EUROPEAN EQUITY UPDATE: Stocks bid on ECB optimism

Analysis details (09:42)

European equities were initially primed for a relatively contained open until a report noted that the ECB’s Governing Council is to hold an extraordinary meeting to discuss current market conditions in lieu of recent gyrations in the fixed income space. As such, bourses in the region are now higher across the board (Eurostoxx 50 +1.3%) in anticipation of some form of action by the ECB. The FTSE MIB (+2.9%) is the region’s clear outperformer amid notable gains in Italian Banks (Intesa Sanpaolo +5.8%, Banco BPM 5.4%, UniCredit +4.9%) following the upside we have seen thus far in Italian paper. That said, it remains to be seen what more the Bank could do at this stage beyond reiterating that it will conduct reinvestments under PEPP in a flexible manner with reporting earlier in the week highlighting the reluctance of policymakers to unveil a new tool at this stage. Ultimately, the fallout from the meeting is likely to be the driving force of price action for the remainder of the session. The European session also follows on from some of the positivity observed in Chinese bourses overnight which were supported after domestic activity data showed surprise growth in Industrial Production and a narrower than feared contraction in Retail Sales. Stateside, futures are firmer (ES +0.7%, NQ +0.8%, RTY +0.6%) but to a lesser extent than European peers ahead of the anticipated 75bps hike by the FOMC this evening. Sectors in Europe are higher across the board with the exception of Energy names following yesterday’s selling pressure in crude. Banks top the leaderboard in response to the latest reporting surrounding the ECB whilst some of the more cyclically exposed sectors such as Autos and Travel & Leisure also outpace peers. In terms of individual movers (ex-banks), LSE (+6.3%) is one of the best performers in the Stoxx 600 following a broker upgrade at UBS, Whitbread (+5%) has been supported by a bullish Q1 update. To the downside H&M (-4%) is hampering the performance of the retail sector despite sales metrics exceeding analyst expectations, whilst it’s been another session of losses for Atos (-7.5%) following yesterday’s strategic update which prompted the departure of its CEO.

15 Jun 2022 - 09:42- Fixed IncomeImportant- Source: Newsquawk