EUROPEAN EQUITY OPEN: Mixed start; materials/energy names supported after price gains

INDICES: At 08:13GMT, Euro Stoxx 50 +0.4%, FTSE 100 -0.3%, DAX 40 +0.2%, CAC 40 +0.7%, FTSE MIB +1.1%, IBEX 35 +1.7%, SMI +0.1%.

OPEN: Indices open mixed amid continued angst over the situation in Ukraine. LME nickel surged to above USD 100,000/t amid a short squeeze induced by Russia-Ukraine fallout. Traders are noting that the spike in global commodity prices amid high inflation is presenting stagflation concerns, a theme that has been acknowledged by key ECB officials in the run-up to Thursday’s meeting (our preview is here). EU is considering a joint bond sale to finance investment into defence and energy, helping offset some of the downside. There may also be technical themes in play after the German DAX and the narrow gauge of European blue chips Euro Stoxx 50 both closed Monday’s session in bear market territory. 

STOCK SPECIFICS: Material names are in focus as commodity prices continue higher, with LME Nickel topping USD 100k/tonne on a short-squeeze. Uniper (UN01 GY) to take a EUR 987mln impairment charge in relation to loans for Nord Stream 2. TotalEnergies (TTE FP) CEO said Europe does not have the LNG import capacity for replace Russian gas. Fresnillo (FRES LN) reported revenue growth, while silver production was modestly below guidance but gold production was above; remains positive about the outlook for precious metals prices. There are also some more warnings on costs today: BHP (BHP LN) CEO sees lower growth this year due to inflation, while Greggs (GRGS LN) booked profits, but warned on cost pressures ahead. In board room themes, Ted Baker (TED LN) announced a new CFO, while Adidas (ADS GY) announced shakeup of China business management. Also of note for cyclicals, Frasers Group has announced an increased investment in Hugo Boss (BOSS GY). In telecoms, KKR (KKR) could lower bid for Telecom Italia (TIT IM) to EUR 0.40 (prev. EUR 0.505). Scout24 (G24 GY) launches EUR 350mln buyback.

NOTABLE MOVERS:

• IWG (IWG LN) +9%: Merges digital assets with Instant Group.


• BAE System (BA/ LN) +7.2%: Defence spending beneficiary.


• Fresnillo (FRES LN) +7%: Results.


• Telecom Italia (TIT IM) +5.8%: KKR may lower offer; some sympathy with peer ORA FP.


• BP (BP/ LN) +4.1%: Energy prices.


• Orange (ORA FP) +3%: In talks with Masmovil Ibercom to expand operations in the country.


• Danone (BN FP) -2.3%: Guidance.


• IAG (IAG LN) -6.6%: Oil prices.


• Tui (TUI LN) -7.4%: Oil prices.


• Greggs (GRGS LN) -12.3%: Results, warns on inflation.

NOTE: Our full European equity briefings for March 8th can be accessed here and here.

08 Mar 2022 - 08:16- EnergyResearch Sheet- Source: Newsquawk