EUROPEAN EQUITY UPDATE: Off best levels but ultimately resuming the solid start to the month

Analysis details (09:37)

European equities (Eurostoxx 50 +0.4%, Stoxx 600 +0.4%) are on a firmer footing and resuming the trend seen at the start of the week after yesterday’s losses of circa 1%. As has been a theme throughout the week, incremental fundamentals for the region have been lacking and as such it’s difficult to pin a specific catalyst on the move. Instead, price in Europe appears to be more of a catch up to the pick-up seen in US stocks after European hours yesterday. The main highlight on today’s agenda from a European perspective will be the ECB’s account of its September meeting. That said, other than any hints over how the discussion over QT was progressing (if at all) at the time, the release is usually deemed as somewhat stale by the market by the time it is published. Stateside, US futures are a touch softer (ES -0.3%, NQ -0.3%, RTY -0.3%) with the e-mini S&P back below 3800 as attention turns towards Friday’s key jobs data. The report will form an important part of building expectations regarding the November 2nd FOMC (80% chance of a 75bps rate rise, taking the FFR target to between 3.75-4.00%, according to money market pricing). In terms of the latest with the Twitter saga, Apollo and Sixth Street, which earlier in the year were looking to finance Elon Musk’s proposed USD 44bln buyout of Twitter, are no longer in talks with the billionaire entrepreneur, according to Reuters. Elsewhere, according to analysts at Citi suggest that global equities will increase 18% by the end of next year but it is set to be a “volatile ride” with profit forecasts still too optimistic. In terms of regional views, Citi is overweight US equities, whilst UK is a favourite play from a value perspective. Sectors in Europe are mostly firmer with Travel & Leisure, Retail and Real Estate names the outperformers whilst energy lags after outperforming yesterday. Shell (-3.6%) is a key laggard within the sector following its Q3 update which saw the Co. caution that refining margins are likely to dent profits in the quarter. Elsewhere, Credit Suisse (+1.4%) are off best levels but ultimately still supported after reports suggest the Co. could look to sell the Savoy which could fetch around CHF 400mln. Finally, Imperial Brands (+4.2%) sits at the top of the FTSE 100 after its latest trading statement in which it launched a GBP 1bln buyback.

06 Oct 2022 - 09:37- Research Sheet- Source: Newswires