EUROPEAN EQUITIES UPDATE: Upsides in European equities after positive US-China trade talks

STOXX 600: +0.8%

• European equities have opened higher. Upside seen in the DAX (+0.8%), FTSE 100 (+0.4%), CAC 40 (+0.1%) and EURO Stoxx 50 (+0.6%). Sentiment in Europe followed a similar trend from the overnight session after APAC stocks gained following President Trump’s more conciliatory language on China, where the US President said talks with China are progressing.


• Elsewhere, Kering (KER FP) announced that it will be selling its beauty division to L’Oreal (OR FP) which has propped up gains for KER (FP), cushioning the CAC 40, although the index is underperforming peers after S&P surprisingly lowered France's sovereign credit rating to 'A+' from 'AA-'.


• Furthermore for the French index, BNP shares (-7%) are under increasing pressure and have been halted this morning; an acceleration that follows on from the Sudan verdict, which some have suggested could open the door to refuges in the US seeking significant damages.


• The main newsflow this morning from Europe surrounded Amazon’s AWS outages, with companies in the Eastern region of the US reporting outages on the cloud computing service. Data this morning saw German Producer Prices at -1.7%, below expected 1.5%.

Sectors: Positive

• European sectors have opened largely in the green. The biggest winner today thus far has been the Banking (+1.8%) sector, despite the losses seen across French banks, but with yields higher. Industrial Goods and Services (+1.4%) is in second place driven by gains in defensive companies like Rheinmetall (+4.3%) and BAE System (+1.4%) due to heightened conflict in Gaza. Moreover, above-forecast Chinese GDP has also fuelled sentiment for Luxury stocks such as LVMH (+1.1%) and Hermes (+1.8%) due to China being a key market for European luxury goods, lifting the Industrial goods and service sector.


• At the bottom we have Automobiles & Parts (-0.6%) and Real Estates (-0.3%). The downtrend seen in Auto is largely due to newsflow from China after a US official announced that Trump plans to impose 25% tariffs on heavy-duty trucks effective November 1st. For Real Estate, Rightmove House prices showed a slight easing in the M/M increase whilst Y/Y remained at the same pace of contraction. Rightmove suggested "speculation that the Budget may increase the cost of buying or owning a property at the higher end of the market has given some movers, particularly in the south of England, a reason to wait and see what’s announced in the Budget.”

Movers:

• Volvo (+1.7%) Broker upgrade form Sell to Hold has lifted shares.


• Telefonica (+1.5%) - Co. is looking to realign its relationship with United Internet (UTDI GY); sources suggest that representatives have called for closer cooperation, with a potential takeover also in mind.


• BP (+1.3%) - Maeil Business paper writes that BP was selected as the preferred bidder for South Korea’s East Sea deep-sea gas field development project. A Korean National Oil Corporation official said, “Official negotiations will take place after notification of preferred negotiators”.


• B&M (-14.9%) Shares are down, weighing down the Optimised Personal Care and Drug Store (-0.1%) after Co. Revises FY26 guidance, FY26 adj. EBITDA between GBP 470mln-520mln, continues to expect LFL growth, future adj. EBITDA margins for B&M UK can stabilise at low double-digit percentage levels over the medium term; in addition, CFO Mike Schmidt to step down.

US Equity Futures:

• US future equities are up with gains in the ES (+0.3%), NQ (+0.4%), and RTY (+0.8%), albeit off earlier highs as Amazon’s AWS outage impacts several firms including Amazon (AMZN), Snapchat (SNAP) and Coinbase (COIN), alongside many others.


• Looking ahead: Notable US corporate earnings due today include Zions Bancorp (ZION), Cleveland Cliffs (CLF), W.R. Berkley (WRB), Steel Dynamics (STLD). No Fed speakers today due to the Fed blackout period.

20 Oct 2025 - 10:05- ForexEU Research- Source: Newsquawk