EUROPEAN EQUITY OPEN: Indices open around flat as we await further Russian sanctions

INDICES: At 08:17,  Euro Stoxx 50 -0.14% at 3,946; FTSE 100 -0.22% at 7,542; DAX -0.17% at 14,494; CAC 40 -0.17% at 6,720; IBEX 35 -0.10% at 8,512; FTSE MIB -0.04% at 27,448; SMI -0.09% at 12,330. 

OPEN: European equities open flat as we await the announcement of further sanctions against Russia over alleged civilian killings in Ukraine; sanctions may include steel, luxuries and jet fuel, while EU officials also said that oil and coal sanctions were an option. Holders of its sovereign debt more than $600 million from reserves held at American banks, but the major move would be for the European Union, and Germany in particular, to ban the import of Russian gas and oil. The US Monday prevented Russia's government from paying holders debt via the USD 600mln it has parked at US banks. Crude is building on gains amid fresh geopolitical tensions as well as continued supply tightness, offsetting constructive geopolitical developments in Yemen and SPR releases. Currencies are range-bound, although the AUD is higher on the RBA's hawkish hold, JPY strengthens as policymakers warn on the speed of recent yen moves, while RUB comes under pressure ahead of further sanction announcements; haven currencies are slightly up against the buck. Data-wise, final March PMIs are to be released in the morning; in the afternoon, US ISM services data, US ana Canadian trade data, weekly ECB purchases; after hours, the API will report weekly energy inventory data. Speakers wise, remarks from the Fed’s Williams (voter) and Kashkari (2023, dove) will be eyed, as will continued commentary on geopolitics. Our ‘Day Ahead’ calendar can be accessed here.

STOCK SPECIFICS: For Russia-focussed names, new EU Russian sanctions are likely to include steel, luxuries and jet fuel, sources said, while officials also said that oil and coal sanctions were an option. Of note for travel & leisure names, travellers have been warned to expect disruption when travelling over the spring and summer as airlines and airports struggle to rehire staff. Of note for gaming names, UK companies will be banned from using ads which include sports personalities, reality TV and social media stars, as part of new rules to protect the vulnerable. In health care, Roche (ROG SW) - To showcase next generation diagnostic solutions at EuroMedLab (April 10-14th); Novartis (NOVN SW) gets US FDA has commercial licensure approval for a multi-product gene therapies; Bayer (BAYN GY) unveiled new data for chronic kidney disease and type 2 diabetes. In industrials, Airbus (AIR FP) continues to expect A350 production increased rate from 5/month to around 6/month in early 2023; no change to delivery guidance; Air France (AF FP) in talks with GE (GE)/Safran (SAF FP) JV on the purchase of Leap-1A engines, for use in Airbus (AIR FP) A320/21neo craft. Of note for auto names, Nio (NIO) in talks with other carmakers on licensing its battery swapping technology. In deal news, Around 37% of Aareal Bank (ARL GY) shareholders expressed support for the Atlantic BidCo EUR 33/shr offer; sources said KKR (KKR) cannot confirm EUR 10.8bln bid for Telecom Italia (TIT IM) unless it is given access to the telecom giant's books. ING (INGA NA) and Societe Generale (GLE FP) subsidiary Boursorama signed a deal to offer services to retail customers of ING in France. Of note for ITV (ITV LN), UK government is to sell off 'Channel 4' before the next general election. In broker updates, JPMorgan resumed luxury names LVMH (MC FP) and Richemont (CFR SW) with an Overweight; Darktrace (DARK LN) initiated at JPMorgan; Lloyds (LLOY LN) downgraded at Barclays; Vodafone (VOD LN) downgraded at Berenberg; Traton (8TRA GY) downgraded at Jefferies.

NOTABLE MOVERS:

• Basler (BSL GY) +3.6%: Upgraded at Berenberg


• Aareal Bank (ARL GY) +3.3%: 37% shareholders support Atlantic offer.


• NN group (NN NA) +2.1%: MS raises to Overweight.


• Pirelli (PIRC IM) +1.9%: Citi uprgades.


• Vodafone (VOD LN) -1.1%: Berenberg downgrade.


• Telecom Italia (TIT IM) -2.2%: KKR wants access to books for due diligence.


• Traton (8TRA GY) -2.8%: Downgrade at Jefferies.


• Darktrace (DARK LN) -5.6%: JPM initiates with Underweight.

Our full European equity briefings for April 5th can be accessed here and here. Our ‘Day Ahead’ calendar can be accessed here.

05 Apr 2022 - 08:17- EquitiesGeopolitical- Source: Newsquawk