EUROPEAN EQUITY UPDATE: Sentiment takes cues from Wall St and APAC amid AI concerns and China rare export news

STOXX 600: -1.3%

• European bourses slumped at the open with weakness in all major European indices - currently stabilised at lows. Weak sentiment in APAC and Wall Street which saw stocks decline in those regions has reverberated into the European market. Concerns continue to persist over AI, which is weighing down the Tech sector. Additionally, news that China's rare-earth product exports fell to 6,173 tonnes in October, the lowest since June, as Beijing and Washington continue negotiating supply terms under their trade truce, has further dampened global sentiment.


• In the UK, Chancellor Reeves is reportedly mulling launching a last-minute raid on banking profits in the budget, which has triggered losses in large UK banking companies weighing down the banking sector and FTSE 100 (-0.9%)


• Looking ahead, speakers include BoE Pill and Dhingra.

Sectors: Negative

• The widespread weak sentiment seen in the market has seen all sectors in the red. At the top of sectors are defensive sectors with Health Care (-0.3%), Optimised Personal Care (-0.4%), Food Beverage & Tobacco (-0.6%) and Real Estate (-0.7%). Bottom of the pile includes the likes of Banks (-2.1%), Basic Resources (-2.3%) and Automobiles and Parts (-2.3%).


• Basic Resources has been weighed down by weaker metals prices. Newsflow from China, where rare-export products fell to 6273 tonnes in October, had weakened sentiment for the Basic Resource sector. Downsides can be seen in large companies like Fresnillo (-4.1%) and Anglo American (-3.7%).


• The Banking sector has also been further pinned down by UK banks following a report that Chancellor Reeves is launching a last-minute raid on banking profits in the budget, straining sentiment in UK banks which are heavily weighted in the banking sectors in Europe. Lloyds (-2%) and Barclays (-2.5%).

Movers

• Roche (+6.0%) - Co. has gained after Giredestrant became the first oral SERD to show superior invasive disease-free survival in early breast cancer. At interim analysis, giredestrant demonstrated a statistically significant and clinically meaningful benefit versus standard-of-care endocrine monotherapy.


• Imperial Brands (+2.6%) - FY (GBP): Revenue 32.17bln (prev. 32.4bln Y/Y), operating profit 3.49bln (prev. 3.55bln Y/Y), sees FY26 adj. operating profit between 3-5% and low-single-digit tobacco revenue growth. Performance in FY26 will be weighted to the second half of the year.


• Rio Tinto (-2.1%) reduced production at its Yawun alumina refinery to extend its operational life, with output set to decline by 1.2mln tonnes annually and the refinery’s production to be cut by 40% in 2026.


• ABB (-4.15%) - The co. has raised its annual EBITA margin target to 18-22% (prev. 16-19%) and its ROCE target to above 20% (prev. above 18%). The co. also reiterates its capital allocation principles and aims at paying a rising sustainable DPS over time.

US Equity Futures:

• US Equity futures have continued their downward slump with downsides in ES (-0.2%), NQ (-0.2%), YM (-0.2%) and RTY (-0.3%). Sentiment remains constrained and newsflow this morning from the US jobless claims which came out at 232k in the October 18th week has done little to alleviate market concern and sentiment. Additionally, Baidu's (+2.3%) Q3 revenue beat expectations adding further pressure on US stocks amidst the growing AI race with China.


• Looking ahead in the US data includes the ADP weekly Prelim estimate and US Factory orders. Speakers today include Fed's Barr (voter) and Fed's Barkin (2027 voter), while Fed's Logan (2026 voter) will deliver remarks after the close.

18 Nov 2025 - 10:10- Fixed IncomeData- Source: Newsquawk