EUROPEAN EQUITY UPDATE: Europe under pressure, partly on catch-up play, whilst traders eye a central bank triple-threat

Analysis details (10:17)

Sentiment in Europe remains on the backfoot as the region plays catch-up to the losses on Wall Street yesterday, whilst the overall mood remains tainted by hawkish central bank noise and with high-level geopolitical meetings getting underway. Traders should also be aware that today’s docket sees a central bank triple-threat, with Fed Chair Powell, ECB President Lagarde, and BoE Governor Bailey, all due to take part on a panel at 14:00BST/09:00EDT. US equity futures trade on either side of the unchanged mark with no stand-out performers thus far, with the contracts awaiting the next catalyst as the month draws to an end. On that note, JPMorgan this morning cut price targets for several FAANG stocks, including Amazon (to USD 175 from USD 200), Meta (to USD 225 from USD 275) and Netflix (to USD 230 from USD 300). Meanwhile, next month will see the start of the Q2 earnings season - analysts at Berenberg highlight that Europe is now the only region where analysts are upping their corporate profit forecasts. “Strong reported earnings growth and breadth of beats for European companies in recent quarters may be deterring analysts from cutting estimates now … They have been consistently behind the curve in forecasting the recovery in earnings as economies reopened following the pandemic.”, the strategist noted. Back to the session, bourses in Europe post losses across the board to varying degrees (Euro Stoxx 50 -0.8%; Stoxx 600 -0.8%), with little reaction seen to the robust EZ Sentiment data. Sectors are mostly lower (ex-Energy) with a defensive tilt as Healthcare, Consumer Products, Food & Beverages, and Utilities are more cushioned than their cyclical peers. In terms of individual movers, H&M (+5.2%) resides towards the top of the Stoxx 600 post-earnings, which was accompanied by a share buyback alongside guidance for price hikes in H2. Conversely, Just Eat Takeaway (-16%) has plumbed the depths after Berenberg initiated the Co. with a Sell, citing muted near-term trading alongside a potentially disappointing Grubhub sale; add to that comments from the Grubhub CEO, who suggested a sale of the unit is not imminent.

29 Jun 2022 - 10:17- Fixed IncomeResearch Sheet- Source: Newsquawk