EUROPEAN EQUITIES UPDATE: Stocks mostly pare early losses, FTSE 100 lags, ADS GY upgraded at Bernstein

STOXX 600: +0.1%

• European bourses opened mostly in the red, but sentiment lifted slowly as the morning progressed to display a more mixed picture in Europe.


• In terms of the macro events thus far; French inflation printed a little below expectations (as a reminder Germany/Spain both printed above consensus); this ultimately had little impact on contracts. The ECB SCE (Nov) saw both the 12-month and 3-year inflation expectations lift from the prior. Thereafter EZ HICP Y/Y printed in line with expectations, whilst the core figure printed a touch above expectations - this spurred some very modest pressure in the complex.

Sectors: Mixed

• European sectors began the morning with a slight negative bias, but now display a more mixed picture.


• Financial Services takes the top spot, joined closely by Retail and then by Basic Resources to complete the top 3. The latter is buoyed by gains in underlying metals prices. Banks sit at the foot of the pile, but with losses to a similar magnitude as Insurance and Healthcare. Elsewhere, beauty names such as L’Oreal (+0.5%) and Beiersdorf (+1.1%) are a little firmer, after US peer Ulta Beauty raised its outlook.


• For the Energy sector specifically, Morgan Stanley wrote in a research note that the oil & gas sector has a mixed prospectus in 2025; gas markets look robust, but the oil markets look well supplied. The bank upgrades; Shell and Equinor – downgrades; TotalEnergies, Eni, Repsol.

Majors: FTSE 100 -0.3%, DAX 40 +0.2%, SMI +0.5%

• The FTSE 100 is on the backfoot in today’s session, continuing the underperformance seen in the prior session. For the UK more broadly, UK BRC Retail Sales rose 3.1% (prev. -3.4%); despite the rise, the BRC Chief said “the crucial 'golden quarter' failed to give 2024 the send-off retailers were hoping for"; JD Sports (+4.2%) tops the pile – Next (+3%) follows closely behind after lifting FY guidance. Mining names are generally in the green today, given the strength in underlying metals prices; Antofagasta (+1.5%) outperforms after receiving an upgrade at Bernstein.


• The DAX 40 is ever so slightly firmer thus far; Adidas (+1.7%) tops the pile after receiving an upgrade at Bernstein; analysts noted that data from their own research suggests that the co. can continue to grow at a rate of about 10% for the next two years. Mercedes (-0.8%) is on the backfoot after Handelsblatt reported that the Co. could soon abandon its ambitious profitability targets. A co. exec said that the 14% op. margin target is no longer "realistic", noting that "I don't see how we are going to achieve that in the foreseeable future".


• The SMI outperforms after Swiss Core Y/Y inflation printed a touch below expectations, which saw money markets price in a handful more basis points of cuts at the March, June and September meetings.

US Equity Futures: ES U/C, NQ +0.1%, RTY -0.1%

• Futures are mixed and trading indecisively on either side of the unchanged mark, with the NQ/ES ultimately taking a breather after the tech-led strength seen in the prior session.


• At CES 2025, Nvidia CEO unveiled its GeForce RTX 50 series GPU (RTX 5070-5090, priced USD 549-1,999) featuring Blackwell architecture and GDDR7 memory. It also introduced Project Digits, a USD 3,000 AI supercomputer with the GB10 Grace Blackwell Superchip, and announced AI advancements for robotics and self-driving cars.


• The highlight of the US Day is the ISM services report for December (primer below), and JOLTS job openings data (seen at 7.7mln in November from 7.744mln in October; last time out, the quits rate rose to 2.1%, from 1.9%, while the vacancy rate rose to 4.6% from 4.4%). Fed’s Barkin is also due to speak.

07 Jan 2025 - 10:20- EquitiesEU Research- Source: Newsquawk