EUROPEAN EQUITY OPEN: AVGO lower, LULU tumbles; HSBA LN Chair to step down; HMB SS take-private speculation; AIR FP deliveries down in May; US jobs data, EZ GDP/employment ahead

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  EUROPEAN OPEN: European equities open Friday trading flat/lower, ahead of US jobs data, Eurozone GDP, labour market, and retail sales stats. On the week, futures of the broad Stoxx 600 and Euro Stoxx 50 indices are currently poised for a second week of gains, though not by much at this stage, and will depend on how the aforementioned data comes in. Overnight, APAC stocks were mixed following a subdued handover from Wall Street, where a stunning online bust-up between US President Trump and Tesla CEO Elon Musk overshadowed the recent call between President Trump and Chinese President Xi in which the leaders agreed to start a new round of talks. India’s RBI cut interest rates more than expected and lowered the cash reserve ratio, boosting liquidity amid slowing growth and easing inflation, signalling a more accommodative monetary policy to support the economy. The PBoC injected RMB 1tln of 3-month funds into markets via outright reverse repurchase agreements, a surprise mid-month move to ease liquidity concerns ahead of a seasonal cash crunch. It breaks the previous pattern of end-of-month disclosures since the tool’s October launch, Bloomberg notes. Following the ECB's rate cut on Thursday, there have been a number of ECB speakers commenting after hours on Thursday and in Friday's pre-market trade (Simkus said rates were now at neutral; Kazaks said markets should not expect cuts at every meeting; Villeroy said the ECB has won the battle against inflation in Europe; Muller said the rate-cutting cycle is probably almost finished).


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  DATA RELEASES: In Europe, Data out of Germany showed the trade surplus narrowing to EUR 14.6bln (exp. 20.0bln, prev. 21.1bln), with exports -1.7% M/M (exp. -0.7%) and imports +3.9% M/M (exp. +0.5%). German industrial output, meanwhile, fell by -1.4% M/M in April (exp. -1.0%). ING said the data on exports and industrial production show a strong reversal of the previous frontloading effects, but the bank remains hopeful for a cyclical rebound. In the UK, Halifax said the annual rate of house price growth slowed to +2.5% Y/Y in May (prev. +3.2% in April). The building society said affordability remains challenging as house prices stay high versus incomes, but lower mortgage rates and steady wage growth support buyer confidence, adding that the outlook depends on rate cuts, income growth, and inflation trends. Still, despite household financial pressures and economic uncertainty, the housing market has shown resilience, Halifax said, and that is expected to continue.


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  STOCK SPECIFICS: In autos, after Tesla's (TSLA) shares finished 14.3% lower on Thursday, wiping about USD 150bln in market cap, amid tensions escalating between CEO Elon Musk and US President Trump, its listing in Frankfurt is seeing upside on Friday following reports that White House aides have arranged a call with Musk to ease tensions. In tech, Broadcom (AVGO) shares fell over 4% in US after hours trading, despite strong results; reports suggested that the downside was likely due to profit-taking following a 78% rally since April, as markets may have priced in much of the AI-driven growth, while investor expectations around the name are high, and accordingly, guidance may have disappointed. In financials, HSBC (HSBA LN) chairman Mark Tucker will step down on September 30th after nearly eight years, to become non-executive chairman of AIA Group; Brendan Nelson will serve as interim chairman. In consumer sectors, US apparel maker Lululemon (LULU) saw its shares tumble by over 20% in extended trading; despite a small beat on the top- and bottom-lines in Q1, Q2 guidance missed expectations, and it cut its FY view. H&M's (HMB SS) founding family has quietly increased share purchases, raising speculation of a move to take the fast-fashion retailer private, Bloomberg reported. In industrials, Airbus (AIR FP) confirmed that it delivered 51 jets in May (-4% Y/Y), with 243 aircraft delivered so far YTD (-5% Y/Y); it reported no new orders in May, and has sold 291 aircraft since January, with a net total of 215 after cancellations. Dassault Systemes (DSY FP) aims to double its EPS by 2029. In notable broker updates, Legal & General (LGEN LN) was downgraded at Deutsche Bank; Prudential (PRU LN) was upgraded at Deutsche Bank; Airbus (AIR FP) was downgraded at Citigroup; Sonova Holdings (SOON SW) was upgraded at Kepler; Allianz (ALV GY) was downgraded at Deutsche Bank.

TODAY'S AGENDA:

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  DAY AHEAD: In Europe, Eurozone Q1 GDP revisions are expected to see the Q/Q measure revised up to +0.4% from an initially reported +0.3%, while the Y/Y rate is seen unrevised at +1.2%. Final Eurozone employment data for Q1 are expected to be unrevised. Eurozone retail sales are seen increasing +0.1% M/M (from -0.1% prior) though the annual rate is likely to cool to 1.3% Y/Y from 1.5%. The Bundesbank will publish its semi-annual forecasts. The data highlight of the Day is the US jobs data for May (our preview is below), where the pace of payroll additions is seen cooling. Canada's jobs data are also due. In energy, Baker Hughes will release its weekly rig count data in the afternoon; last week's report showed drillers cut the number of operating rigs for a fifth straight week to the lowest since November 2021. On today's CRA slate, potential rating reviews are due from Moodyʼs on Norway (currently Aaa), Moodyʼs on South Africa (Ba2), and Fitch on Hungary (BBB). On the speakers' slate, ECB President Lagarde will speak again today, and BoE chief economist pill is also on the schedule (note: Pill will be speaking on "AI and Households").


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  PREVIEW - US NONFARM PAYROLLS (13:30BST/08:30EST): The consensus expects the pace of payroll additions to cool in May, though the unemployment rate is expected to be unchanged, and wage growth is expected to ease on an annualised basis. There will be an eye on revisions to prior data, given the BLS will be correcting ‘minor errorsʼ from the April 2025 jobs data, though this will not impact the unemployment rate. Additionally, there will be some focus on government payrolls, where Federal job loss figures may tick up as severance periods end regarding public sector layoffs. Labour market proxies have tilted to the downside, with the ADPʼs gauge of private payrolls significantly disappointing expectations, signalling a loss of hiring momentum; weekly initial jobless claims and continuing claims data both rose slightly relative to the comparable survey windows in April. Within the ISM surveys, manufacturing employment continues to sit in contraction, despite a tick higher in the month, though the picture is better in the services sector, where employment returned to expansion. The Conference Boardʼs gauge of consumer confidence saw views of the labour market weakening in May. And while the most recent JOLTS data surprised to the upside, the internals were more mixed, and it is worth noting that it is data for April, not May. Currently, markets are fully pricing two Fed rate cuts this year, and analysts have suggested that any upside surprise could lead to a pricing out of these cuts, while any downside surprise could drive recession fears, and impact risk assets.


• Click here for Newsquawk's full US jobs report preview. 

06 Jun 2025 - 08:10- EquitiesData- Source: Newsquawk