EUROPEAN EQUITY UPDATE: Stocks continue to decline with sectors painting a clear defensive picture

STOXX 600: -1.6%

• European bourses kicked off the Tuesday session with losses across the board, with risk deteriorating further since the back-end of the APAC session. Overnight, APAC stocks were mostly subdued following the mixed lead from Wall Street, where the majority of sectors declined but tech outperformed amid strength in some of the mega-caps following deal announcements.


• Overall, there isn't an obvious macro driver to explain the deterioration across global benchmarks. That being said, there could be a central bank angle as the losses come alongside Fed officials this week refraining from endorsing another rate cut at its December confab - Fed's Cook, Daly, and Goolsbee highlighted labour-market risks, but did not commit to further easing in December, echoing the tone of Chair Powell last week. Further on the central bank front, the RBA maintained its Cash Rate at 3.6% as expected, whilst it sharply raised forecasts for core inflation out to the second quarter of 2026.


• Over in the UK, focus has been on a rare pre-budget speech by the Chancellor following reports that suggested she will indicate that she is prepared to break Labour’s manifesto promise not to raise income tax. The Chancellor refrained from reiterating election pledges but offered no further detail.

Sectors: Negative

• European sectors are in the red across the board but with a clear defensive bias.


• The shallowest losses are seen in Food Beverage, Real Estate, Utilities, Healthcare, and Optimised Personal Care Drug and Grocery.


• On the flip side, Basic Resources, Retail, Telecoms (amid Telefonica), and Industrial Goods and Services at the foot of the pile.


• The Telecoms sector is pressured by heavyweight Telefonica (-10%) post earnings, after net income and EBITDAaL fell Y/Y, while it will halve its 2026 dividend to EUR 0.15/shr (prev. 0.30 in 2025).

Others:

• 
  BP (-0.9%) - Posted Q3 adj. net income of USD 2.21bln (exp. 2.02bln), but down from USD 2.27bln a year ago; it maintained its USD 750mln quarterly share buyback, with CEO expecting total completed or announced disposals of around USD 5bln in 2025.


• 
  Telefonica (-10%) will halve its 2026 dividend to EUR 0.15/shr (prev. 0.30 in 2025), redirecting cash toward core telecom operations and new initiatives including defence and cybersecurity, as part of Chairman Marc Murtra’s growth-focused strategy.


• 
  ABF (-2.3%) - Reported a 13% fall in FY profit, hurt by weak sugar prices in Europe, and forecast improved results for the new financial year; the Board said it is reviewing its group structure, potentially separating Primark and Food units, though no decisions have been finalised yet; it also announced a GBP 250mln share buyback by FY2026, and expects growth in adj. operating profit and adj. EPS in 2026, while it remains confident in medium- and long-term prospects.


• 
  Hugo Boss (-0.6%) - Q3 sales fell 4% to EUR 989mln (exp. 1.01bln), hit by a weaker USD and lower revenues in China and the UK; it expects FY sales between EUR 4.2-4.4bln, and EBIT of EUR 380-440mln, at the lower end of guidance, citing macroeconomic volatility and currency headwinds.

US Equity Futures: ES -1.1%, NQ -1.4%, YM -0.8%, RTY -1.6%

• Lower across the board to a similar magnitude as their European counterparts, with newsflow relatively quiet from a US standpoint this morning and the US government shutdown set to extend to its longest streak this week.


• Today’s data slate is thin, with the US RCM/TIPP economic optimism survey the only major release due.


• Stateside speakers today include Fed's Bowman (Voter, Dove), who is due to speak about 'Bank Supervision and Monetary Policy' at Banking Conference.


• In equities, notable corporate earnings reports are due from ETN, PFE, UBER, AMGN, ANET, AMD, SHOP, SPOT.

04 Nov 2025 - 10:10- EquitiesResearch Sheet- Source: Newsquawk