EUROPEAN EQUITIES UPDATE: Stocks continue to cheer trade reports, NESN SW post-earnings

STOXX 600: +0.5%

• European bourses opened stronger across the board, with positive trade developments continuing to boost sentiment. However, as the morning progressed, indices have dipped off earlier highs but still reside firmer across the board.


• Sentiment was boosted in the prior session as traders reacted to the US-Japan trade deal, which heightened expectations of a similar deal being struck between the EU and US. Those bets seemingly paid off, with reports later in the afternoon suggesting that the US and the EU were closing in on a trade deal with a 15% tariff rate, albeit this is yet to be officially confirmed.


• That being said, the reports were not all positive, with one US Official suggesting that the situation was “fluid and subject to change” Moreover, White House Trade Adviser Navarro poured some cold water, and recommended taking the report with a pinch of salt.


• Trade aside, focus has been on a slew of EZ PMIs, which were ultimately lacking in surprises. France continued to edge incrementally higher (but still within contractionary territory); in Germany, Services edged into expansionary territory (as expected); EZ figures were more or less in line. The HCOB suggested that their GDP Nowcast model "points to robust economic growth" for Q3. Looking to the UK, both Services and Composite were a little short of expectations, but ultimately had little impact on the FTSE 100.


• Focus for the EZ now turns to the ECB later. The Bank is expected to stand pat in what is being seen as a 'placeholder' meeting. Policymakers view current policy as well-positioned but are focused on potential further easing and differing views within the Governing Council. Concerns include the looming trade war deadline and recent tariff threats, with caution over the Euro's appreciation and its disinflationary effects.

Sectors: Positive

• European sectors hold a strong positive bias, with the industry compilation today largely dictated by post-earnings movers.


• Optimised Personal Care tops the pile, largely driven by Reckitt (+10%), which soars after the Co. reported a Q2 sales beat, lifted its annual guidance and plans a GBP 1bln share buyback. Banks take second spot, lifted by post-earnings strength in Deutsche Bank and BNP Paribas (discussed below).


• Food, Beverage and Tobacco underperforms alongside Real Estate today; the former has been pressured by heavyweight Nestle, after its results.

Majors: DAX 40 +1.2%, CAC 40 +0.4%, SMI +0.2%

• The DAX 40 is on a stronger footing today and outperforming vs European peers. Key movers today include: Deutsche Bank (+5.8%, strong Q2/H1 figures and maintained guidance), Deutsche Telekom (+2.5%, T-Mobile shares rose 5% after-hours; DTG GY holds a 51% stake in the Co.). Elsewhere, Infineon (-2%) moves lower after industry peer STMicroelectronics reported dire metrics.


• The CAC 40 is modestly higher today, but ultimately fares a little worse vs peers, thanks to significant post-earnings losses in STMicroelectronics, which is also feeling headwinds from its client Tesla, who warned of "rough times". STMicroelectronics reported its first quarterly loss in 10 years, missing on EPS, whilst Revenue was incrementally higher. Elsewhere, BNP Paribas (+2.4%) benefits after reporting generally strong figures and marginally increased its Net Income guidance for FY25.


• A couple of heavyweights reported from within the SMI today, including Nestle (-4%) and Roche (+1%). The former reported a slight miss on Sales but did maintain its guidance for 2025; downside also stems from the Co. reporting 3% decline in real interest growth. As for Roche, the Co. saw its H1 net income rise 23% Y/Y.

US: ES +0.1%, NQ +0.3%, RTY -0.3%

• US equity futures are mixed. Tech-heavy NQ outperforms with the likes of Google (+3% pre-market, profit and sales beat expectations on strong cloud/ad growth) and ServiceNow boosting the index after earnings. Though it is worth highlighting that Tesla (-6.4%) moves lower in pre-market trade after a sales miss, with CEO Musk warning of "tough times".


• Also of note, Trump is set to sign executive orders later today.


• RTY, however, underperforms, with no specific catalyst other than an RTY and fixed income reversal from Wednesday, with modestly firmer yields across the curve today.


• On the docket ahead, US weekly initial jobless claims are seen at 226k from 221k, while continuing claims (which coincide with the BLS survey window for the June-July jobs report) are seen at 1.96mln from 1.956mln. US new home sales are seen rising to a rate of 650k from 623k. Elsewhere, the Chicago Fed's NAI and Kansas City Fed manufacturing reports are due. Canadian retail sales are seen slipping 1.1% M/M in June (prev. +0.3%), while the core rate is seen falling by 0.3% M/M. Notable corporates reporting today include: HON, BX, CL, AMP, NDAQ, UNP, INTC, DLR, NEM, KDP, AAL, MBLY, LVMUY. 

24 Jul 2025 - 10:05- ForexEU Research- Source: Newsquawk