EUROPEAN EQUITY UPDATE: Marginal gains for stocks as Santa Rally fails to materialise

Analysis details (09:30)

European equities (Stoxx 600 +0.2%) trade just above the unchanged mark with the Stoxx 600 on track to close the week out with gains of around 0.6%. The session follows on from a negative APAC lead after stocks in the region were hampered by the soft US lead. Incremental macro updates for Europe remain particularly thin as markets approach the festive break and with volumes lighter than usual. Stateside, US futures are mixed/flat (ES +0.1%, NQ Unch., RTY +0.2%) with the ES lingering around the 3850 mark following yesterday’s data-induced sell-off. The main highlight on today’s docket comes in the form of monthly US PCE metrics which will be eyed for further evidence of disinflationary forces in the US with the core PCE Y/Y expected to slip to 4.6% from 5.0%. Barclays notes that investors withdrew USD 41.9bln from equity funds in the week to December 21st; the largest on record. The Regional breakdown revealed that US stocks were subject to USD 37bln of outflows, Europe USD 3bln and Global USD 5bln, whilst inflows were observed for Japanese and EM funds. From a sectoral standpoint, the largest outflows came from tech and financials. Sectors in Europe are mostly firmer with marginal outperformance in Personal Care, Retail and Financial Services names. To the downside, Utilities and Travel & Leisure are the only sectors in the red, albeit marginally so. In terms of notable stories, BHP’s GBP 10bln lawsuit over the Samarco, Brazil disaster will commence in spring 2024, Nestle’s CFO Roger expects a challenging six-months before inflation begins to ease in H2-2023 and TSMC is said to be in talks with suppliers over its first European plant, according to FT sources.

23 Dec 2022 - 09:30- Research Sheet- Source: Newsquawk