EUROPEAN EQUITY UPDATE: Stocks continue to rise ahead of month end alongside encouragement from Spanish and German CPIs

Analysis details (10:14)

• European equities (Eurostoxx50 +0.6%) are extending gains, with clear underperformance in the FTSE100 (-0.2%), albeit the UK index is off lows. Today has been exceptionally busy for European traders, with a number of notable data prints including, Spanish CPI (Flash) and German state CPIs. For Spain, the metrics were softer than forecasts, though a deeper look at the Spanish report indicated that the softer CPI can be attributed to temporary factors, such as tourism. The German metrics also cooled more than the expectations for the nationwide metric implies.


• European sectors have a strong positive tilt, with clear outperformance in Autos & Parts, which has been lifted by broker upgrades for BMW (+3.4%) and Michelin (+2.3%) both at JP Morgan - in turn lifting peers including Volkswagen (+1.4%) who see shallower gains amid a broker downgrade. Real Estate resides in second place, with names such as Leg Immobilien (+3.8%) and Vonovia (+3.2%), seemingly benefitting from JPM’s European Equity strategy, which is now long on the sector. Taking a look at some other sectoral changes as part of JPM's European Equity Strategy, the bank cuts Food, Retail, Hotels/Travel and semiconductors to Underweight, with the sectors overall unreactive to the news. Technology is also towards the top of the pile, propped up by Infineon (+4.3%), the best-performing stock in the Stoxx600. Energy is found at the foot of the bunch despite the intraday gains in the crude complex, being hampered by TotalEnergies (-1.3%) following a downgrade to Hold from Buy at Jefferies. In terms of stock specifics, Phillips (-6.1%) is posting marked losses after the FDA has alerted about an emerging safety issue involving the DreamStation 2 CPAP machine for sleep apnea.


• Asia-Pac stocks were mixed after the choppy performance on Wall St where stocks wavered, treasuries rallied and the dollar dipped on dovish Fed rhetoric, while the region also digested the RBNZ’s hawkish hold where it kept rates unchanged but signalled risks of a future hike. ASX 200 (+0.3%) was positive with the index helped by encouraging data including better-than-expected Construction Work Done which feeds into next week’s GDP release and after softer monthly CPI all but guaranteed a pause at the December RBA meeting. Nikkei 225 (-0.3%) swung between gains and losses with early pressure from a firmer currency before the index rebounded off lows, while there were also comments from BoJ Adachi who stuck to the dovish script as he noted it is appropriate to patiently maintain easy policy and if needed, the BoJ will take additional easing steps. Hang Seng (-2.2%) and Shanghai Comp. (-0.6%) declined with underperformance in Hong Kong amid property sector woes.


• US equity futures (ES +0.4%, NQ +0.4%, RTY +0.8%) are trading on the front foot, with ES futures inching above yesterday's best, whilst RTY outperforms as it attempts make up yesterday’s losses. The docket for today is packed with data releases, including US MBA’s, GDP Estimates, PCE Prices and Advance Goods Trade Balance. Markets will also be looking out for Fed Beige Book and commentary from Fed’s Mester (2024 Voter, Hawk). In terms of stock specifics, Jabil (JBL, -5.1%) sunk by around 18% after-hours, after the Co. cut its outlook citing softening demand. Over to Gamestop (GME, +15.5%) is flying in the pre-market as investors await earnings from the Co. on December 6th.

29 Nov 2023 - 10:14- Research Sheet- Source: Newswires