EUROPEAN EQUITY UPDATE: cautious trade as EU energy ministers meet

Analysis details (09:36)

Stocks in Europe are predominantly marginally softer (Eurostoxx 50 -0.3%) with focus in the region remaining on the gas-supply situation following yesterday’s announcement by Gazprom that it will lower flows via NS1 to around 20%, whilst ministers are currently meeting in Brussels to discuss a gas usage reduction plan. The session takes place in the context of a mostly positive APAC session with the Hang Seng outperforming on account of news that Alibaba is to apply for a primary listing in Hong Kong, which would make it eligible for the Stock Connect programme. Stateside, US futures are a touch softer (ES -0.2%, NQ -0.3%, RTY -0.1%) with attention after-hours on Walmart (-9% pre-market) after the Co. issued its second profit warning in 10 weeks - "due to pricing actions" - with Amazon and Target slipping in sympathy. Also of note for Amazon, the Co. is to increase Prime prices across Europe by at least 20% amid rising costs. It’s a busy slate of earnings today with UPS, General Electric, 3M, Coca-Cola, McDonalds and General Motors all due in the pre-market whilst Alphabet, Microsoft and Visa are due after the closing bell. In terms of analyst views Morgan Stanley notes that early results from the European Q2 earnings season currently points towards 1) a solid breadth of sales beats, 2) 10% more misses than beats, 3) a margin reset for Europe with EPS vs Sales revisions deep in negative territory, 4) a strongly negative skew to price action. Sectors in Europe are predominantly softer with the exception of energy and basic resources which are underpinned by price action in underlying commodity prices; this has proved supportive for the FTSE 100 (+0.7%) given its large weighting of both sectors. To the downside, Retail names lag following the update from Walmart and has sent the likes of Zalando (-4.9%) and Kingfisher (-5.7%). In terms of stock specifics, UBS (-8.1%) is a notable laggard in the region after Q2 profits fell short of expectations. Elsewhere, Unilever (+2.4%) shares have been supported by H1 results which saw the Co. beat on sales and raise sales guidance, whilst easyJet’s (+1.4%) Q3 trading statement revealed a smaller than expected loss for the airliner.

26 Jul 2022 - 09:36- EquitiesImportant- Source: Newsquawk