EUROPEAN EQUITY UPDATE: Modest risk-on as talks continue after a limited APAC handover

Analysis details (09:40)

A lacklustre start to the European session with bourses essentially flat on the open following a limited APAC lead given regional closures. However, shortly after the open modest risk-on action began to emerge amid rhetoric from Ukrainian President Zelensky who confirmed talks are to continue and that while they are unlikely to agree on all points at once, they should still work on issues such as Donbass. Remarks which were sufficient to lift both European cash and futures to upside of circa 0.30%. Note, US futures saw modest associated upside but remain essentially unchanged on the session; ahead of key events including ISM Services PMI and further rhetoric from the likes of Fed’s Williams and Brainard, the latter on inflation. The sectoral breakdown has Energy outperforming, in-fitting with benchmark action, while the other end of the spectrum has Basic Resources lagging amid anticipation of further Russian sanctions from the EU, which could target steel, among other components. On this, Goldman Sachs is recommending cyclicals such as Energy and Banks in addition to some high/stable defensive dividend names. In terms of this morning though, sectors and bourses aren’t too swayed by individual movers thus far and the majority of the notable risers/fallers have occurred following broker moves. Explicitly, NN Group (+3.0%) and Pirelli (+1.6%) benefit from upgrades at Morgan Stanley and Citi; while Vodafone (-1.3%), Traton (-1.8%) and Darktrace (-6.7%) hindered via respective action from Berenberg, Jefferies and JPMorgan. Elsewhere, Aareal Bank (+3.5%) is bid as around 37% of its shareholders have expressed support towards a takeover from Atlantic BidCo, as such, Atlantic is considering making a potential new takeover offer with a price of EUR 33/shr under consideration. Finally, Telecom Italia (-1.0%) slips after KKR has reportedly expressed a need to see the Co’s books for due diligence prior to confirming its offer, as the market environment has altered.

05 Apr 2022 - 09:40- Fixed IncomeEconomic Commentary- Source: Newsquawk