EUROPEAN EQUITY UPDATE: Europe firmer on catch-up play to the late Wall Street bounce; choppy trade overall

Analysis details (09:41)

It’s been a choppy session thus far for the equity space with Europe kicking off the day with gains following the afternoon bounce on Wall Street. Market participants are on the lookout for the next catalyst to dictate price action as US ISM Services and the FOMC Minutes loom. US equity futures have nursed the mild losses seen heading into the Europan cash open, with the contract moving between modest gains and modest losses at the time of writing (ES -0.2%, NQ -0.3%, RTY -0.3 and YM -0.2%). Back in Europe, gains are seen across the board but to varying degrees (Euro Stoxx 50 +2.0%; Stoxx 600 +1.8%), with the British FTSE 100 (+2.2%) and Dutch AEX (+2.2%) narrowly outperforming. The former is boosted by a rebound in oil names and following the index underperformance yesterday, whilst the latter gains impetus from Just Eat Takeaway (+17%) as the Co. entered into a commercial agreement with Amazon in the US which will expand membership to Just Eat’s Grubhub. Amazon has the option to take a 2% stake in Grubhub which could grow to 15%. Sectors in Europe are firmer across the board and portray a pro-cyclical bias – with Travel & Leisure, and Retail among the top performers alongside Tech. For the auto sector, Barclays wrote that there is a "clearly darkening picture" for the European auto industry, and sees the industry preparing for a much slower volume recovery. The bank downgraded Faurecia (-3.3%) and Valeo (-0.6%) whilst upgrading Michelin (+3.0%) and Continental (+2.8%). In terms of individual movers, Telecom Italia (+2.0%) is reportedly looking at a network valuation of at least EUR 25bln for its asset spinoff plan, according to Reuters sources. ASML (+3.3%) coat-tails on the broader sectoral strength and overlooks the losses in its ADR yesterday sparked by the US reportedly asking ASML to stop selling key chipmaking gear to China, according to Bloomberg. In terms of commentary, analysts at Blackrock believe the recent shart selloff in stocks has presented opportunities in some energy stocks – “Even with the rapid growth of clean energy infrastructure, it’d be nearly impossible to meet energy demand without fossil fuels”, the desk said, with a potential boost seen in energy companies’ revenues and earnings from the replacement of Russian fuel.

06 Jul 2022 - 09:41- EquitiesResearch Sheet- Source: Newsquawk