Newsquawk

EUROPEAN EQUITY OPEN: Stocks start on the front foot, final PMIs ahead

OVERNIGHT: On Wall Street, stocks were firmer on Thursday after "pause" chatter from Fed's Bostic unwound earlier losses (see here). Asia-Pac stocks traded mostly higher amid tailwinds from the US (see here); the Nikkei 225 outperformed peers after data which showed Tokyo-area headline and core inflation began to soften, while the Unemployment Rate edged lower. China shares gained after strong Caixin Services and Composite PMI data which showed the fastest pick-up in activity since August, but upside was capped heading into China’s ‘Two Sessions’ (see here for our Two Sessions primer).

EUROPEAN OPEN: Stocks have started the last session of the week on the front foot, and both the broad- (Stoxx 600) and narrow (Euro Stoxx 50) gauges of European blue chips are both on course for weekly gains, albeit not completely paring back last week’s downside. Friday’s chipper trading tone appears to have been supported by strong leads from Wall Street and APAC trading, where some dovish commentary from Fed’s Bostic was seized upon by bulls. Today’s focus is going to be on final PMI data out of the bloc, and as the Stateside day comes into focus, there will be attention on the Services ISM data for further macro steer.

GERMANY TRADE: data released Friday showed Germany's trade surplus widening by more than expected in January (16.7bln vs an expected 11bln, from December's 10bln); the breakdown showed exports +2.1% M/M (exp. 1.5%), and imports -3.4% M/M (exp. 2.0%). ING notes that exports recovered somewhat from the December shock, but in the near term, ongoing weakening of export order books, expected slowdown of the US economy, high inflation and high uncertainty will leave a clear mark on German exports, and the reopening of the China economy will probably not be enough to fully offset the long series of downward risks.

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

EUROPEAN DATA/SPEAKERS: Final Services and Composite PMI data are due from the Eurozone, and are all expected to be confirmed vs the flash. EU producer price data for January will be released – we have already seen hotter-than-expected metrics for the HICP data, which has resulted in expectations of ECB terminal rate being revised upwards by both analysts as well market-implied measures. US President Biden will meet German Chancellor Scholz. On the speakers front, ECB Vice President de Guindos will speak, but no text is expected. On the CRA front, Fitch Ratings will review Austria's ratings (currently AA+) and Czech Republic's ratings (AA-), while Moody's will review Hungary's rating (Baa2).

US DATA/SPEAKERS: The Services ISM will be eyed; the manufacturing equivalent released earlier in the week was judged as hawkish after the prices paid component surged, and analysts will be looking to see if there are any similar dynamics within the services release. As is customary, the S&P Global final services and composite PMIs will be released, providing a convenient preview ahead of the ISM release. Fed voters Logan and Bowman, and non-voters Bostic and Barkin (non-voter) are all on the slate to speak.

COMMUNICATIONS: Universal Music Group (UMG NA) sales top expectations, CEO calls for new streaming model. Of note for Deutsche Telekom (DTE GY), EU Commission gives greenlight for Austria's largest private fibre partnership. Pearson (PSON LN) sales and net both growth underpinned by English language courses. Rightmove (RMV LN) annual profit rises, boosts dividend.

CONSUMER CYCLICAL: Salvatore Ferragamo (SFER IM) saw profits fall in FY22, but was smaller than expected, and says it has seen encouraging start to FY23. Of note for auto names, an EU debate scheduled for Friday on combustion engine ban taken off the agenda. Stellantis (STLAM IM/STLAP FP) upgraded at RBC. Porsche (PAH3 GY) and Volkswagen (VOW3 GY) downgraded at HSBC. Carnival Cruise Line (CCL LN) to expand its offering of seasonal European sailings in 2024. Knorr-Bremse (KBX GY) downgraded at Deutsche Bank.

FINANCIALS: ING (INGA NA) to nominate Karl Guha as its supervisory board chairman. Admiral Group (ADM LN) downgraded Citi. JPMorgan Chase upgrades Generali (G IM), downgrades Zurich Insurance (ZURN SW).

INDUSTRIALS: Fincantieri (FCT IM) will present measures to strengthen its financial position without a capital increase. Spain PM said government to check the legality of Ferrovial (FER SM) exit plan. BAE Systems (BA/ LN) won USD 250mln US army contract. Eiffage (FGR FP) and NGE consortium awarded EUR 230mln contract. Deutsche Lufthansa (LHA GY) earnings rise but still short of pre-pandemic levels. HSBC downgrades Schindler Holdings (SCHP SW), AB SKF (SKFB SS), Hexagon (HEXAB SS) and Vestas Wind Systems (VWS DC).

MATERIALS: BHP (BHP AT) signs contracts with Shandong ports, which accounts for around a quarter of China's annual iron ore throughput. Swiss regulators will reportedly propose sanctions against Clariant (CLN SW) over financial report misstatements in 2020 and 2021. Arkema (AKE FP) upgraded at Goldman Sachs. Boliden (BOL SS) downgraded at JPMorgan Chase.

TECH: Ericsson (ERICB SS) to pay USD 206mln penalty for violating US anti-bribery provisions. Nokia (NOKIA FH) aims to maintain a net cash position of 10-15% of sales. Infineon Technologies (IFX GY) will acquire Gan Systems for USD 830mln. Software AG (SOW GY) upgraded at Morgan Stanley.

03 Mar 2023 - 08:10- Research Sheet- Source: Newswires