EUROPEAN EQUITY UPDATE: Europe trims losses and the US edges into the green despite a lack of drivers and ahead of risk events

Analysis details (09:31)

Equities in Europe opened on a softer footing as the pressure from Wall Street reverberated through APAC and then to Europe. US equity futures were also softer but to a lesser extent than peers across the pond and have since mostly moved into the green as yields ease, with the RTY (-0.4%) narrowly underperforming the ES (+0.2%), YM (+0.1%) and NQ (+0.3%) at the time of writing. The earlier downbeat mood was seemingly due to a continuation of the selling pressures last week in anticipation of hawkish central bank activity and ongoing energy woes throughout Europe, with the Chinese trade data not helping sentiment overnight. Europe is now looking ahead to Thursday’s ECB rate decision (a 75bps rate hike is expected; a full Newsquawk preview is available in the Research Suite) ahead of the EU energy meeting on Friday. Bourses in Europe have been paring earlier losses but remain mostly lower and to varying degrees (Euro Stoxx 50 -0.1%; Stoxx 600 -0.5%). Sectors are mostly lower after opening with a mild defensive bias – that bias has since eased somewhat, with some cyclicals making their way up the ranks. Travel & Leisure sits as one of the only sectors in the green, with airliners cheering the slide in oil prices – easyJet (+1.4%), Air France-KLM (+0.9%) are firmer whilst Lufthansa (+1.6%) also saw reports that Klaus-Michael Kuehne, Germany's richest man, is looking to expand his current 15.01% stake in Lufthansa when the opportunity arises. On the downside, Banks, Energy and Basic Resources are suppressed by action across bond yields, oil, and base metals respectively. In terms of individual movers, Ubisoft (-12%) has plumbed the depths despite Tencent investing in Guillemot Bros, the company run by Ubisoft's co-founders, with traders suggesting that this narrows the chances of a takeover of the French company. Elsewhere, the continuing Russian gas woes keep Uniper (-7.2%) and Siemens Energy (-4%) at the bottom of the Stoxx 600, although the latter also placed almost EUR 1bln in convertible bonds to fund the Siemens Gamesa (+0.2%) deal. Repsol (-1.3%) fails to benefit from reports that EIG has agreed to buy a 25% stake in Repsol's upstream unit for USD 3.4bln (or around USD 4.8bln including debt), alongside a separate deal update. On the ETF front, Blackrock data suggested investors in August exited European equity ETFs at the fastest pace since Brexit, with outflows of USD 7.7bln.   

07 Sep 2022 - 09:31- EquitiesResearch Sheet- Source: Newsquawk