EUROPEAN EQUITIES UPDATE: Stocks move higher post-Fed, BoE next up

STOXX 600: +0.8%

• European bourses opened firmer across the board and have continued to hold an upward bias throughout the morning. Positive sentiment which comes after the Fed decided to cut rates by 25bps, but it has been described as a “hawkish cut” by some analysts. Nonetheless, sentiment has been boosted across the equities complex.


• Docket in Europe has been fairly light today; Norges Bank (cut by 25bps as expected; MPR hawkish), ECB’s de Guindos said the risk of undershooting for the ECB is "not big" or "especially relevant".


• Now attention turns to the BoE at mid-day; the Bank is expected to keep rates steady at 4% in a 7-2 vote split. Attention will focus on any guidance on future cuts and on quantitative tightening, where consensus expects a slowdown to GBP 70bln per annum from October.

Sectors: Positive

• European sectors opened mixed but now has a very slight positive tilt.


• The cyclical sectors are all towards the top of the pile, with sentiment boosted following the Fed’s decision to cut rates by 25bps; Tech continues its past couple of days of outperformance, largely led by Dutch semiconductor names; ASML (+2.5%), BE Semi (+2%). Industrials takes the second spot, followed by Construction & Materials.


• Luxury names are also broadly higher today; Hermes (+1.8%) benefits after a US Judge dismissed a case filed against the Co., which accused the French luxury maker for violating US antitrust laws. Elsewhere, Kering (+0.5%) is underperforming vs peers after the Co. announced the departure of Gucci CEO Stefano Cantino; appointed Francesca Bellettini as the new President and CEO of Gucci.


• Healthcare finds itself around the middle of the sectoral list; Novo Nordisk (+2.7%) builds on recent gains, with MTD gains now totalling just shy of 10%. The recent bout of strength stems from a study which showed that the Wegovy pill is on par with its injection option. Elsewhere, Roche (+0.3%) is little moved after it agreed to acquire 89bio (+85% pre-market) for up to USD 3.5bln.


• To the bottom of the pile lies Optimised Personal Care, followed closely by Media and Retail; the breadth at the bottom of the pile is very narrow.

Others:

• Deutsche Bank +1%; Deutsche Bank's asset manager DWS kicks off sale of its data centre business, according to FT. DWS hopes NorthC could be valued at more than EUR 2bn. (FT)


• Continental -22%; Aumovio has started trading in Frankfurt, following its spin-off.


• Next -5%; puts guidance on pause, citing uncertainty regarding weak UK growth/jobs.


• Swatch -1.3%; Swiss Watch Export -16.5% (prev. +6.9%).

US Equity Futures: ES +0.7%, NQ +0.8%, RTY +1.1% 

• Futures are firmer across the board, and with some slight outperformance in the economy-linked RTY. Indices closed mixed in the aftermath of the FOMC announcement, which saw the Bank cut rates by 25bps and with the accompanying dot plots showing two more cuts this year. As a reminder, the initial reaction was dovish, but Chair Powell’s presser thereafter leant hawkishly where he highlighted a data dependent approach and suggested the decision to cut rates was risk management.


• The US Day sees the release of weekly initial jobless claims data (for the week that coincides with the BLS survey window for the September jobs data); 240k is expected after last week's 263k (NOTE: Axios reported that last week's spike in claims to a four-year high was largely caused by fraudulent filings in Texas, not an economic slowdown; adjusting for this dynamic, it said that claims remain around 240k). Meanwhile, continuing claims are expected to rise to 1.95mln from 1.939mln (not, this week's continuing claims does not coincide with the BLS survey window). Elsewhere, the Philly Fed manufacturing index is seen improving to 2.5 from 0.3, and follow's Monday's soft Empire Manufacturing report (note: these initial surveys for the month help shape expectations of what the ISM manufacturing report will look like when it is released on October 1st).

18 Sep 2025 - 10:25- Fixed IncomeEU Research- Source: Newsquawk