EUROPEAN EQUITY OPEN: Cautious start for European stocks; flash PMIs ahead, before key risk events later in the week

EUROPEAN OPEN: European equities have started the week on a note of caution ahead of today's flash PMI data, and before this week's key risk events, which includes the FOMC (+25bps expected) and ECB (+25bps has been heavily telegraphed). Over the weekend, Spaniards went to the polls to vote in a snap election, which was won by the conservative Popular Party (PP), but it didn't get a majority; PP will need to enter talks with other parties to form a coalition government, while left-wing parties may team up with regional parties to try and form their own government. The outcome leaves the political future uncertain and dependent on coalition negotiations, BBC said. In the APAC session, the July PMI data from Australia and Japan overnight came in on the soft side, and European gauges are expected to pare back a little in the month too. The corporate earnings slate has been busy on Monday, with telecoms giant Vodafone (VOD LN) posting better than expected revenue growth, and named a new CEO; Ryanair (RYA ID) posted solid revenue growth in the quarter, but cut its outlook due to Boeing (BA) jet delivery delays; Philips (PHIA NA) posted earnings and sales beats. Commenting on the tone of incoming European earnings, the team at Morgan Stanley said Q2 results so far point to: (1) 32% breadth of sales beats; (2) a 5% net miss on EPS; (3) positive EPS trends only for Large-cap stocks; (4) increasing negative skew to price action around beats/misses. It is also worth noting that US oil major Chevron (CVX) reported higher than expected Q2 profits, and said production in the Permian soared to a record high, while its CEO had his mandatory retirement age waived.

EQUITY NEWS:

• Our full European briefings for July 24 can be accessed here and here.


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  COMMUNICATIONS: KPN (KPN NA) - Q2 results show growth, plans regular dividends for 2023. Vodafone (VOD LN) - Reports better revenue growth, announces Luka Mucic as CFO.


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  CONSUMER: Adidas (ADS GY) - Yeezy shoe orders surpass expectations, exceeding EUR 508mln by June 2nd. Compass Group (CPG LN) - Agrees to buy back up to GBP 500mln of shares from Barclays. Hella (HLE GY) - Strong H1 results, affirms FY23 revenue guidance. Ocado (OCDO LN) - Wins legal battle, to be paid GBP 200mln over patent infringement accusation. Pandora (PNDORA DC) - Ako Capital holds 0.6% short position.


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  FINANCIALS: Gam Holding (GAM LN) - Liontrust extends offer period, Co's future at risk due to Newgame's interest. Generali (G IM) - TUA assicurazioni sale attracts interest from international groups. Julius Baer (BAER SW) - Strong H1 performance, uncertainties impact client sentiment. Metro Bank (MTRO LN) - Denies political bias amid Brexit support account closure accusation. UBS (UBS SW) - Swiss Government plans Ermotti as Credit Suisse chair.


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  HEALTHCARE: Atoss (AOF GY) - Impressive H1 results, positive outlook for FY23 and beyond. Ipsen (IPN FP) - Principal shareholder concert simplification effective from Dec 19, 2023. Philips (PHIA NA) - Q2 results exceed forecasts, raises FY23 outlook with restructuring on track. Roche (ROG SW) - Partners with Alnylam to develop RNAi therapeutic for hypertension.


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  INDUSTRIALS: Airbus (AIR FP) - Expands Astrocast partnership for improved satellite IOT technology. Easyjet (EZJ LN) - Monitoring Greek Island wildfires, operating flights to Rhodes. International Distributions Services (IDS LN) - Upgraded to Hold from Sell by Peel Hunt. Ryanair (RYA ID) - Q1 results meet expectations, optimistic for modest FY24 growth.


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  REAL ESTATE: Housing Names - Sunak renews pledge to build 1mln new UK homes, streamlining planning system. Icade (ICAD FP) - H1 revenues rise, FY23 dividends expected to increase over 10%.


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  TECH: Software AG (SOW GY) - Q2 revenues beat expectations, affirms EBITDA margin guidance.


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  UTILITIES: Orsted (ORSTED DC) - Sells remaining 25% share of London Array for GBP 717mln.

TODAY’S AGENDA:

• Our interactive calendar can be accessed here; a pdf version can be downloaded here.


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  EUROPE: The focus today will be on flash PMI data, which are expected to register modest declines M/M for the EZ, Germany and France.


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  NORTH AMERICA: Flash PMI data are the only notable item on a quiet calendar. On the supply front, the US will sell USD 42bln of 2yr notes, in a front-loaded supply schedule this week, ahead of Wednesday’s FOMC (2s today, 5s Tuesday, 7s Wednesday). Before the market open, earnings are due from DPZ; after the bell, NXPI, CDNS, WHR, FFIV, ARE, PKG, and BRO are due; our Daily US Earnings Estimates can be accessed here.


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  WEEK AHEAD: It’s a key week ahead for macro updates, with the FOMC meeting (+25bps expected – and looking for clues as to whether we have hit terminal), US advanced GDP for Q2 (will help guide terminal expectations ahead), PCE (Fed’s preferred inflation gauge); elsewhere, policy meetings from the ECB and BoJ. Our week ahead briefing can be accessed here. It's also a busy week for corporate earnings; highlights include: DHR, GE, RTX, NEE, VZ, TXN, GOOGL, MSFT, V on Tuesday; TMO, T, KO, BA, UNP, META, NOW on Wednesday; HON, BMY, CMCSA, MCD, SPGI, ABBV, MA, TMUS, INTC, MDLZ on Thursday; and AZN, CVX, XOM, PG on Friday. Our Weekly US Earnings Estimates note can be accessed here.


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  APAC WRAP (OVERNIGHT): Stocks in the Asia-Pacific region had mostly positive movements, but gains were limited. US equity futures were uncertain before key events like FOMC, ECB, and BoJ meetings, and big tech earnings results. The ASX 200 remained flat due to mixed performances in the energy and mining sectors, and Australia's flash PMIs showed contraction. The Nikkei 225 rose, still supported by dovish BoJ sources story ahead of this week's policy meeting. The KOSPI ignored North Korea's missile firing. Hang Seng declined due to weakness in property and tech, while Shanghai Comp. was undecided amid mixed economic signals in China. (Newsquawk)


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  WALL STREET WRAP (FRI): Stocks had a mixed and choppy week, with utilities performing well and tech stocks lagging. Despite some uncertainty, the S&P 500 ended the week with gains. Treasury yields slightly declined, with traders focusing on the upcoming FOMC meeting where a rate hike is expected. Treasuries overall had a lower week due to mixed data and uncertainty about the Fed's future actions. The Japanese Yen weakened against the US Dollar after dovish reports about the BoJ's upcoming meeting. Next week, the focus will be on central bank meetings (FOMC, BoJ, and ECB) and heavy corporate earnings reports. (Newsquawk)

24 Jul 2023 - 08:15- EquitiesData- Source: Newsquawk