Newsquawk

EUROPEAN EQUITY OPEN: Indices start the week with gains; geopolitics and Brexit in focus ahead of flash EZ inflation data and ECB minutes later in the week

OVERNIGHT: Stocks on Wall Street Friday were hit after further hot inflation data saw a hawkish shift to Fed pricing (see here). Asia-Pac stocks began the week cautiously heading into month-end, and a slew of upcoming releases including Chinese PMI data (see here). BoJ Governor nominess Ueda has again been speaking to lawmakers, and is impressing that the current brand of loose monetary policy outweighs the costs.

EUROPEAN OPEN: European equities open with gains after Friday’s sell-off, which was influenced by hot US inflation data resulting in a hawkish re-pricing of Fed rate hike expectations, providing further signs that the global normalisation of surging prices will not be linear. The data slate is benign on Monday; BoE speak and ECB speak is due. Elsewhere, UK PM Sunak potentially meeting with EC President von der Leyen at lunchtime in Berkshire to discuss the Northern Ireland Protocol; Downing Street has referred to the meeting as "final talks". Events will pick up later in the week, where the domestic focus will return to inflation, with flash HICP data due for release, as well as the ECB’s recent meeting minutes. Meanwhile, geopolitics continues to be in focus as China leader Xi reportedly plans a meeting with Russia President Putin next week; Western allies have warned China that providing any lethal aid to Russia would come with real costs.

Our live day ahead calendar can be accessed here; a PDF version can be accessed here.

EUROPEAN DATA/SPEAKERS: There will be attention on the Eurozone consumer inflation expectations numbers; recent reports have noted that Eurozone underlying inflation rose to a record in January, according to the revised data releases, which will likely embolden the ECB’s hawks to push for a 50bps hike in March. Sentiment indicators are out in the morning; final consumer confidence is expected to be confirmed at -19.0 in February; and on the business side, economic, services and industrial sentiment is seen improving in the month. On the speakers front, BoE Chief Economist Pill and BoE’s Broadbent will speak at the annual BEAR Research Conference, while ECB’s Chief Economist Lane will speak speaking on macro-financial stability, and will release a slide deck.

NORTH AMERICAN DATA/SPEAKERS: There is not a lot of A-List releases on the slate for Monday’s session: Durable Goods orders for January, and Pending Homes Sales are the highlights; Dallas Fed’s regional survey will also be out. From Canada, current account data for Q4 is due. Fed’s Jefferson (voter) will speak on inflation and the Fed's mandate, and will likely reiterate remarks from last week that wage growth was still running too high, and the ongoing imbalance between supply/demand for labour suggests high inflation may come down only slowly.

SUPPLY: The Eurozone will sell EUR 4bln of 2025 and 2028 NGEU notes. The BoE will conduct its long-term Gilt sale in the afternoon.

CORPORATE EARNINGS: Today’s major US corporate earnings include OXY; our daily earnings expectations sheet can be accessed here; our weekly earnings sheet can be accessed here – this week’s major earnings include TGT and MNST on Tuesday; LOW and CRM on Wednesday; AVGO and COST on Thursday.

WEEK AHEAD: While the week starts off on a quiet note, for scheduled data releases and speakers, the week ahead contains the US ISM, BoJ Governor nominee hearing, China PMI data, EZ flash inflation, as well as ECB minutes; our week ahead preview note can be accessed here.

Our full stock specific briefings for February 28th can be accessed here and here.

COMMUNICATIONS: Deutsche Telekom (DTE GY) CEO said his biggest mistake was taking a stake in BT (BT/ LN), adding that he did not understand all of the obstacles around the telecoms company. KKR is ready to cooperate with Telecom Italia (TIT IM) board. Mediaset Espana (TL5 SM) downgraded at Oddo Securities.

CONSUMER STAPLES: AB Foods (ABF LN) gave a trading update where it raised FY outlook. Of note for tobacco companies, UK mulls imposing a new tax on vaping products. Bunzl (BNZL LN) posts higher profits underpinned by demand, maintains FY23 outlook. Royal Unibrew (RBREW DC) downgraded at Handelsbanken.

ENERGY: BP (BP/ LN) CEO Looney could be paid an GBP 11mln bonus, but BP consulting investors on size of exec bonuses ahead of the AGM. Shell (SHEL LN) upgraded at Goldman Sachs.

FINANCIALS: Standard Chartered (STAN LN) reportedly in talks to provide lending to support Credit Suisse's (CSGN SW) investment banking spinoff CSFB. UniCredit (UCG IM) head of the remuneration committee resigned following unsubstantiated allegations of leaking from the board. Commerzbank (CBK GY) will re-join the DAX 40 today, following the delisting of Linde (LIN GY).

HEALTH CARE: Pfizer (PFE) is reportedly in talks to acquire Seagen (SGEN) in a deal likely to be valued at more than USD 30bln. Haleon (HLN LN) is reportedly exploring a USD 600mln sale of its ChapStick lip balm brand. Activist investor Jeff Ubben is joining an independent, external group of experts that advises Bayer’s (BAYN GY) management on sustainability. Separately, Bayer's Nubeqa has been approved for additional indication in Japan. S&P cuts Fresenius Medical Care (FME GY) ratings.

INDUSTRIALS: Airbus (AIR FP) expects the Pacific region to take deliveries of 920 planes over the next two decades amid a bounce in air travel. Thales (HO FP) will hire 12k new workers this year amid higher demand. Deutsche Post (DPW GY) downgraded at HSBC. PostNL (PNL NA) ses profits of EUR 70-100mln in FY23. Austrian Post (POST AV) downgraded at Erste Group. Schneider Electric (SU FP) receive a positive mention in Barron's, which noted clean energy names were attracting billions in investments. Senior (SNR LN) sales profits beat in FY22, sees strong growth in 2023 in line with guidance.

TECH: Nokia (NOKIA FH) announced an updated company and technology strategy, and unveiled a refreshed brand, as part of its long-term strategic transformation, and reiterated its long-term financial targets. Capgemini (CAP FP) and Schneider Electric (SU FP) are to collaborate to accelerate 5G based industrial automation with Qualcomm (QCOM).

UTILITIES: Of note for UK energy and utilities, Ofgem is expected to announce lower energy price cap, according to according to the latest forecast from energy consultancy Cornwall Insight.

27 Feb 2023 - 08:10- Research Sheet- Source: Newsquawk