EUROPEAN EQUITIES UPDATE: Sentiment in the equities complex deteriorates

STOXX 600: -0.4%

• European bourses opened mixed, but have now succumbed to some significant selling pressure in recent trade, to display a mostly negative picture in Europe. While there is no clear catalyst for the downside, it could be attributed to traders winding down their optimism surrounding increased defence spending in Europe, given that it would take time to build up to spending of 1.5% of GDP. This aside, a broader risk-off mood has entered markets since the European cash open, with the Dollar also catching a bid - some may see this as money flows returning back to the US, after recent weeks of European outperformance.


• The EZ-specific data docket has been very light thus far; more focus has been on central banks from within the region. The Riksbank kept rates unchanged, whilst the SNB delivered a 25bps cut (as expected, but vs some outside expectations of a hold). For the ECB; President Lagarde highlighted the increased uncertainty of US tariffs, but ultimately reiterated her data dependent approach.


• On the trade front, EU's Trade Commissioner Sefcovic says the Commission is considering delaying first set of counter tariffs against the US to mid-April.

Sectors: Mixed

• European sectors are mixed and with the breadth of the market fairly narrow aside from the top/bottom performers.


• Retail takes the top spot, joined closely by Real Estate; the latter buoyed by the relatively lower yield environment – a factor which has led to some of the underperformance in Banks today.

Others: FTSE 100 +0.1%, DAX 40 -1%, CAC 40 -0.5%

• The FTSE 100 is modestly firmer, and performing a little better vs peers as the region digests the latest set of resilient UK jobs data; Pantheon Macro writes that this should keep the MPC on their gradual/careful path, and perhaps even warrant some caution. As a reminder, the BoE is set to deliver an unchanged rate decision today. In terms of stock specifics, Bunzl (+1.9%) gains after it received an upgrade at HSBC; for UK homebuilders, Crest Nicholson (+12.2%) soars after it unveiled a new strategic plan and saw an encouraging start to the year.


• The DAX 40 is underperforming vs peers; RWE (-4.3%) bottoms the index after it reported a mixed set of results, with its FY guidance also falling short of expectations. Elsewhere, Lanxess (-6.2%) extends lower after it reported very poor results, with particular weakness in its Adj. Net Income figure. For shipping name Hapag Lloyd (-7.6%); the co. beat on its headline metric, but cut its FY dividend.


• Focus in Europe has also been on Sodexo (-12%), where the French food services co. cut guidance citing weakness in its North American unit.

US Equity Futures: ES U/C, NQ U/C, RTY U/C

• Futures are flat, with a dip in sentiment seen in recent trade; as a reminder, the Fed policy announcement sparked upside in the complex; the Bank left rates unchanged, cut its US growth forecasts whilst it said it will slow the balance sheet runoff. Following the decision, US President Trump posted "The Fed would be MUCH better off CUTTING RATES as U.S.Tariffs start to transition... into the economy".


• The US Day sees the release of weekly jobless claims data; initial claims are seen at 224k from 220k (these coincide with the BLS survey window for the March jobs data), while continuing claims are seen at 1.887mln from 1.87mln. The Philly Fed manufacturing index is seen easing to 8.5 from 18.1. Existing Home sales are seen paring to 3.95mln in February from 4.08mln prior.

20 Mar 2025 - 10:15- EquitiesEU Research- Source: Newsquawk