EUROPEAN EQUITY UPDATE: European earnings disappoint, tech underperforms; ASML -7% on poor guidance

STOXX 600: -0.1%

• European bourses opened mixed/mostly lower, but have traded with an upward bias throughout the European morning, to show a mixed picture.


• ASML posted Q2 metrics firmer than expectations, though it was ultimately the guidance and subsequent commentary that encouraged sellers. Outlook was dreary, noting an expected drop in revenue from the previously seen 8.2bln, to 7.4-7.9bln, along with a drop in gross margins. The kicker however, came after CEO Fouquet said the company may not achieve growth in 2026 “while we still prepare for growth in 2026, we cannot confirm it at this stage”.


• Over in Sweden, OMX Stockholm also lags, after Handelsbanken’s (-7.4%) Q2 operating profit fell more than expected on lower NII, which fell 6% to SEK 10.69bln, held back by significant SEK appreciation.


• On a positive note, SMI outperforms after metrics from Richemont (+1.0%) and Partners (+5.4%) . The latter confirmed its FY guidance and showed a significant increase in Assets under Management, while Richemont saw Q1 sales rise.


• On UK specifics, CPI came above expectations in June at both headline and core levels. ONS said the inflation rise was mainly driven by motor fuel prices, and it noted food price inflation increased for the third consecutive month to its highest annual rate since February 2024. Markets await Thursday’s labour market data and BoE Bailey’s guidance before significantly adjusting rate expectations ahead, as the MPC has signalled a readiness for larger rate cuts if jobs growth slows sharply.


• The day ahead features a heavy dose of Fedspeak, as well as US PPI metrics (which are expected to cool at the annual level). Closer to home, Eurozone trade stats for May will garner attention, with the surplus expected to widen. Earnings season will also remain in focus, with today's US slate including: JNJ, PNC, BAC, GS, MS, PLD, PGR, UAL, KMI, AA.

Sectors: Mixed

• Opened mixed, and continue to show this bias with Tech and Autos sitting at the bottom.


• Autos are posting the largest losses with Stellantis and Renault driving the sector lower. Stellantis shares reversed after the company said it would discontinue its hydrogen fuel cell technology development programme, while Renault stalled after it posted dreary full-year guidance, with commentary stressing a poor retail market.


• At the top of the pile lies Media, with Publicis (+1.2%) lifted in sympathy with Omnicom (+0.6% premarket) after it topped revenue estimates on strong growth in its advertising unit.

Individual Movers

• Partners +5.4%: Confirms FY guidance, AuM growth beats expectations


• Rio Tinto +1.5%: Pilbara iron ore output rose, copper production exp. at the top of FY guidance.


• Richemont +1.0%: Q1 sales at constant FX rise.


• Renault -15.9%: Provided dreary FY guidance, stressed poor retail market.


• Fuchs -14.2%: Lowered FY earnings guidance.


• Handelsbanken -7.4%: Q2 op. profit fell more than expected on lower NII.


• ASML -7.3%: Lowered Q3 rev., margin outlook, does not confirm 2026 growth target.


• Stellantis -3.3%: Discontinues hydrogen fuel cell technology development programme.


• K+S -2.6%: downgraded at Baader.


• STMicroelectronics -1.3%: Falling in sympathy with ASML.

US: ES -0.1%, NQ -0.3%, RTY U/C

• US equity futures also post modest losses, underperformance in tech-heavy NQ as it wanes from Tuesday gains, along with underperformance in European tech names. RTY fares the best, rebounding (closed -2.0%), after its reaction to Hawkish CPI components seen Tuesday.


• Ahead, comments are expected from Fed’s Logan (2026 voter), Hammack (2026 voter), Barkin (2027 voter), Barr (voter), Kugler (voter), Cook (voter) and Williams (voter).


• Companies reporting today include JNJ, PNC, BAC, GS, MS, PLD, PGR, UAL, KMI, AA.

16 Jul 2025 - 10:00- EquitiesData- Source: Newsquawk