EUROPEAN EQUITIES UPDATE: Stocks move higher into Powell; AKZA NA lifted after earnings, NVIDIA -1% after H20 production halt

STOXX 600: +0.2%

• Stocks are little changed, albeit with a positive bias amid a lack of newsflow into Fed Chair Powell’s speech in the European afternoon.


• A bout of risk aversion, with no specific fundamental driver, was seen pre-cash open. Nonetheless, this did little to inflict sustained pressure on European bourses, which have been edging higher since the lacklustre open.


• The move may have been a function of positioning into Fed Chair Powell’s Jackson Hole text release and speech at 15:00BST, where his comments will be closely monitored for any dovish policy shift. Last year, Powell provided strong guidance that rate cuts were set to begin soon, but given the current environment and recent commentary, that's unlikely to happen this time around.


• WSJ says that Chair Powell will outline the Fed’s updated framework on Friday, his final speech at the conference; the revisions, part of a months-long review, abandon key 2020 innovations but won’t affect near-term policy, focusing instead on guiding the Fed’s approach to inflation and labour market goals.


• Barclays has said that the change may shift from focusing on employment shortfalls to a symmetric approach on deviations from maximum employment and replace the 2020 flexible average inflation targeting (FAIT) with the prior flexible inflation targeting (FIT) strategy. While moving from "shortfalls" to "deviations" reflects post-pandemic inflation lessons, abandoning FAIT is seen as unfortunate, as it could be useful if the US returns to the effective lower bound with below-target inflation, Barclays argued. No changes to communications, including the SEPs, are expected.


• A more in-depth primer for Powell’s speech is located in the Newsquawk research suite.

Sectors: Positive Bias

• European sectors opened mostly in the red after a quiet open. However, green has since bled across the board as sentiment improved.


• Chemicals sits at the top, led by Akzo Nobel (+5%), after the FT reported that Activist Cevian acquired a more than 3% (EUR 300ln) stake in the company.


• At the bottom of the pile is Optimised personal care, after earnings-related losses from Polish retailer Dino Polska (-7.2%).


• Banks also underperform, though they are off their worst levels; this comes after Bloomberg reported that Poland is planning to increase corporate income tax for banks, proposing to increase the tax to 30% from 19%. Within the sector, Polish banks trade with losses up to 10%, while London-listed Standard Chartered (+3.5%) limits the sector's losses after it reported a favourable outcome in a US civil case.

US Equity Futures: ES +0.1%, NQ U/C, RTY +0.4%

• Stateside, stocks have been moving in tandem with those across the Atlantic.


• RTY outperforms as investors continue optimism about the YTD underperforming small-cap index.


• Elsewhere, ES and NQ underperform modestly, the latter to a broader extent amid premarket losses in chips after NVIDIA (-1.4%) ordered a halt to H20 production following China’s directive against purchases.


• The Jackson Hole Economic Symposium will dominate news flow today. Elsewhere, the BoC's Q2 Senior Loan Officer Survey is due. In the afternoon, Baker Hughes will release its weekly rig count data. Today's CRA docket includes potential rating reviews by Fitch Ratings on the UK (currently AA-), and Moody’s on Sweden (Aaa) and Austria (Aa1).

22 Aug 2025 - 09:55- Fixed IncomeEU Research- Source: Newsquawk