EUROPEAN EQUITIES UPDATE: Mostly Positive trade; SMI underperforms, banks boosted in UK and Italy

STOXX 600: +0.6%

• European equities began the week in the green (ex. SMI), with quiet European-specific newsflow.


• On the data front, the EZ Sentix Index fell to -3.7 from 4.5 (exp. 8.0); no move was seen on this metric.


• Across the Atlantic, newsflow has been steady. Since the disappointing US jobs data on Friday, US President Trump fired the BLS Chief, and Fed Governor Kugler has tendered her resignation early. On Friday, US stocks posted their largest fall since May, so the positive picture is potentially a “buy the dip” trade.


• Looking at the majors, SMI (-0.6%) underperforms as it reacted for the first time (amid a domestic holiday on Friday) to the US unexpectedly raising tariffs on Swiss goods to 39% (from 31%); the Swiss President said the increase exceeds negotiations and will harm the economy, especially machinery and watches (Richemont -0.8%, Swatch -0.6%), while pharma remains unaffected (Novartis -0.5%). At the top of the list, however, FTSE MIB (+1.6) outperforms with strength in banks after Italy's competition authority decided not to open an investigation into Mediobanca’s bid for Banca Generali.


• In UK specifics, the UK Supreme Court ruled on Friday that hidden commissions from lenders to dealers on car loans were not unlawful. The FCA said the cost of the redress scheme could be between GBP 9-18bln, lower than some analyst expectations of GBP 30bln. Close Brothers shares rose as much as 30%, and Lloyds is higher by 7.3%. RBC analysts upgraded Lloyds to outperform, saying the top court's judgement was a "clearing event" for the UK bank. Lloyds said it would keep its GBP 1.2bln provision under review, and that any change was "unlikely to be material".


• Elsewhere, BP (+1.1%) is set to report earnings on Tuesday. Reporting via the FT suggested that activist investor Elliott Management wants a new CEO to add USD 5bln of cost savings.

Sectors: Mostly Positive

• Sectors began mixed, though as the session has progressed, the picture looks more positive. Banks reside at the top and Healthcare at the bottom.


• Banks outperform with aforementioned strength seen in both Italy and the UK.


• Sat at the bottom of the pile is Healthcare. Novartis is in the red with its 13% weighting bringing the sector lower. This underperformance stems from broad weakness in the SMI, after the US hiked its tariffs from 31 to 39%. Note, the index was closed on Friday due to a market holiday.

US Equity Futures: ES 0.6%, NQ 0.7%, RTY 0.8%

• Stateside, equity futures have been firming throughout the morning as traders digest Friday, and the weekend's events.


• RTY outperforms a touch after its underperformance on Friday. On the docket, US factory orders are expected to have declined by 4.8% M/M in June (from +8.2% M/M in May); durable goods revisions are also due. Notable companies reporting today include: Palantir (PLTR), Hims & Hers (HIMS), Wayfair (W), BioNTech (BNTX) and Tyson Foods (TSN).

04 Aug 2025 - 09:55- ForexEU Research- Source: Newsquawk