EUROPEAN EQUITY UPDATE: Choppy but contained trade ahead of further Central Bank updates

Analysis details (09:40)

A somewhat choppy morning for European bourses, after opening within modest gains of around 0.5% across the board following yesterday’s pressure and detaching somewhat from the Wall St./APAC read across from ‘hawkish’ FOMC Minutes. However, this initial upside waned shortly after the cash open alongside further pushback from China around House Speaker Pelosi’s potential Taiwan visit; albeit, such updates aren’t new or particularly surprising – hence, the pullback seems more of a fading of the initial, fundamental factor absent upside rather than a concerted move. Currently, bourses are modestly firmer but in proximity to the unchanged mark, Euro Stoxx 50 +0.1%, and struggling to gain any conviction amid limited fresh newsflow; for reference, US futures are in-fitting with this, though the NQ derives marginal outperformance amid a respite in yield upside. Delving deeper, the sectoral breakdown is primarily positive featuring Health Care as the clear outperformer amid gains in Sanofi (+1.2%) after the EU Commission provided approval to Dupixent for those aged 6-11 with severe asthma. At the other end of the spectrum lies Energy as the standout laggard after yesterday’s pressure and subsequent overnight consolidation; exacerbated further by pressure in Shell (-2.1%) after a Q1 update highlighting post-tax impact and additional charges re. Russian activities are expected to be USD 4-5bln. JPMorgan writes, as part of its Q-score update, that stagflation concerns are mounting among investors as inflation remains high and growth slumps; as such, using the Q-score to highlight potentially attractive names including ASML (+0.7%), NatWest (+0.6%), Novartis (+0.6%) and Stellantis (+0.2%) among others under the scenario of stagflation. For the session ahead the schedule is again dominated with Central Bank activity with ECB Minutes due and to be closely scrutinised for any further clarity on/discussion around the “some time” after guidance around rate hikes post-APP.

07 Apr 2022 - 09:40- Fixed IncomeEconomic Commentary- Source: Newsquawk