EUROPEAN EQUITY UPDATE: Gains across stocks wane but the periphery recuperates

Analysis details (10:19)

European equities trade mostly with mild gains (Euro Stoxx 50 +0.4%; Stoxx 600 +0.6%) following a somewhat indecisive cash open as the region initially took its cue from the mixed APAC lead. Chinese markets overall saw a mixed performance but the mainland managed to close in the green - with later reports suggesting Chinese state funds have reportedly purchased stocks to slow the market decline. Developments from a macro standpoint have been light but geopolitics remains among the top market themes (with no meaningful diplomatic progress seen) in the run-up to more earnings, central bank speakers, and US CPI later this week. US equity futures briefly embraced the mood in Europe, but gains are less pronounced and contained, with relative broad-based performances seen across the ES (+0.2%), YM (+0.2%), NQ (+0.1%), and RTY (+0.1%). Back in Europe, bourses are firmer to varying degrees with the peripheries rising from the ashes after yesterday’s bond-induced downside: the FTSE MIB (+1.0%) and IBEX 35 (+1.5%) stand as the marked outperformers. Conversely, the AEX (-0.1%) sees its gains cancelled out by Just Eat Takeaway (-3.4%) which announced a delisting from Nasdaq amid the low trading volumes of the Company’s ADRs. Sectors are mostly firmer with Basic Resources and Banks benefiting from elevated base metals and yields respectively, whilst Tech feels the weight of the latter. On that note, Goldman Sachs recommends staying overweight European banks amid the pivot to higher rates. The strategists also suggest “Value sectors, which were once low growth and very low return are also starting to see fundamental return improvements, most notably energy and telecoms.” Over to individual stocks, BP (+1.3%) shares stand strong after seeing decent beats on revenue and adj. net expectations alongside the announcement of an additional USD 1.5bln share buyback and an upgrade to its 2022 Capex guidance. Ocado (-12%) plumbed the depths after missing revenue expectations and refraining from declaring a dividend. BNP Paribas (-1.4%) has drifted off worse levels in tandem with the broader sector, but the bank missed on revenue expectations whilst FICC revenue also fell by almost ¼ Y/Y. Finally, EDF (-2.4%) also came under pressure after the name narrowed its FY22 nuclear generation guidance.

08 Feb 2022 - 10:19- EquitiesData- Source: Newsquawk