EUROPEAN EQUITY UPDATE: Cautious and choppy amid quiet news flow and as the main Fed event looms

Analysis details (10:03)

Equities in Europe see a cautious and choppy mid-week session thus far, with a light docket and news flow on the quiet side as the clock ticks down to the Fed’s Jackson Hole Symposium – with the schedule for this week’s main event slated for release at 01:00BST on Thursday. Traders are expecting central bank officials gathering at the Symposium to reiterate their hawkish stances and renew pledges to tackle inflation rather than provide any explicit dovish policy tilt. US equity futures are also choppy with the most liquid contracts of the main benchmarks swinging between gains and losses since the European open, despite a lack of newsflow. According to a Reuters poll of 50 strategists over the past two weeks, the S&P 500 (cash) is expected to end the calendar year at 4,280 (vs 4,128 at yesterday’s close). The median expectation implies around a 3.7% upside from current levels and is down from the 4,400 forecasts of a poll taken at the end of May. In 2023, the S&P 500 is expected to hit 4,400 by mid-year (6.59% upside from current levels). Meanwhile, in Asia, Goldman Sachs believes foreign investors are likely to reduce purchases of Chinese onshores stocks by some USD 50bln this year amid a series of headwinds including geopolitics, global tightening and a weakening Yuan Back in Europe, bourses are now flat/mixed after a subdued open. Sectors are mostly lower with a modest defensive bias (Utilities, Food & Beverages, Consumer Products, and Personal Care in the green) and a relatively narrow market breadth, although Basic Resources lag amid a decline in underlying base metal prices. In index-related news regarding the FTSE 100 reshuffle, Convatec (-1.4%) and F&C (-0.9%) are indicated to join the FTSE 100 with Abrdn (-1.3%) and Hikma (-0.6%) to leave. In financials, investor Ping An said HSBC (-1.0%) was a significant investment, and it was not an activist. In energy, Shell (-0.5%) reached an agreement with Unions at the Prelude Floating LNG site in Australia. In consumer cyclicals, LVMH (+0.3%) beauty store Sephora is reportedly gearing up to re-enter the UK market in Q1 2023, whilst Richemont (+2.2%) will take a non-cash charge of around EUR 2.7bln on YNAP investments and Co. Chair said he remains confident that the appetite for luxury is not abating.

24 Aug 2022 - 10:03- Fixed IncomeResearch Sheet- Source: Newsquawk