EUROPEAN EQUITY UPDATE: Further pain for Europe whilst US futures enter the week on a slightly firmer footing

Analysis details (09:50)

European equities (Stoxx 600 -1.4%) have kicked the week off with further losses with the region unable to recoup any of the lost ground seen on Friday. As it stands, the Stoxx 600 is at its lowest level since December 20th with the index extending on the downside seen at the cash open. Macro catalysts for the region include this morning’s flash PMI metrics which saw the composite reading fall short of expectations as a better faring for the manufacturing sector was outweighed by the impact of Omicron on the services industry. Stateside, US futures are trading on a modestly firmer footing (ES +0.3%, NQ +0.3%, RTY +0.3%) after the worst weekly performance in the S&P 500 and Nasdaq since March 2020. Focus for the US this week will fall on the FOMC policy announcement on Wednesday and a slew of large-cap earnings from names such as General Electric, Verizon, J&J, Microsoft, Boeing, AT&T, Apple, McDonalds, Chevron and Caterpillar. On earnings season so far, analysts at Goldman Sachs have cautioned that guidance from S&P 500 companies has been disappointing thus far. GS notes that of the six companies that have provided formal Q1 2022 guidance, five guided below expectations, with three of the five having exceeded earnings expectations. Elsewhere, analysts at Morgan Stanley see the FTSE 100 outperforming European peers in the coming months with UK equities set to benefit from rising oil prices and upside in real yields with MS noting that 25% of UK profits stem from the energy sector. Sectors in Europe, trade mostly lower with Telecoms the outlier (STOXX 600 Europe Telecom Index +0.3%) amid gains in Vodafone (+5.5%) following reports the company approached Three Mobile regarding a potential takeover in December, with separate reports via Reuters sources suggesting the company is in talks with Iliad to combine their respective Italian businesses. Personal & Household Goods names are lower on the session but outperforming peers with support emanating from gains in Unilever (+5.7%) after the FT reported Trian Partners, run by Nelson Peltz, has built a stake in the company. To the downside, losses are relatively broad-based with underperforming sectors including Travel & Leisure, Technology and Basic Resources.

24 Jan 2022 - 09:50- EquitiesEconomic Commentary- Source: Newsquawk