EUROPEAN EQUITY OPEN: Stocks open with gains; US ADP jobs data, ISM Services and FOMC rate decision are today's key focus, ahead of Thursday's ECB meeting

OVERNIGHT: On Wall Street, Tuesday saw a risk-off trade with a focus on regional banking, leading to vast losses, with the regional banking ETF closing down over 6%. The latest JOLTS was cooler than expected, leading to fresh buying on haven demand and a dovish move in money market pricing, with markets pricing in a 25bps hike from the Fed with 85% certainty. Our US wrap is here. Most Asia-Pacific stocks were negative due to losses on Wall Street ahead of the FOMC rate announcement and regional bank jitters. The ASX 200 and KOSPI declined due to weak data releases, while the Hang Seng was pressured by weakness in energy and tech sectors, with traders expecting a rate hike from the Fed and a similar move by the HKMA. The RBNZ Financial Stability Report said NZ's financial system is well placed to handle the higher interest rate environment and international financial disruptions; data showed New Zealand HLFS Job Growth +0.8% Q/Q in Q1 (exp. 0.4%). Our APAC wrap can be accessed here.

EUROPEAN OPEN: European equity indices open with gains amid a heavy slate of corporate earnings, which as always, we recap below. There is particular focus on automakers after a number of earnings, while tech names are also in focus after disappointing numbers from US semi AMD. There have also been constructive updates in the financial sector, with numbers from BNP (BNP FP), UniCredit (UCG IM) and Lloyds (LLOY LN), helping the risk mood this morning – these updates follow other well received updates from Europe’s banking sector in this earnings season. The tone of trading later today is likely to be shaped by US jobs data (ADP at 13:15BST), ISM Services data (15:00BST), and the FOMC rate decision (19:00BST, presser at 19:30BST); more in our Day Ahead section below.

STOCK SPECIFICS: In financials: BNP Paribas (BNP FP) profits doubled in the quarter after Bank of the West sale, and it confirmed FY targets. UniCredit (UCG IM) raised guidance after a strong quarter, while CEO said some M&A targets made no sense at current levels. Lloyds (LLOY LN) Q1 profits top forecasts, maintains guidance. In consumer cyclicals: Carnival (CCL LN) CEO said that demand is back. Adidas (ADS GY) is among the companies US lawmakers query over allegations its products use forced Chinese labour. Flutter (FLTR LN) Q1 revenues rise 29%, but US sales were up 92%, and it said it remains firmly on track for US profitability in FY23. Pandora (PNDORA DC) raised guidance after Q1 sales top expectations. For automakers: European investment in China's auto sector reached a record as automakers try to claw back market share. Automakers will also note Ford Motor (F) slipped in afterhours US trading despite reporting a swing back into quarterly profit, it kept its guidance unchanged. Porsche AG (P911 GY) saw record deliveries in Q1 and operating profit surged 25%. Stellantis (STLAP FP/STALM IM) sales rise 14% in Q1, exec said demand was holding up well in Europe, and it confirmed its guidance. Aston Martin Lagonda (AML LN) said Q1 performance was in line with expectations, and maintained FY guidance. In consumer staples: AB InBev (ABI BB) plans to boost marketing on Bud Light. Fitch cuts Casino (CO FP) ratings, and placed it on Rating Watch Negative. Of note for UK stocks: FCA to publish a consultation outlining plans to overhaul market listing regulations to make it more attractive to list in Britain. For homebuilders, Barratt Developments (BDEV LN) said FY trading outlook remains in line with expectations. In industrials: Deutsche Post (DPW GY) operating profit topped expectations. Lufthansa (LHA GY) saw a 40% jump in revenues, and reiterated guidance ahead of summer travel surge. In healthcare: Eli Lilly (LLY) and Sanofi (SAN FP) to cap US insulin prices at USD 35/month for the uninsured in NY. UK NICE said it was unable to make a recommendation on capmatinib (Tabrecta) since Novartis (NOVN SW) did not provide an evidence submission. Elsewhere, Amgen (AMGN) sues Novartis (NOVN SW) for infringing several patents, and asks a New Jersey federal court to block generic osteoporosis and bone cancer drugs. Haleon (HLE LN) quarterly profits pressured by higher costs, expects FY23 sales growth towards the upper-end of guidance range; separately, Pfizer (PFE) intends to begin selling its 32% stake in Haleon within months. In tech: Advanced Micro Devices Inc (AMD) saw top- and bottom-line beats, but traders noted that Data Centre Revenues missed expectations, with chip sales falling 64%, and its stock declined over 6% afterhours. Nvidia (NVDA) has lowered the price of its best graphics card, the RTX 4090, but only in Europe and only the Founders Edition GPU is affected, according to Digital Trends. In energy, Saipem (SPM IM) sold its KCA onshore drilling activities for USD 550mln. In materials, Holcim (HOLN SW) acquires roofing and waterproofing company PASA. Our full equity specific briefings for May 3rd can be accessed here and here.

DAY AHEAD: Interactive Day Ahead calendar is here; a pdf version can be accessed here. Another thin slate in Europe; the highlight is labour market data for March, where the Eurozone unemployment rate is seen unchanged at 6.6%. The labour market theme will continue into the US Day, where the ADP national employment data will contribute to our expectations of the more widely followed official BLS jobs data out on Friday; analysts expect ADP to print 150k vs 145k previously. The US quarterly refunding announcement is not expected to ruffle too many feathers ahead of the ISM services data due after the open; the street expects slight upside in the ISM release (see our weekly note here for primers on these events). The main event of the day is the FOMC meeting (our full preview is here), where a 25bps rate hike is expected, and traders will be on the lookout for any guidance on whether the Fed is now to pause monetary policy tightening (our full Fed preview can be accessed here). On the corporate earnings front, numbers are today due from CVS, EL, MELI, QCOM, EQIX, PSA; our Daily US Earnings Estimates sheet can be accessed here. Later this week, MRNA, REGN, COP, MNST, AAPL, BKNG and CI are due; our Weekly US Earnings Estimates sheet can be accessed here.

03 May 2023 - 08:10- Research Sheet- Source: Newsquawk