EUROPEAN EQUITY UPDATE: European stocks propelled after some Russian troops return to base

Analysis details (09:49)

European equities kicked the session off on a tentative footing after the lacklustre handover from the US and Asia as ongoing geopolitical jitters remained at the forefront. However, shortly after the cash open, stocks were propelled higher (Eurostoxx 50 +1.4%) alongside reports from Russia that some of its Western and Southern-based units are set to return to bases after completing drills. This update was welcomed by markets and stood in contrast to reports yesterday suggesting that a potential invasion could be imminent as well as comments after the EU cash close from a US official stating that satellite images showed Russian troops leaving assembly points and moving to attack positions. That said, it is worth noting that the report of troops returning to base has come solely from the Russian side and is yet to be confirmed by the West. Furthermore, UK Foreign Minister Truss has suggested that she would need to observe a full-scale removal of Russian troops from the border to accept the claim that they have no intentions of carrying out an invasion. US futures (ES +1.3%, NQ +1.8%) have also welcomed the news and eclipsed yesterday’s best levels, with the ES around 50 points shy of the 4500 mark. With a lack of scheduled Fed speakers today and tier 1 US data points, geopolitics will likely remain a key driver for price action. Interestingly, the February BofA Feb survey showed that Russia-Ukraine was the 5th largest tail risk for markets with hawkish central banks remaining the top risk; depending on the survey period, this view might have been reassessed in recent sessions. Back to Europe, sectors are higher across the board with Industrial Goods & Services, Consumer Products and Tech outperforming peers. Basic Resources names are firmer but lagging the broader market with some producers softer in the wake of news that Chinese regulators are to closely monitor movements in iron ore and crack down on any irregularities. Glencore (+2.9%) is cushioning some of the downside for the sector after FY results and announcing that it is to sell its stake in Russneft. Elsewhere, FTSE 100-heavyweight Astrazeneca (+3.8%) is a notable outperformer in the index after a positive update for its Lynparza drug.

15 Feb 2022 - 09:48- EquitiesResearch Sheet- Source: Newsquawk