EUROPEAN EQUITY UPDATE: Stocks bounce back on quarter/month-end

Analysis details (09:39)

European equities (Eurostoxx 50 +1.2%, Stoxx 600 +1.1%) are attempting to claw back some of yesterday’s downside, albeit the Stoxx 600 remains on track to close the week out with losses of 0.5%. There hasn’t been a great deal in the way of fresh impetus via fundamentals behind the move and as such, it remains to be seen whether today’s bounce is of the dead cat variety given how fragile the tape has been throughout the week. It is also worth acknowledging that today marks both month and quarter end and as such market conditions could be choppier than usual. Today’s main data release comes in the form of Eurozone inflation metrics with Y/Y HICP expected to advance to 9.7% from 9.1% with market pricing for the October meeting currently indicative of a 75bps hike with around a 27% chance of a 100bps move. Geopolitical risk will also be on the radar for today’s session with Russian President Putin set to deliver a speech to lawmakers at around 13:00BST (primer available here), which will also coincide with the follow-up press conference for the EU Energy Ministers meeting (primer available here). Stateside, futures are also attempting to recover from yesterday’s losses (ES +0.9%, NQ +0.8%, RTY +1.1%) which saw a tough session for the tech sector after Apple shed the best part of 5% following a downgrade at BofA whilst Meta announced a hiring freeze. More encouragingly for the sector, Micron (+2.2%) is seen higher in the pre-market post Q4 results. That said, earnings from Nike (-8.8% pre-market) will likely garner a lot of attention after the sports retailer saw margins squeezed during Q1. From a macro perspective, the focus today for the US will be on the core PCE metrics due at 13:30BST with the Y/Y rate expected to inch higher to 4.7% from 4.6%, whilst the speaker slate includes Fed’s Barkin, Brainard, Bowman and Williams. Back to Europe, sectors are firmer across the board with Real Estate outperforming peers in what has been a tough week for the UK property market as mounting mortgage rates have garnered a lot of attention. Elsewhere, Energy, Insurance and Banking names are also near the top of the leaderboard, whilst Personal Goods lag peers. In terms of individual movers, the disappointing earnings report from Nike has bled through to some of its European competitors with Adidas (-3.6%) and Puma (-4.9%) both suffering. Elsewhere, ABN AMRO (+4.8%) and Hugo Boss (+4.15%) have benefited from broker action at Goldman Sachs and Berenberg respectively. To the downside, Dignity (-10.2%) and Cineworld (-3.7%) shares are both softer following poorly received H1 results.

30 Sep 2022 - 09:42- Research Sheet- Source: Newsquawk