EUROPEAN EQUITY OPEN: Equities open flat/lower as hawkish BoC impulse continues to reverberate; GDP revisions ahead

EUROPEN INDICES: At 08:11BST, Euro Stoxx 50 -0.2% at 4,284; FTSE 100 +0.1% at 7,634; DAX -0.2% at 15,931; CAC 40 -0.1% at 7,199; IBEX 35 +0.0% at 9,362; FTSE MIB +0.1% at 27,080; SMI +0.1% at 11,354.

EUROPEAN OPEN: Following the downside on Wall Street and a mixed performance overnight in Asia, European stocks open on the back foot. A surprise BoC rate hike is said to have raised fears the Fed could similarly surprise on the hawkish side next week, stoking yields higher, and weighing on growth proxies. And the theme of higher yields has extended into Thursday trading. In terms of this morning's data releases, the slate in Europe is thin today, though traders will be focussed on revisions to Q1 growth data. Earlier today, the KPMG/REC monthly report on the UK labour market showed a cooling as starting salaries for permanent staff rise at weakest pace in over two years, while the number of permanent staff placements dropped sharply, indicating loosening job market; the survey also highlighted dampened hiring activity, and ongoing economic concerns. On the UK housing front, data from the RICS said the net balance of new home buyer enquiries was the highest since May 2022 at -18, and although national house prices are still declining, the downward momentum was gradually easing. Additionally, RICS said that its new instructions indicator entered positive territory for the first time since early 2022.

EUROPEAN STOCK SPECIFICS:

• 
  NOTABLE MOVERS:  Evotec (EVT GY) +3.9%, Wizz Air (WIZZ LN) +3.7%, Travis Perkins (TPK LN) +1.5%, Rio Tinto (RIO LN) +1.5%, Novartis (NOVN SW) +0.9%, SocGen (GLE FP) +0.9%.


• 
  COMMUNICATIONS: BT (BT/A LN) CEO Jansen's base salary frozen, pensions scheme seeks private credit investment. Telecom Italia (TIT IM) submarine cable unit signs MOU for new infrastructure with Libya's LPTIC.


• 
  CONSUMER CYCLICAL: Clas Ohlson (CLASB DC) Q4 results slightly below expectations, cost-saving measures implemented.


• 
  CONSUMER: Crest Nicholson (CRST LN) flagged slowdown concerns after decline in HY profits.


• 
  ENERGY: Eni (ENI IM) signs MOU for energy transition initiatives in Libya.


• EX-DIVS: Centrica (CNA LN), Compass Group (CPG LN), Johnson Matthey (JMAT LN), Sainsbury's (SBRY LN), Vodafone (VOD LN), WPP (WPP LN).


• 
  FINANCIALS: GAM Holding (GAM SW) shareholder Rock Investment requests EGM for board and articles changes. Barclays (BARC LN) Head of Americas power/utilities resigns, joins Guggenheim. M&G (MNG LN) reported net client inflows of GBP 0.4bln, strong investment performance across asset management and wealth business. SocGen (GLE FP) will sell some subsidiaries in Africa, would have a positive impact of around 5bps on CET1.


• 
  HEALTHCARE: Novartis' (NOVN SW) Sandoz presents compelling investment proposition as standalone company at Capital Markets Day; well positioned to deliver continued mid-single digit sales growth. Atos (ATO FP) board recommends voting against resolutions calling for chair removal.


• 
  INDUSTRIALS: Airbus (AIR FP) deliveries rose in May with a gross 17, and deliveries +34% at 63. Ryanair (RYA LN) settles US class action for USD 5mln, sees no lawful basis for claims but settlement benefits shareholders. Getlink (GET FP) May passenger vehicles traffic +14% Y/Y. Capita (CPI IM) to sell non-core software business for GBP 33mln. Wizz Air (WIZZ LN) sees a return to profits this FY.


• 
  UTILITIES: Orsted (ORSTED DC) confirms renewable ambitions, financial targets, and policies for 2023-2030.


• 
  OTHER: Of note for Banking and Pharma companies, the FT reports that delays in translating EU legislation were causing severe delays, jeopardizing the voting of around 200 components before the 2024 elections, and raising concerns about insufficient time.


• Our full European equity briefings for June 8th can be found here and here.

TODAY'S AGENDA:

• Our interactive online calendar is here; a PDF version can be found here.


• 
  US RECAP: US stocks were lower on Tuesday, with some notable losses in big tech, though there was an absence of obvious catalysts other than the BoC's surprise 25bp BoC hike, which pushed DM yields higher. Analysts also noted the divergent performance between Tech names (NDX -1.75%) and small caps (RUT +1.8%) in what appeared to be a position unwinds in wake of the RUT's technical breakout earlier this week. Our US wrap is here.


• 
  APAC RECAP: Asia-Pac stocks were subdued as global yields rose in wake of the BoC's surprise rate hike on Wednesday, resulting in mixed performance across the region, with tech underperforming. ASX 200 was rangebound; Australia's trade surplus narrowed in April, but remains elevated; export earnings were down 5.0%, slightly less than anticipated. Nikkei 225 retreats; the Japan economy watchers survey rose to 55.0 in May (exp. 55.0, prev. 54.6), while the outlook pared to 54.4 (exp. 56.1, prev. 55.7); and revised data shows Japan's economy grew more than expected in Q1, with domestic spending and company restocking offsetting the decline in exports. Hang Seng and Shanghai Comp. were lacklustre; China's Big 4 banks reduced deposit rates to support economy, in line with official commentary this week. In South Korea, a senior BoK official warned that an early shift in monetary policy may pressure the local currency due to increased volatility, and BoK said the degree of policy tightening has significantly lessened this year, emphasising that tightening was not over. In India, the RBI kept its Repo Rate unchanged at 6.50%, as expected, via unanimous vote; it also maintained its policy stance of remaining focused on withdrawal of accommodation via a 5-1 vote. Our APAC wrap is here.


• 
  EUROPE DAY AHEAD: Eurozone GDP revisions for Q1 are expected to be revised down 0.1ppts to 0.6% Q/Q and 1.2% Y/Y; the final employment stat for Q1 is expected to be confirmed at +0.6%. On the speaker's slate, SNB Chair Jordan is due to make remarks.


• 
  NORTH AMERICA DAY AHEAD: Weekly US Initial Jobless Claims are seen a touch higher at 235k vs a prior 232k, while Continuing Claims are seen rising a touch to 1.8mln from 1.795mln. Wholesale Sales and Wholesale Inventory revisions will be released after the open. On the supply front, the Treasury will announce sizes for next week's 3yr, 10yr, 30yr auctions. Following the BoC's surprise rate hike on Wednesday, BoC's Beaudry will deliver the Economic Progress Report.


• 
  ENERGY: The weekly EIA NatGas storage change data is due, and is expected to show a build of 113BCF (vs last week's build of 110BCF).

08 Jun 2023 - 08:11- EquitiesData- Source: Newsquawk