EUROPEAN EQUITIES UPDATE: Stocks move higher as US Treasury Secretary Bessent boosts sentiment; SAP +10% post-earnings

STOXX 600: +1.8%

• European bourses are entirely in the green and with clear outperformance in the DAX 40, which benefits from upside in SAP (+9%) after its results (discussed below).


• Sentiment in Europe has been lifted in continuation of the upside on Wall Street, in the prior session. The strength follows some positive trade related updates, including; a) US Treasury Secretary Bessent expecting the tariff standoff with China to de-escalate, b) US President Trump saying he has no intention to fire Fed Chair Powell.


• Back to today, price action across European bourses has really only been upwards; a slew of EZ PMIs and the latest ECB Wage Tracker had little impact on the complex.


• To break down those PMI figures; France, Germany and the EZ-wide figure all painted the same picture; Manufacturing modestly improved, whilst the Services component was weak – Germany’s composite measure surprisingly fell into contractionary territory. The accompanying EZ-wide report suggested that “most manufacturers in the Eurozone are not too fazed”, regarding tariffs. Elsewhere, the ECB Wage Tracker fell to 3.055% vs the prior estimate 3.251%.


• Docket ahead is relatively thin; focus turns to ECB speak from Lane & Cipollone.

Sectors: Positive

• European sectors hold a clear cyclical bias, in-fitting with the risk tone.


• Tech is the clear outperformer, with the industry lifted by post-earnings strength in SAP (details below). BE Semiconductor also jumped post earnings; the Co. missed on its headline metrics, but saw growth in Q1 bookings. Basic Resources is lifted by the broader strength in metals prices.


• Optimised Personal Care and Utilities, two defensive sectors, find themselves at the foot of the pile.

Majors: FTSE 100 +1.6%, DAX 40 +2.9%, CAC 40 +2%

• FTSE 100 is on a firmer footing and performing about as well as European peers. Croda (+9.1%) tops the pile after reporting a jump in revenue and reaffirming its guidance. Elsewhere, mining names are broadly in the green, benefiting from the strength in metals prices; though, Fresnillo (-6.5%) slipped after its latest production update, where it reported a 9% decline in silver output. BP (+4.5%) finds itself towards the top of the bunch, benefiting from the strength in oil prices, risk tone, and follow-through from yesterday’s FT reporting which suggested Eliott boosted its stake in the Co. to 5%. On the data front, the region's PMI metrics painted a downbeat picture; Manufacturing was in-line, whilst the Services component surprisingly fell in contractionary territory. The accompanying release highlighted that the figures "add pressure on the Bank of England to reduce interest rates again at its May meeting".


• The DAX 40 outperforms in Europe, largely thanks to significant post-earning strength in SAP (+9.3%). The software company reported a beat on its Q1 profit, with a significant surge in cloud revenue; the Co. also affirmed its FY guidance. German auto names are broadly benefiting from the risk-tone and as traders digest the aforementioned trade developments.

US Equity Futures: ES +2%, NQ +2.4%, RTY +1.9%

• Futures are entirely in the green today, with modest outperformance in the NQ as the risk-tone improves and after Tesla gains post-earnings; currently higher by around 5.5% in pre-market trade.


• To recap Tesla’s results; the Co. missed on both top- and bottom-line figures, with Net Income slumping 71%. Nonetheless, upside stems from commentary from CEO Musk, who said he will be stepping back from DOGE.


• Docket ahead will include US PMIs, as well as a slew of Fed speakers; Fed's Goolsbee, Musalem & Hammack are all on the docket.

23 Apr 2025 - 10:00- EquitiesEU Research- Source: Newsquawk