EUROPEAN EQUITY UPDATE: FTSE MIB leads the downside amid domestic turmoil, with peers awaiting US earning's season

Analysis details (09:30)

Stocks in Europe kicked-off the session on the backfoot (Euro Stoxx 50 -0.8%; Stoxx 600 -0.5%), with the Italian FTSE MIB (-1.9%) the marked laggard in early trade as the Italian administration returns to the brink, following the 5-Star party threatening to boycott a confidence vote which could lead to the collapse of Draghi’s gov’t and potential elections. US equity futures began trending lower as Europe entered the fray following a rather rangebound APAC session, with Fed officials floating the possibility of a 100bps hike at the July 27th announcement; Waller (Voter, Hawk) scheduled for 16:00BST. Add to that, the US earnings season officially kicks off today with the releases of JPMorgan, Morgan Stanley due. Note, in light of the pronounced movement seen across asset classes this morning, the equity space while pressured is seemingly somewhat resilient; with participants perhaps waiting for these key Banking names to update and in particular to scrutinise the details of their near/medium-term guidance. Back to Europe, sectors are predominantly in the red, although Tech is bucking the trend slightly, despite the morning’s pronounced rate upside, but perhaps more in-light of yesterday’s substantial pressure and following a well-received update from TSMC (TSM +2.5% pre-market). Specifically, the semiconductor name beat on its headline Q2 metrics and guides Q3 revenue above expectations. However, it’s worth caveating that some of the associated commentary was cautious as they expect some of this year’s capex to be pushed into 2023 amid tool supply problems and as such look for capex at the lower-end of previous guidance for 2022. More broadly, remarking that next year will see a more typical downcycle in demand, unlike 2008’s pronounced one. Elsewhere, but sticking with chips, Intel (INTC -0.4% pre-market) has reportedly informed customers of price increases, which are yet to be finalized but could be over 20% in some cases, via Nikkei.

14 Jul 2022 - 09:30- Fixed IncomeEconomic Commentary- Source: Newsquawk