EUROPEAN EQUITIES UPDATE: Stocks rangebound into the Fed; UBS upped its STOXX 600 PT

STOXX 600: +0.2%

• European bourses opened mostly and modestly higher and price action has been rangebound throughout the morning, as traders await the FOMC later today.


• Earlier, traders had a UK inflation report to digest; it was largely in-line but the M/M and Y/Y Services component did cool a touch. Overall, metrics that will not shift the dial too much for the BoE – and this has been reflected in market pricing, which has only priced in a couple more bps of cuts at future meetings. In Europe, the ECB 2025 Annual Wage Tracker rose from the prior; the Bank said “early signs suggest lower and more stable wage pressures in H1 2026”. Thereafter, EZ HICP Final M/M and Y/Y were both revised a touch lower - little move seen on these releases.


• More broadly for US-China relations, some progress on the TikTok deal whereby the White House said it was further extending the TikTok enforcement delay, with the deadline to sell TikTok extended until December 16th. Though most recently, China reportedly told tech firms to stop purchasing NVIDIA’s RTX Pro 6000D chips. Ahead, the docket for Europe is now thin for the remainder of the day; most focus will lie on the FOMC (all discussed in the US section below).


• UBS upped its STOXX 600 2025 PT to 600 (currently 551.34), implying 9% upside from current levels.

Sectors: Mixed

• European sectors are mixed, and aside from top performer, the breadth of the market is fairly narrow.


• Tech tops the sectoral list today, following on from outperformance seen in Chinese tech-names such as Baidu; as a reminder, the Co. received an analyst upgrade related to its in-house chip venture and with SMIC (981 HK) testing domestically-made advanced chip-making machinery. SAP (+4%) gains, bucking the gradual downside seen YTD, where shares are currently down approx. 8%.


• Travel & Leisure takes the second spot, followed closely by Retail; the latter buoyed by strength in Inditex (+1.5%), after it received an upgrade at UBS.


• Chemicals is the underperformer today, with the downside driven by Wacker Chemie (-1.7%); the co. was downgraded to Underweight from Overweight at Morgan Stanley. Elsewhere, Basic Resources is also found towards the bottom of the pile, given the broader weakness seen in the underlying metals complex.

Movers:

• AstraZeneca -0.3%; Co. provides an update on Resolute Phase III Trial; Fasenra trial did not meet primary endpoint. Elsewhere, Saphnelo self-administration TULIP-SC Phase III trial meets primary endpoint in patients.


• Barratt Redrow +0.4%; rev. drops, raises dividends. Says uncertainty in macro environment and weak consumer confidence remain challenging.


• Nestle -0.5%; Co. Chairman Paul Bulcke steps down with Pablo Isla to take over, effective October 1st.


• Centrica +3%; upgraded to Overweight from Equal Weight at Morgan Stanley; adds stock to its "Top Pick" list.


• Novo Nordisk +2%; upgraded to Buy from Hold at Berenberg


• PostNL +5.7%; updates 2028 targets. To pay a dividend that develops in line with business production.

US Equity Futures: ES U/C, NQ -0.1%, RTY +0.2%

• US equities closed on a slightly softer level yesterday, whilst futures trade on either side of the unchanged mark, as traders await the FOMC; expectations are for a 25bps cut. The NQ saw some fleeting pressure after China’s internet regulator told the country’s biggest tech companies to stop buying NVIDIA chips; currently -1.1% in pre-market trade.


• Pre-market movers: Apple (-0.3%) iPhone sales fell 6% in China in the July-August period. Elsewhere, the White House said it was extending the TikTok enforcement day with the deadline extending to 16th December. As for Oracle (U/C), it is seen as taking a stake in TikTok. And for Wells Fargo (+0.5%), China has lifted the ban on the bank's employees.


• Looking Ahead: All focus will be on the FOMC, where the Bank is expected to deliver a 25bps cut. Decision aside, focus will be on any forward guidance and the voting patterns will be crucial in analysing dovish and hawkish sentiment. Interestingly, US President Trump is set to speak to Fox News during Chair Powell's press conference. Before all this, US Building Permits and Housing Starts are due.

17 Sep 2025 - 10:15- Fixed IncomeEU Research- Source: Newsquawk