EUROPEAN EQUITY UPDATE: Sentiment slips further from a downbeat handover as yields advance with Central Bank events ahead

Analysis details (09:40)

A softer start to the session, in-fitting with the handover from Wall St. and APAC trade where, in particular, tech names lagged amid yield upside post Brainard. On this, the sessions focus is very much on Central Bank activity – barring any substantial Ukraine-Russia development – with numerous ECB speakers due including influential members Lane and Schnabel, before the FOMC Minutes; an account which will be scrutinised for clues as to their balance sheet plans and the broader view on 50bp. For reference, the ES is currently pivoting the 4500 mark, a level it has not made a substantial foray below since March 25th, while the NQ (-0.6%) continues to lag amid further yield advances. Returning to current European price action and the Euro Stoxx 50 is lower by 1.5%, losses are fairly broad-based and perhaps modestly exacerbated by the soft March Construction PMI data where all measures dipped from the prev. and the French metric printed in contractionary territory. While bourses are all lower, the FTSE 100 (-0.5%) is carving out relative outperformance and is being assisted by the likes of Imperial Brands (+2.5%) after confirming their adj. March 15th guidance remains valid. As such, the Food, Beverage & Tobacco sector is among the ‘outperforming’ sectors; but, still lags Media given strength in Publicis (+1.1%) after Tuesday’s broader market and noted CAC 40 pressure amid a tightening French election ahead of Sunday’s first round – Publicis has, in previous elections, been regarded as a good hedge given its high US exposure. Finally, other notable movers this morning include CHR Hansen (+3.0%) after beating on headline revenue metrics in Q2 and lifting organic growth guidance for 2021/22. Laggards include Klepierre (-3.3%) and ADP (-2.1%) on downgrades from JPMorgan and Goldman Sachs while Redrow (-2.0%) slips after announcing a higher fire safety provision is required. Looking past this week and US earnings season gets underway with banks set to report on April 13th, ahead of the broader season, Deutsche Bank’s Chadha looks for a Q1 beat of 6-7% vs average 5% but shy of post-COVID 14-20% levels. Additionally, their strategists do not believe the increase in oil prices as a boost to energy names is fully reflected in expectations. 

06 Apr 2022 - 09:40- Fixed IncomeData- Source: Newsquawk