EUROPEAN EQUITY UPDATE: Mixed trade across Europe as earnings pick up in pace and UK political chaos continues

Analysis details (10:07)

Bourses in Europe briefly succumbed to losses across the board after seeing a mostly downbeat cash open, as the negative lead from Wall Street reverberated through APAC markets and then in Europe. Markets overnight received a modest but fleeting boost on source reports that China is considering easing its COVID rules for travellers, although this failed to hold up sentiment. The focus during the European session thus far has been on UK politics as Lizz Truss hangs on to her premiership by a thread, whilst over in Japan, USD/JPY briefly topped the 150.00 mark as traders remain on intervention-watch. Aside from that, fresh macro fundamental factors have been light while earning season picks up in earnest in both the US and Europe, with the former seeing Tesla (-5.9% pre-market) slump after missing on revenue and margin expectations, whilst analysts fear a potential slowing in demand. US equity futures are softer across the board but to varying degrees, with the NQ (-0.9%) lagging the ES (-0.5%) and RTY (-0.4%), with Tesla carrying a larger weight in the NDX (~4.0%) than the SPX (~1.8%). Back in Europe, cash bourses trade mixed at the time of writing with the breadth of the market narrow (Euro Stoxx 50 -0.2%; Stoxx 600 -0.4%). Sectors in Europe are mostly negative with no overarching theme – Energy and Banks outperform amid price action in underlying crude and yields respectively. Meanwhile, Telecom names sit at the bottom of the pile as Ericsson (-14%) and Nokia (-5.3%) plumb the depths following red flags on margins – with the former missing on operating profit and margin expectations, whilst the latter raised its revenue guidance but cut its FY22 operating margin guidance. Other sectoral laggards include the likes of Financial Services, Tech, Retail, and Media. In terms of individual movers, earnings have been in the spotlight with the likes of Hermes (+1%), Pernod Ricard (+0.5%), Volvo (-3%), Akzo Nobel (-5%), ABB (-1%), Nordea (-0.8%), Tele2 (-1.3%), and Deutsche Boerse (-3.1%) amongst the firms that reported in the pre-market. In M&A, Phillip Morris (+0.6% pre-market) has confirmed it has increased its offer for the Swedish Match (-1.2%) to SEK 116/shr from SEK 106/shr. Elsewhere, Geely is said to be mulling boosting its stake in Aston Martin Lagonda (-2.8%) over time, according to Bloomberg sources - Geely acquired a 7.6% stake in the Co. last month and is reportedly mulling raising its holding to 10%.

20 Oct 2022 - 10:11- EquitiesResearch Sheet- Source: Newsquawk