EUROPEAN EQUITY UPDATE: Stocks bounce in a session lacking in fresh macro drivers

Analysis details (09:30)

European equities trade higher across the board (Stoxx 600 +0.8%) with the Stoxx 600 on track to close the week out marginally softer (circa -0.3%). After an initial tentative showing, stocks extended opening gains with no clear fundamental driver for the move at the time with upside also observed in US futures. As it stands, US index futures trade marginally firmer (ES +0.2%, NQ +0.2%, RTY +0.2%) after sitting a touch below neutral in early European trade with the ES now gaining a slightly firmer footing above 3500. The day ahead sees a lower volume of speakers and economic releases, leaving traders to digest recent Fed commentary and data ahead of next week’s FOMC meeting minutes, where we will be looking for clues on the size of the December rate hike as well as views of the eventual terminal rate. Bank of America's weekly flows report notes the biggest inflow into equities seen in the last 35 weeks, but European equities have seen their 40th straight week of outflows. Its 'Bull & Bear Indicator' rose to 0.4 from 0.0, the first rise in nine weeks, which BofA says is driven by improving bonds and credit flows, as well as equity market breadth over the past two weeks. Sectors in Europe are mostly higher with outperformance in Energy names, followed by Utilities and Banking names with the latter potentially supported by today’s pick-up in yields. To the downside, Tech is the only sector in the red with losses of around 0.2%. In terms of individual stories, BHP (+1.5%) improved its offer for Oz Minerals to AUD 28.25/shr (vs last close of AUD 26.30), Rio Tinto (+0.7%) has abandoned its securityholder deal in the Turquoise Hill bid whilst Vivendi's (+0.7%) Canal+ entered into talks to acquire the film and pay TV operations of Orange (+1.3%).

18 Nov 2022 - 09:30- Research Sheet- Source: Newsquawk