EUROPEAN EQUITY UPDATE: Europe opened mostly lower but now trade mixed in the absence of macro updates

STOXX 600: -0.3%

• European bourses opened mostly lower across the board, but sentiment in Europe has picked up a little this morning to display a more mixed picture.


• Initial sentiment was pressured following two key stories overnight; 1) renewed criticism from China's MOFCOM on the US regarding chip controls, 2) Israel is preparing a possible strike on Iranian nuclear facilities, according to CNN; but it is not clear whether Israeli leaders have made a final decision.


• Despite a quiet docket for economic data releases, the G7 Central Bank and Finance Minister Meeting is taking place in Canada, and will garner headline attention with tariffs and trade tensions dominating the agenda; reports note that G7 finance ministers are aiming to find trade common ground while avoiding public disputes with the US amid new US tariffs on steel, aluminium, and autos, and a worsening global economic outlook.

Sectors: Negative

• European sectors are mostly lower and hold a slight defensive bias.


• Utilities takes the top spot, benefiting from its defensive status but with sentiment also boosted after post-earning strength in SSE.


• Retail is found at the foot of the pile, with JD Sports doing much of the dragging (detailed below).

Others: FTSE 100 U/C, DAX 40 -0.1%, CAC 40 -0.5%

• The FTSE 100 is essentially flat but performing a little better vs peers. There have been quite a few earnings reports from within the index today, including; SSE (+1%, FY Profit beat), Marks & Spencer (-1%, headline beat but expects GBP 300mln impact from cyber incident), JD Sports (-5%, FY beats but Q1 underlying sales -2% Y/Y). Outside the FTSE 100, Curry’s (+10%, FY profit beat and raises outlook). For the UK more broadly, the region released a hotter-than-expected inflation report; services soared to 5.4% (exp. 4.8%, prev. 4.7%). The inner components reveal some caveats, and so may offer the BoE some reasons to look past this report; though may see the risks of stagflation growing.

US Equity Futures: ES -0.4%, NQ -0.5%, RTY -0.3%

• Futures are modestly lower, continuing the similar price action seen in the prior session.


• Morgan Stanley (MS) strategists have upgraded US stocks to Overweight and Treasuries to overweight from neutral, expecting multiple Fed rate cuts to support bonds and boost earnings. The bank’s analysts forecast the S&P 500 to reach 6,500 by Q2 2026, suggesting clients buy America, except for the US dollar.


• US data docket is very light; Fed’s Barkin and Bowman are both due to speak.

21 May 2025 - 10:05- Fixed IncomeGeopolitical- Source: Newsquawk