EUROPEAN EQUITY OPEN: Stocks open around flat amid US debt ceiling impasse; focus for European traders switches to PMI data

OVERNIGHT: Wall Street was mixed on Monday: the Nasdaq gained support from Alphabet and Meta Platforms, while the S&P 500 was flat with cautious investor behaviour ahead of debt ceiling discussions. Our US wrap is here. President Biden and House Speaker McCarthy had a "productive" meeting on preventing a US debt default, but no deal was reached. Both sides again agreed that a default was off the table. McCarthy expressed optimism and intends to communicate with Biden daily until an agreement is reached. Treasury Secretary Yellen reiterated the urgent need to raise or suspend the debt limit to avoid financial catastrophe. APAC stocks initially rose to two-week highs but then relinquished early gains amid caution over the US debt ceiling impasse, while traders were also awaiting today's PMI releases in Europe and the US. Aussie shares were capped by weakness in the consumer sectors and after Australia’s flash manufacturing PMI remained at a contraction. Japanese stocks climbed to the highest levels since 1990 before slumping in afternoon trade. China stocks were subdued following Hong Kong’s failure to sustain the early tech-led momentum after China approved 86 domestic online games in May, while the mainland was pressured after press reports speculated that the PBoC's benchmark lending rates will remain unchanged for some time, and as the US denied it was planning to lift sanctions on China's defence minister. Our APAC wrap is here.

EUROPEAN OPEN: European indices start the day around flat, and while traders will be keeping an ear on US debt ceiling talks, the focus will be on PMI data released in the morning. Analysts will be watching to see if the upside surprise seen in April can continue into May, although consensus expectations look for a mixed showing (see day ahead, below).

STOCK SPECIFICS: In communications, Altice UK has acquired a further 650mln shares in BT (BT/A LN), raising its stake to around 24.5%; Altice UK confirmed it does not intend to make an offer for BT. ITV (ITV LN) makes an investment in PitPat, adding it to its media for equity portfolio. Of note for Deutsche Telekom (DTE GY), T-Mobile (TMUS) CEO sees Q2 postpaid phone net additions at flat or higher vs Q2 last year. In financials, UBS (UBSG SW) China fund management project has reportedly stalled after the Credit Suisse (CSGN SW) deal. First Citizens BancShares (FCNCA) sues HSBC (HSBA LN) for reportedly poaching dozens of SVB staff. Julius Baer (BAER SW) saw modest inflows after a slow start to the year. In consumer sectors, British American Tobacco (BATS LN) is facing shareholder activism, with top holders calling for buybacks to boost the stock price. Nestle (NESN SW) operations chief to retire, Stephanie Pullings Hart named successor. For UK staples, Chancellor will meet food manufacturers today and call for the industry to assist in easing pressure on household budgets. In tech, Samsung Electronics (005930 KS) Q2 DRAM shipments expected to have increased 15-20%, and SK Hynix (000660 KS) shipments expected +30-50% in Q2 amid reported improvements in South Korea's chip industry. In materials, Antofagasta (ANTO LN) Centinela Mine supervisor union to extend contract negotiations to avoid strike. Fresnillo (FRES LN) chair notes recent reforms of mining laws in Mexico, but said Fresnillo will not be significantly affected. In energy, Tullow Oil (TLW LN) working interest in South Lockichar blocks is to increase from 50% to 100%. In real estate, Barratt Developments (BDEV LN) chair John Allan to step down. Our full European equity briefings for May 23rd can be accessed here and here.

TODAY’S AGENDA:

23 May 2023 - 08:10- Data- Source: Newsquawk

Purchasing Manager IndexUnited StatesUnited KingdomJanet YellenAltice SAFresnillo PLCHawkFederal ReserveINTU.USFCNCA.USLOW.USTLW.LNFRES.LNANTO.LN000660.KS005930.KSBDEV.LNTMUS.USAZO.USBATS.LNHSBA.LNITV.LNDTE.GYDataChinaBarratt Developments PLCBDEVECBBoEGovernorDoveInternational Monetary FundInstitute for Supply ManagementNew Home Co Inc/TheLOWAZOIntuit IncINTUPANWBrentOilEuropean OpeningPresidentJapanPBoCBT Group PLCBT/A.LNITV PLCMediaDeutsche Telekom AGDTETMUSUBS AGUBSGCredit Suisse Group AGHSBABritish American Tobacco PLCUS exchanges (NYSE, Nasdaq)Nestle SANESNSK Hynix IncSouth KoreaAntofagasta PLCANTOFRESTullow Oil PLCEUREU SessionAsian SessionHighlightedResearch SheetNetherlandsMexicoHong KongAustraliaQatarIraqUSDGermanyGBPEuropeGeopolitical

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