EUROPEAN EQUITY UPDATE: European equities attempt to claw back losses on quad-witching day

Analysis details (09:28)

In what has been a choppy start to the final trading session of the week, initial optimism for European stocks quickly faded as gains were scaled back after the cash open. There was no fresh fundamental catalyst behind the selling pressure with the move taking place in the context of ongoing angst over the heavy-handed nature of monetary policy as central bank’s continue to grapple with significantly above-target inflationary dynamics. That said, stocks in the region were unable to venture back into positive territory with, once again, there being no clear basis for the move (Eurostoxx 50 +0.6%). The BoJ bucked the trend during the APAC session by refraining from taking a hawkish pivot with the central bank maintaining existing policy settings and vowing that it will not hesitate to act further if necessary. Stateside, futures are outperforming European peers with the e-mini S&P (+0.8%) back around the 3700 mark after declining to 3642 for the Sep contract during yesterday’s session. Note, today is quad-witching day and therefore the session could see some slightly more erratic price action than usual. The latest flow show from Bank of America revealed that stocks saw 16.6bln of inflows in the week to June 15th with the breakdown revealing that US funds have seen inflows for the past six weeks (USD 14.8bln this week), whilst European funds have witnessed outflows for 18 weeks (USD 1bln this week). Elsewhere, the survey noted that BofA’s Bull & Bear indicator has declined to zero/extreme bearish for the first time since 2020. A separate report out of BofA saw strategists at the bank upgrade European stocks to neutral from negative on the basis that, following the sell-off seen in 2022 so far, the Stoxx 600 has already priced in the difficult economic backdrop for the region. Sectoral performance in Europe is mostly positive with the only laggards including Energy and Insurance names.   To the upside, Real Estate, Travel & Leisure and Financial Services names outpace peers. In terms of individual movers, Glencore (+3.4%) sits at the top of the FTSE 100 after stating that HY adj. EBIT is to exceed USD 3.2bln and expects more normal market conditions to prevail in H2. Elsewhere, E.ON (+1.7%) has benefited from a broker upgrade at Goldman Sachs, whilst Playtech (+3.8%) shares have been supported by news that the deadline for TTB Partners to make a bid for the Co. has been extended. On a less positive footing, Tesco (-0.2%) shares sit in minor negative territory after Q1 sales fell short of expectations and cautioned that the current market environment remains incredibly challenging.

17 Jun 2022 - 09:25- Fixed IncomeImportant- Source: Newsquawk