EUROPEAN EQUITY UPDATE: European stocks boosted post-PMI, but the tone remains cautious pre-NFP

Analysis details (09:25)

European bourses are higher across the board following tailwinds from APAC markets which saw Chinese equities surge amid further COVID reopening rumours, whilst the tech sector in the region led the gains with US audit inspectors finishing on-site China work ahead of schedule, according to Bloomberg. Further on China’s COVID situation, China's Health Authorities are to hold a presser on targeted COVID prevention on November 5th at 15:00 local time (07:00GMT) – which will likely dictate the APAC session at the reopening on Sunday.  A former Chinese government expert told a conference that many new COVID policies will be introduced over the next 5-6 months, and added a "substantive change" to COVID policy is coming soon. Add to that, reports this morning suggested China is working on a plan to scrap COVID flight suspensions, according to Bloomberg, but this was quickly downplayed by China’s Foreign Ministry which said it was not aware of the issue and added that China's COVID policies are consistent and clear. On geopolitics, it’s worth being aware that South Korea scrambled some 80 fighter jets as 180 North Korean warplanes were detected flying near South Korea, according to Yonhap. US equity futures this morning post relatively broad-based gains of some 0.7-0.9% across the most liquid contracts in the run-up to the US jobs report – with markets looking for 200k in the headline NFP (Full Newsquawk preview available in the Research Suite). On that note, the White House said it does not expect the US economy to go into a recession and sees the US economy heading to stable and steady growth, while it was also reported that the White House Press Secretary is expecting job gains of 150k in the coming months. Back in Europe, major bourses extended on opening gains (Euro Stoxx 50 +1.4%, Stoxx 600 +1.2%) with opening gains further exacerbated as EZ PMI metrics were revised higher but with upside capped as they remained in contractionary territory and the accompanying commentary suggested: “After a weak third quarter of PMI and official GDP data, the latest survey results for the start of the fourth quarter suggest the eurozone economy is now headed for a winter recession.” Sectors are mostly in the green with no overarching theme but some defensive sectors have been moving up the ranks since the cash open. Basic Resources stands as the clear outperformer with base metals boosted by the aforementioned Chinese COVID news/rumours. In terms of individual movers, SocGen (+6.0%) and Telefonica (+1.9%) rise after beating Revenue and Net expectations. Leonardo (-7%) slips post-earnings, and Genmab (+3.0%) is firmer after upping FY22 Revenue and EBIT guidance.

04 Nov 2022 - 09:25- Research Sheet- Source: Newsquawk