EUROPEAN EQUITY UPDATE: Gains in Europe trimmed as NATO pushes back on Russian claims

Analysis details (09:38)

European equities (Eurostoxx 50 +0.3%) kicked the session off on the front-foot as markets continued to assess an apparent cooling in geopolitical tensions with Russia continuing to convey that they are withdrawing military personnel and equipment from Crimea. Furthermore, the Belarus Foreign Minister stated that not one soldier or piece of military equipment will stay in Belarus after military drills with Russia. However, this enthusiasm was pared back and equities trimmed gains amid continued pushback from the West with NATO Secretary General Stoltenberg stating that he is yet to see any Russian de-escalation, adding that Russia is continuing with its military build-up. Stoltenberg also cautioned that Russia has always moved forces back and forth and as such movement is not confirmation of a withdrawal. As we have mentioned a lot in our commentary over the past 24 hours, an acceptance from the West over Russia’s claims re troop movements and whether that can be regarded as a de-escalation should be the key focus for the market. If this is not forthcoming, Western powers will be unlikely to talk down the prospects of an imminent incursion into Ukraine by Russia. Following the pushback from Stoltenberg US futures saw their more modest gains scaled back with the ES (+0.1%) returning closer to the unchanged mark. Traders are also mindful of upcoming US Retail Sales data and FOMC minutes from the January meeting which will be eyed for any details around the magnitude of upcoming rate adjustments and balance sheet normalisation. Sectors in Europe, are a mixed bag with Energy and Basic Resources top of the leaderboard amid advances in underlying commodity prices, whilst Personal Goods and Telecom names lags peers. Individual movers and shakers have taken more of a backseat to geopolitical updates in what has been a lighter session for pre-market earnings. Nonetheless, gainers include Umicore (+5.4%), Swedish Match (+4.8%), Air Liquide (+2.9%) and Heineken (+1.7%) post-earnings, whilst Adyen (+3.6%) have been supported via a broker upgrade at Deutsche Bank. To the downside, Ahold Delhaize (-4.6%) sits near the bottom of the Stoxx 600 after Q4 earnings underwhelmed, whilst Ericsson (-7.8%) is enduring heavy losses following the findings of a 2019 investigation.

16 Feb 2022 - 09:38- EquitiesResearch Sheet- Source: Newsquawk