EUROPEAN EQUITY UPDATE: Stocks catch-up to yesterday’s late Wall Street gains

Analysis details (09:34)

European equities trade on the front-foot in a catch-up play to the gains seen in the US afternoon on Tuesday post-Powell in which the Fed Chair provided a message for both the hawks and doves. Fresh macro drivers for Europe are lacking for today’s session asides from yesterday’s comments from the influential Schnabel at the ECB who voiced her concern that inflation will remain high in the medium-term. The handover from the APAC region was mixed, while US President Biden's State of the Union Address did little to excite markets. Stateside, US futures (ES -0.3%, NQ -0.2%, RTY -0.4%) sit in marginal negative territory after a solid close on Wall Street with focus for today’s session on a busy Fed speaker slate which includes voters Williams, Cook, Barr and Waller. Williams’ comments will be of particular importance given his influence on the FOMC and will be viewed to see if he confirms the tone set by Powell. Sectors in Europe are higher across the board with outperformance in Energy names alongside upside in underlying energy prices and post-earnings gains in Equinor (+5.8%) which also saw the Co. announce a special dividend and increase its share buyback programme. Note, gains for the sector are being capped by TotalEnergies (-1.9%) which have failed to benefit from reporting a doubling in net profit last year. Chemicals names are faring well with Akzo Nobel (+6.2%) near the top of the Stoxx 600 post-results as the Co. anticipates higher core profits on account of an easing in raw material costs. Within the European banking sector, today has seen solid earnings from ABN AMRO (+5.6%) and a less well-received update from SocGen (-0.5%). Elsewhere in the financial landscape, Adyen (-12.8%) sits at the foot of the Stoxx 600 post-results with analysts focusing on a miss on margins and increased hiring. Volkswagen (-0.5%) is a touch softer post-results with the Co. noting that supply chain turmoil dragged on net cash flow. Finally, Telecom Italia (+2.6%) shares have been supported by news that state lender CDP is reportedly preparing a counter-offer worth around EUR 20bln with Macquarie for Telecom Italia's network.

08 Feb 2023 - 09:34- Research Sheet- Source: Newsquawk