EUROPEAN EQUITY UPDATE: Sell-off seeps to Europe while traders gear up for the US jobs report

Analysis details (10:14)

Equities in Europe have mostly succumbed to a downbeat tone as the selling pressure spilt over from the bloodbath on Wall Street to a dire APAC session, and then to a subdued European morning. The morning has also seen further hawkish rhetoric from ECB officials after Holzmann floated the idea of a live June meeting, whilst Villeroy said a positive rate is possible this year. On the geopolitical front, EU members are said to be close to an agreement on a new package of sanctions against Russia, but the oil embargo is experiencing some obstacles, namely from Hungary, as the new EU proposal exempts Hungary and Slovakia through 2024 – PM Orban called for a minimum reprieve of five years. Aside from that, the focus has been on yesterday’s sell-off across risk assets which was led by tech. US equity futures trade with a mild downside bias but, performance is broad-based at the time of writing. European equities are softer across the board this morning (Euro Stoxx 50 -1.2%; Stoxx 600 -1.1%) but to a lesser magnitude than the losses seen in other regions. UK’s FTSE 100 (-0.8%) saw early “outperformance” as exporters in the index cheered a declining GBP. Meanwhile, the latest BofA flow show suggested equity funds saw outflows in Europe, US and Japan, whilst USD 9.1bln was pulled from bonds and USD 14bln pulled from cash. Sectors are mostly in the red with a clear anti-cyclical bias, whilst defensives are also softer but cushioned in comparison. Energy outpaces as gains in the crude complex continue to underpin oil names: BP (+2.0%), and Shell (+1.5%). In corporate results, Adidas (-4.9%) saw a strong consumer report from Western markets demand in Q1 but cut guidance amid China’s COVID situation. ING (-1.9%) profits fell short of expectations as Russian provisions weigh. IAG’s (-8.3%) Q1 trading update noted a recovery in business travel. In deal news, Vivendi's (-0.2%) Canal Plus is reportedly working on a potential bid for a minority stake in Starz, FT reported.

06 May 2022 - 10:14- EquitiesResearch Sheet- Source: Newsquawk