EUROPEAN EQUITY UPDATE: stocks continue to climb higher as earnings pick-up in pace

Analysis details (09:13)

Stocks in Europe (Eurostoxx 50 +0.4%) are mostly firmer (ex-FTSE 100 -0.4%) in a continuation of the gains seen yesterday and a strong close on Wall Street. Overnight, APAC stocks eventually traded mostly higher, though Chinese stocks experienced a choppy session with some desks continuing to cite ongoing angst following the CCP National Congress over the weekend. In terms of the upside in Europe, there is no clear single catalyst, however, desks continue to point towards ongoing hopes of Fed communication over a potential slowdown in rate hikes following reporting from the WSJ on Friday. Other drivers include declines in European natural gas prices, an improvement in UK politics and technical factors such as oversold conditions. IFO data from Germany exceeded expectations, however, accompanying commentary was grim with economists noting that a winter recession is coming and 50% of companies still intend to increase prices in the next three months. Stateside, US futures are hugging the unchanged mark with the e-mini S&P managing to hold above the 3800 mark in what is an exceptionally busy day for US earnings; today’s pipeline includes the likes of Google, Microsoft, Centene, General Motors, UPS, ADM, General Electric, Raytheon, Coca-Cola, 3M and Visa. Today’s data docket for the US includes housing data at 14:00BST and Richmond Fed at 15:00BST.  Sectors in Europe are mostly firmer with outperformance in Media and Tech names. The latter is bolstered by German heavyweight SAP (+4.5%) post-earnings after income from cloud operations helped the Co. exceed revenue expectations. To the downside, Chemical names lag amid losses in Linde (-4.5%) after the Co.’s board approved a shareholder vote on a proposal to delist from the Frankfurt exchange. In a busy morning of earnings, HSBC (-4.5%) is a standout laggard after the Co. announced the departure of its CFO alongside a decline in profits. Mitigating the downside for the banking sector is UBS (+4.5%) after the Co. reported better than expected profits and noted that institutional trading activity remained strong. Elsewhere, post-earnings gainers include Logitech (+6.2%), THG (+18.2%), laggards include Remy Cointreau (-6.2%), Orange (-2.8%), Whitbread (-1.8%) and Covestro (-1.6%). Finally, L’Oreal (-1.9%) is softer following news the Co. has been sued by an individual claiming she developed uterine cancer as a result of using Co's hair straightening products.

25 Oct 2022 - 09:13- Research Sheet- Source: Newsquawk