EUROPEAN EQUITY OPEN: Stocks tilt lower after the open as Germany enters a technical recession and US debt ceiling concerns continue to linger; semis supported after NVDA results

OVERNIGHT: Stocks on Wall Street fell as debt ceiling talks once again failed to yield a breakthrough, while the rising risk of default prompted Fitch Ratings to place the US on rating watch negative (see below for our recap); the FOMC minutes were in keeping with recent commentary made by officials (our recap is below); afterhours, Nvidia (NVDA) earnings were solid, seeing the company’s share surge over 20%, and supporting the Nasdaq-100 index, where it holds a 5.5% weight. Our US wrap is here. Asian stocks traded mostly lower with the region cautious following the losses on Wall St. Aussie shares weakened as the commodity-related sectors led broad declines, while sentiment was also dampened on news that households are set to pay hundreds of dollars more each year after the energy regulator approved an increase of up to 25% in electricity bills. Japanese stocks saw upside capped in the absence of any major positive drivers or Tier-1 data releases. South Korean shares were subdued after the BoK rate decision, where rates were left unchanged, but six of the seven board members kept the door open for one more hike. Our APAC wrap is here

EUROPEAN OPEN: European shares have tilted lower after the open; Stellar earnings update from US-listed Nvidia (NVDA) is supporting sentiment among some of the bloc’s chipmakers (ASM, ASML, Be Semi, Infineon, Siltronic). But the fiscal circus in Washington continues, and despite sides remaining optimistic, rating agency Fitch is more cautious. A detailed look at German GDP growth in Q1 saw the headline revised to -0.2% Y/Y (exp. 0.2%), bringing some economic concerns to the fore: ING notes that with the quarterly measure printing -0.3% Q/Q, the data confirms that the German economy contracted in the last two quarters, and is officially in a technical recession. Meanwhile, German GfK Consumer Sentiment improved slightly to -24.2 in June (exp. -24.0, prev. -25.8). In the UK, Ofgem sets the energy price cap for July-September at GBP 2,074 (prev. 3280); the regulator added that, in the medium-term, the UK was unlikely to see prices return to pre-energy crisis levels. In France, data showed the manufacturing business climate easing to 99 in May (exp. 101.0, prev. 101.0).

STOCK SPECIFICS: Chip Names will note that Nvidia (NVDA) surged after the US close following solid earnings, and its rise is supporting the Nasdaq-100 index given its 5.5% weighting. Elsewhere in tech, US District Court has dismissed a securities claim against Ericsson (ERICB SS). Energy Names will note remarks from Russia Deputy PM who does not see new steps being taken at the June 4th OPEC+ meeting, and sees Brent crude prices above USD 80/bbl by the end of this year. Aker BP (AKERBP NO) announced a significant oil discovery near Yggdrasil, with a prelim estimate for a GRV between 40-90mln BOE. Eni (ENI IM) and Sonangol are to expand cooperation in decarbonisation and sustainable energy transition areas. In real estate, Adler Group (ADJ GY) Rental EBITDA declined, but it confirmed FY guidance. In industrials, Dassault Aviation (AM FP) to reduce share capital by cancelling 0.67% of share capital. In materials, Antofagasta's (ANTO LN) Centinela mine supervisory union accepted contract negotiations in order to avoid strike action. Johnson Matthey (JMAT LN) FY results in-line with expectations. In financials, LSE (LSEG LN) CFO Manz to step down at the end of her 12-month notice period in May 2024. Generali (G IM) reported upbeat results and confirms targets. In healthcare, EMA accepts Novartis' (NOVN SW) Sandoz marketing authorisation application for proposed biosimilar denosumab. In communications, Cineworld (CINE LN) gave a Chapter 11 update, now expects to emerge from Chapter 11 in July 2023. In consumer sectors, Tate & Lyle (TATE LN) sees annual profits jump 22%. FTSE 100 ex-divs: Coca-Cola (CCH LN), DCC (DCC LN), Imperial Brands (IMB LN), Intertek (ITRK LN), Kingfisher (KGF), Whitbread (WTB LN). Our full European equity specific briefings for May 25th can be found here and here.

TODAY’S AGENDA:

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

NVDAUnited StatesFederal ReserveJanet YellenGermanyECBHawkFOMCGross Domestic ProductDoveJMAT.LNCINE.LNDCC.LNANTO.LNTATE.LNCCH.LNWTB.LNITRK.LNNVDA.USERICB.SSENI.IMG.IMDataUnited KingdomIMBIntertek Group PLCITRKKingfisher PLCKGFWhitbread PLCWTBCentral BankConfederation of British IndustryRiksbankMonetary PolicyInitial Jobless ClaimsContinuing ClaimsMDTBBYDLTRRLADSKWDAYMRVLULTACOSTRepublicanInflationInterest RateEuropean OpeningYieldJapanASMASMLRating AgencyPM USOPECBrentOilEni SpADassault Aviation SAAntofagasta PLCANTOJohnson Matthey PLCLSEGManz AGNovartis AGNOVNCineworld Group PLCFTSE 100 IndexCoca-Cola Co/TheCCHDCCAsian SessionHighlightedResearch SheetEU SessionAM.FPRussian FederationFranceGBPEURItalyAfricaUSD

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