EUROPEAN EQUITIES UPDATE: Stocks benefit from a flurry of US-EU trade updates into US PCE

STOXX 600: +1%

• European bourses opened with a strong positive bias and continued to trudge higher as the morning progressed – currently trading at session highs.


• Sentiment over the past couple of days has been boosted by; 1) Thursday’s report that Trump is looking to announce Powell’s replacement early, 2) WSJ reports that the EU is considering lowering tariffs on US imports in a bid to woo US President Trump, 3) von der Leyen suggesting the EU had received the latest US trade proposal – stressing that whilst they are ready for a deal, they have made preparations for no deal, 4) US-China have agreed to to an additional understanding to implement the Geneva agreement.


• In terms of what has happened today, markets have had to digest a hotter-than-expected French inflation report; this sparked some modest two-way action in contracts. The Spanish metrics thereafter were broadly in-line, but headline Y/Y was a touch hotter than expected.

Sectors: Positive

• European sectors are entirely in the green, although with the breadth of the market fairly narrow.


• Autos & Parts takes the top spot, benefiting from the risk tone and the EU-US trade-related updates mentioned earlier. Consumer Products and Services follows closely behind with particular strength in Adidas (+4%), JD Sports (+6%) and Puma (+5%); the trio are benefitting from significant post-earnings strength in Nike (details in US section below).

Stories:

• Pearson (+3%) upgraded to Outperform from Neutral at BNP Paribas.


• Mediobanca (+0.5%) targets EUR 4.9bln shareholder payout and looks for strong revenue/profit, as the Co. aims to fend off BMPS bid.


• Babcock (-2.9%) downgraded to Hold from Buy at Deutsche Bank.


• Knorr Bremse (-5.4%) downgraded to Neutral from Overweight at JPMorgan.

US Equity Futures: ES +0.2%, NQ +0.3%, RTY +0.3%

• Futures are modestly firmer across the board, taking impetus from a strong European session but with gains capped ahead of the US PCE later today.


• On that, consensus for PCE is for a gain of 0.1% M/M, matching the prior pace, with the Y/Y seen ticking up to 2.3% from 2.1%; expectations are in a narrow range between 2.2-2.3%. The core rate is expected to rise by 0.1% M/M, matching the prior pace, with the annual rate seen rising to 2.6% Y/Y from 2.5% (forecasts range between 2.4-2.6%).


• Final University of Michigan sentiment data is also due today, where there will be particular focus on the 1yr and 5-10yr inflation expectations (currently 5.1% and 4.1%, respectively). On the speaker slate, Fed’s Hammack and Williams are scheduled.


• Key mover today is Nike, which is currently higher by 9.5% in the pre-market. The Co. signalled that the sales slump is bottoming out, and CEO's turnaround strategy gained investor support following an upbeat earnings call, reversing some of the stock’s recent declines.

27 Jun 2025 - 10:00- ForexEU Research- Source: Newsquawk