EUROPEAN EQUITY UPDATE: Europe fades early gains but US futures see some resilience

Analysis details (10:21)

Europe opened on a mostly firmer footing (ex-FTSE) but the bourses have pulled back from their best levels since the open, with the regional picture now more of a flat/mixed one. US equity futures remain resilient but off highs, with the contracts showing a relatively broad-based performance and still holding onto yesterday’s gains. In terms of commentary, Barclays suggests “Peaking inflation is welcome but unlikely to stop hawkish central bank moves short term. Meanwhile, the EU continues to slide towards recession. So rates should stay range-bound, with high volatility. We thus remain neutral rate-sensitive Value and Growth, but UW cyclical Size and OW defensive Momentum to hedge cycle risk.” The desk at Jefferies meanwhile said they are going long a basket of early cyclicals over defensives, whilst upgrading the weighting of financials to bullish and cutting healthcare to bearish. The desk continues to be attracted to gold mining stocks “on the basis that the Fed will find it hard to get back to 2% inflation.” Elsewhere, Bernstein’s desk weighs in on European equities and suggests that “margin estimates need to come down given high inflation, the economic outlook and a potential energy supply crisis.”, with the analysts reiterating their view of a mild recession. Back to the session, bourses are varied (Euro Stoxx 50 Unch; Stoxx 600 Unch) with the majors essentially trading flat. Sectors are mixed with the breadth of the market relatively narrow, aside from Energy leading the charge as crude prices continue to grind higher. In terms of individual movers, BP (+1.2%) is firmer amid reports UAE state investor Mubadala Investment and energy Co. Raizen are said to be the final bidders for the BP-Bunge Bioenergia unit, according to Reuters sources, which could be worth USD 1.8bln. Adler group (+1.7%) has announced the sale of two development projects. Credit Suisse (+0.7%) is firmer as Harris Associates disclosed a 10.1% stake in Credit Suisse as of July 31st (vs 5.2% disclosed in 2013). Finally, earnings today came from the likes of Antofagasta (-0.6%) , Entain (+5.1%), Daimler Truck (-1.3%), Deutsche Telekom (+0.3%), RWE (-0.5%), Siemens (-1.3%), alongside several more.

11 Aug 2022 - 10:21- Fixed IncomeResearch Sheet- Source: Newsquawk