EUROPEAN EQUITY UPDATE: Stocks continue their descent as markets eye regional CPIs

Analysis details (09:33)

• European equities (Eurostoxx 50 -0.3%) trade softer following a predominantly negative close yesterday as a lack of positive catalysts keeps sentiment for the sector suppressed; FTSE 100 (-0.7%) lags on account of a firmer GBP. The main macro focus for the region today has come via regional inflation metrics whereby state CPIs from Germany have painted a picture of notable cooling on a Y/Y basis, whilst the M/M readings have been more of a mixed bag. As such, attention turns to the mainland figure at 13:00BST which is expected to see a Y/Y decline from 6.1% to 4.6% and M/M hold steady at 0.3%. Elsewhere on the inflation front, Spain reported a Y/Y increase to 3.5% from 2.6% (as expected) and M/M decline to 0.2% from 0.5% (vs. Exp. 0.3%). As a reminder, the EZ-wide print is due for release tomorrow morning. That said, it is unclear what impact (if any) the release will have on monetary policy expectations with the ECB widely expected to pause its hiking campaign in October.


• Asia-Pac stocks traded mixed following the indecisive performance in the US heading into month and quarter-end amid further upside in global yields and higher oil prices. ASX 200 (-0.1%) pared initial gains as strength in the commodity-related sectors was offset by upside in yields and a weakness in consumer stocks after retail sales missed forecasts. Nikkei 225 (-1.5%) underperformed after it slipped beneath the 32,000 level and amid mass ex-dividend day in Japan concerning over 1,400 companies. Hang Seng (-1.1%) and Shanghai Comp. (+0.1%) diverged amid headwinds in the property sector after the suspension of shares in Evergrande and some of its units, while the mainland was kept afloat after the PBoC’s strong liquidity injections ahead of the holiday closures and following China’s latest support pledges.


• US equity futures (ES -0.1%, NQ -0.1%, RTY -0.1%) are trading modestly weaker, paring back gains seen in yesterday's session. The docket for today picks up, with US Core PCE Prices (Final), GDP (Final) and weekly IJC’s all due at the busy 13:30 BST / 08:30 ET slot. Away from data, markets will look out for a slew of Fed speak from Goolsbee (Dove), Cook (Neutral), Powell (Neutral) and Barkin (Hawk). Additionally, traders continue to monitor news flow out of Washington; minority leader McConnell is comfortable with the Senate spending bill, and the Senate will today vote on a motion to proceed with the "shell" bill to avoid a shutdown at 16:30BST/11:30EDT, according to Fox. On the earnings front, Accenture and Carmax are to report earnings with the blockbuster release from Nike due after-market close. As for stock specifics, Micron (-5.5%) is extending losses in the pre-market, following a better-than-feared, though still not great, earnings call. However, the chipmaker did provide some bullish macro commentary suggesting ongoing demand growth and industry-wide supply reductions have set the stage for increased revenue and improved profitability throughout FY24.


• Equity sectors in Europe have a mostly negative tilt with Travel & Leisure at the bottom of the pile after feeling the pressure from higher energy prices with Ryanair (RYA ID) a laggard within the group after cutting its winter flight schedule due to Boeing (BA) delays. To the upside, Energy names are the clear outperformers given the aforementioned upside in energy prices, whilst underlying strength in metals prices has lent a hand to Basic Resource names. In terms of stock specific updates, ASML (-1.5%) shares are on the backfoot after TF International Securities suggested the Co. is likely to cut EUV equipment shipment forecasts significantly for 2024 by about 20–30%. Elsewhere, in the tech sector, ams-Osram shares are rooted to the foot of the Stoxx 600 after news that the Co. plans to secure a total of EUR 2.25bln through the combination of a capital increase. Finally, BBVA (+1.6%) is enjoying a session of gains after raising its interim cash dividend by 33% to EUR 0.16.

28 Sep 2023 - 09:33- EquitiesData- Source: Newsquawk