T, pellet production 821.8k/T.


• Shell -3.3%: Weak Q2 Production Outlook, crude prices lower on the day after OPEC+ increased oil output more than expected.


• Stellantis -2.6%: Downgraded at BofA.

US: ES -0.4%, NQ -0.6%, RTY -0.5%

• Equity futures are trading in the red, suffering from the downbeat mood amid tariffs.


• Tech heavy NQ underperforms following updates from TSMC and Apple.


• Ahead, President Trump will meet Israeli PM Netanyahu amid a shift in the Middle East from conflict to diplomacy, presenting a potential opening for new US-led dealmaking efforts in the region; the meeting is set to take place at 18:30EDT/23:30BST in Washington.

07 Jul 2025 - 09:55- ForexGeopolitical- Source: Newsquawk