EUROPEAN EQUITY UPDATE: Soft survey data sees stocks slip

Analysis details (09:40)

European equities (Eurostoxx 50 -1.2%) are enduring another session of losses after downside seen at the cash open was extended following disappointing PMI metrics. The EZ-wide release saw all three metrics fall short of expectations with the composite print declining to 51.9 from 54.8 as S&P Global observed that “Eurozone economic growth is showing signs of faltering as the tailwind of pent-up demand from the pandemic is already fading, having been offset by the cost-of-living shock and slumping business and consumer confidence”. Accordingly, Chief Economist Williamson now expects Q2 growth of just 0.2% with “worse likely to come” in H2. Stateside, US futures are faring better than their European peers with the NQ just about outpacing the ES (-0.2%) with gains of 0.1% with a bulk of commentary surrounding the US focusing on Fed Chair Powell’s appearance before the Senate Banking Committee yesterday ahead of his visit to the House Finance Committee later today. According to a Bloomberg survey, the Stoxx 600 is expected to end the year at 467, which would imply upside of around 14% vs. Tuesday’s close but would leave the index down 4% on the year. Bank of America, which has a target of 430 suggests that the Fed’s tightening cycle is now fully priced, whilst SocGen (415 target) believes that Q3 could remain choppy and volatile but we might not be far from the “peak of pessimism”. Sectors in Europe are mostly lower with the exception of Travel & Leisure which sits in minor positive territory. In terms of laggards, it's been another tough session for Basic Resources names thus far amid price action in underlying commodity prices. Elsewhere, Banks have been hampered with the pullback in yields seen post-PMI data, whilst Real Estate, Autos and Chemicals are also notably under water for the session. In terms of individual movers, Atos (+5.6%) sits at the top of the Stoxx 600 following a report in BFM that the French government is in favour a merger between the Co. and Thales (+0.1%), whilst Eurofins Scientific (+1.7%) has been supported by a broker upgrade at Deutsche Bank.

23 Jun 2022 - 09:40- Fixed IncomeData- Source: Newsquawk