EUROPEAN EQUITIES UPDATE: Stocks tread water following US-China talks ahead of US CPI

STOXX 600: U/C

• Mixed trade overall after indices saw some modest upside as trade commenced, marginally defying indications from futures which pointed to a slightly softer cash open.


• Markets tread water following the US-China trade talks, where both sides concluded the two days of negotiations in London with a framework to restore the flow of sensitive goods, pending approval from Presidents Trump and Xi. Chinese Foreign Ministry spokesperson Lin said there is no information to offer on the US-China meeting in London.


• Overnight, APAC stocks were mostly higher amid the trade-related optimism, though the upside seemed capped given the lack of solid details.


• Ahead, the main macro focus remains on US CPI (details below in the US section)


• In Europe, the UK spending review is the main event (see below for primer), and we are also due to get the ECB's wage tracker data. There are also a few ECB speakers scheduled today, with President Lagarde, ECB's Buch (Supervisory), ECB chief economist Lane, and ECB's Cipollone due.

Sectors: Mixed/Mostly lower

• Kicked off the session with a mild upward bias which turned into a downward bias not long after the open.


• Basic Resources, Tech, Consumer Products and Services all benefit from the aforementioned US-China trade updates.


• Retail is the marked underperformer - dragged by IBEX-heavyweight Inditex (-4.9%) who missed on revenue expectations and flagged an FX impact - in turn causing the Spanish index to lag vs peers.


• UK sectors are in focus today as Chancellor Reeves is poised to announce her spending review into individual government departments and outline what their budgets will be for the next three years. In terms of the sticking points for Reeves, reports in the FT on June 2nd outlined that the outstanding departmental budget decisions included housing, energy, education and crime (full primer available on Newsquawk).

Movers:

• Sana Bidco, wholly owned by KKR-advised (KKR) funds, made a recommended best and final offer for Assura (+2.1%) of GBP 0.5042/shr, valuing the company at GBP 1.69bln.


• BT (+1.4%) is reportedly exploring a takeover of TalkTalk, according to the Telegraph, amid concerns that TalkTalk’s financial pressures could impact BT’s business and the wider broadband market.


• Inditex (-4.9%) reported Q1 sales of EUR 8.27bln (exp. 8.36bln), reflecting slower growth amid economic uncertainty; its May-June revenue rose +6% (prev. +12% Y/Y); cooler weather in Spain (which accounts for around 15% of its sales), also weighed on performance.


• In notable broker updates, Bayer (+2.3%) was upgraded at HSBC; Deutsche Boerse (-0.6%) was downgraded at UBS; Safran (-0.1%) was downgraded at Citi.

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

• Subdued trade across US equity futures following the US-China talks which concluded but the framework is pending approval from Presidents Trump and Xi.


• The highlight of the US Day is the CPI report for May, which comes ahead of tomorrow's PPI (using both, analysts will be able to model what the Fed's preferred gauge of inflation, PCE, will look like for the month), and next week's FOMC.


• JPMorgan outlines CPI scenarios based on Core MoM data, with SPX options implying a ±1% move. A print of 0.4% (5% probability) could see the SPX fall 2–3%. A 0.35–0.4% reading (25% chance) may lead to a 1.25–1.75% drop. If CPI lands between 0.3–0.35% (35% probability), SPX might move between –0.25% and +0.75%. A softer 0.25–0.3% (30% chance) could lift SPX by 1–1.5%, while a sub-0.25% surprise (5% probability) might drive gains of 2–2.5%.

11 Jun 2025 - 10:25- ForexData- Source: Newsquawk