EUROPEAN EQUITIES UPDATE: Stocks opened lower in reaction to geopols but now trade with an upward bias

STOXX 600: +0.1%

• European bourses opened lower across the board, as traders react to the surprise US attack on Iran. Although, it is worth noting that stocks have traded with an upward bias throughout the morning, with a handful of indices managing to climb into positive territory – nothing behind the latest upside in stocks, move potentially a function of the geopolitical situation yet to escalate further.


• To recap the latest geopolitical updates, the US launched “Operation Midnight Hammer,” striking Iran’s nuclear facilities at Fordow, Natanz, and Isfahan. Following the attack, US President Trump called the impact as an “obliteration”, adding that the strike would be a one-time action, with Washington still seeking diplomacy.


• On the Iranian side, Iran’s parliament has endorsed closing the Strait of Hormuz following the US strikes, introducing significant geopolitical risk; the strait channels around 30% of global seaborne oil flows. While not yet closed, the move awaits approval from the Supreme Security Council and Supreme Leader Khamenei.


• Back to Europe, the docket today featured a number of EZ PMI figures; French figures were weaker-than-expected; German metrics were stronger-than-expected, with the Composite component surprisingly climbing into expansionary territory; EZ was mixed. The accompanying EZ release suggested that “the eurozone economy is struggling to gain momentum", but highlighted that "the ECB can remain relatively calm, as the strong euro and the deflationary effect of US tariffs argue against a short-term rise in inflation”.


• Focus ahead turns to ECB President Lagarde (text expected), with no scheduled data releases for the bloc due for the remainder of the day.

Sectors: Negative

• European sectors hold a negative bias, with only a handful of industries managing to hold afloat.


• Construction & Materials tops the pile, joined closely by Tech and then Energy; the latter of course buoyed by the upside in oil prices, sparked by the latest geopolitical flare ups.


• Chemicals sits right at the foot of the pile, Insurance joins closely behind; Insurance pressured by downgrades for Swiss Re and Munich Re, both at Morgan Stanley.

Stories:

• Spectris +14.8%: Confirms to be acquired by Advent International for GBP 37.63/shr in cash.


• Holcim +5.0%: Completed spin-off of North American business, Amrize.


• Novo Nordisk -2.5%: Provided updates on its CagriSema drug, whereby it said it showed significant weight loss in studies, with patients sticking to lower doses losing more on average despite only about 75% reaching the highest dose. The accompanying study highlights that the drug led to weight reduction of 22.7% or more – though this is still less than the Co’s own expectation of 25%. Elsewhere, the Co. provided updates on its amycretin drug which caused an average weight loss of 24%, which is higher than other drugs on the market at the moment. Some pressure today may also be attributed to some positive weight related updates from rival Eli Lilly.

US Equity Futures: ES +0.3%, NQ +0.2%, RTY +0.1%

• Futures are modestly firmer across the board, with sentiment seemingly faring a little better vs European peers despite the surprise US attack on Iran.


• The docket ahead includes US Flash PMIs, where the metrics are expected to fall slightly. Elsewhere, US existing home sales for May seen slipping to 3.95mln from 4.0mln. On the speakers' slate, remarks due from Fed's Goolsbee (2025 voter), Q&A expected; Kugler (voter) and Williams (voter) will speak at a 'Fed Listens event'; Fed's Bowman (voter) will speak at a banking conference.

23 Jun 2025 - 10:05- ForexGeopolitical- Source: Newsquawk