EUROPEAN EQUITY UPDATE: Sentiment improves whilst US is set to return to markets

STOXX 600: +0.1%

• European bourses opened with a strong negative bias, with only a couple of indices remaining afloat.


• As the morning progressed, sentiment in the complex gradually improved, to currently display a mixed picture in Europe.


• EZ-specific docket has included, ECB's Villeroy. He noted that "if the pace of rate cuts is steady, there is no need to make them bigger"; on the growth front said "is slightly positive thus far, but not enough." Thereafter, German ZEW printed below expectations, with the accompanying commentary noting that "if these trends continue in the current year, Germany will fall further behind the other countries in the EZ".

Sectors: Mixed

• European sectors are mixed vs initially opening mostly in the red.


• Consumer Products is the slight outperformer today, lifted by gains in Luxury names after US President Trump refrained from imposing Chinese tariffs on day one.


• Basic Resources is hampered by losses in mining names, with analysts at Citi noting that traders are awaiting more clarity on tariffs; Antofagasta (-0.8%), Anglo American (-1.5%)


• Autos is also on the back foot, as Trump imposes 25% tariffs on Canada/Mexico, which adds fears of potential levies on European autos; Bernstein analysts highlight that Stellantis (-1.4%) imports around 40% of its vehicles they sell in the US.


• The Utilities sector has been hit after US President Trump said he will end leasing to some wind farms; wants to maximise US O&G; and is exiting the Paris climate agreement – RWE (-1.7%), Vestas (-3.6%). Further pressure also stems from significant losses in Orsted (-16.9%) after it announced a USD 1.7bln impairment due to US headwinds.

Majors: FTSE 100 +0.2%, CAC 40 +0.2%

• The FTSE 100 is marginally firmer today, and trading within a very tight 8,521-43 range. Banking names generally populate the top of the index, after the FT reported that Chancellor Reeves is said to have intervened in a car finance mis-selling case to protect lenders in which she launched an effort to shield car loan providers from multi-billion-pound payouts; Lloyds (+4.9%) tops the index; Close Brothers (+18.5%) soars on the news. Elsewhere, Mining names are generally in negative territory, with metals prices subdued and despite BHP’s positive production update; the co. boosted copper production and maintained its guidance. On the economic front, the UK’s wage metrics ticked up in November – though in-line with expectations.


• The CAC 40 is also incrementally firmer; Luxury names find themselves topping the index – whilst there are no sector-specific catalysts, optimism may stem from the lack of China-specific tariffs announced on day-one of US President Trump’s first day in office; LVMH (+1.5%), Hermes (+0.8%). Elsewhere, Stellantis (-1.1%) conforms to the broader auto weakness – it was also reported that Renault overtook Stellantis in market share for the first time since 2021.

US Equity Futures: ES +0.4%, NQ +0.4%, RTY +0.8%

• Futures are entirely in the green, with clear outperformance in the economy-linked RTY on the first day of cash equity trade under the second Trump administration.


• The North American day sees the release of Canadian CPI metrics for December, where headline inflation is expected to pare a little to 1.8% Y/Y (prev. 1.9%).


• Today's US corporate earnings include Charles Schwab Corp, D.R. Horton, KeyCorp, 3M, Fifth Third Bancorp, Prologis, Netflix, United Airlines, and Capital One Financial Corp

21 Jan 2025 - 10:20- MetalsData- Source: Newsquawk