EUROPEAN EQUITY UPDATE: Stocks drift higher as crude and bonds slip; traders look ahead to a myriad of central bank speakers

Analysis details (09:34)

Equities in Europe started the session mostly higher in what was a contained open, but the upside thereafter extended in a move that coincided with losses in energy prices and bonds. This also followed a firm APAC handover which saw Hong Kong post gains of over 3% whilst the Japanese Nikkei advanced around 1.5% on its return from the long weekend. US equity futures have also drifted higher in lockstep with Europe - but to a lesser magnitude (ES, NQ, RTY, YM broadly higher by around 0.3% apiece) following yesterday’s Powell-induced volatility. However, recent price action in stocks do not line up with particular headlines and it remains to be seen whether this can be sustained as traders look ahead to a slew of central bank speakers. On the war, diplomatic progress between Russia and Ukraine remains slow whilst EU and NATO members are gearing up to meet this week - but EU Foreign Affairs Minister suggests there won't be a further package of EU sanctions this week, whilst BBC’s Parker suggested that some member states are worried about 'sanctions fatigue'. Nonetheless, most European bourses are in the green (Euro Stoxx 50 +1.0%, Stoxx +0.5%), with the FTSE 100 and Dutch AEX initially outperforming on account of their Energy and Basic Resources exposure. However, EZ peers caught up as Autos, Banks and Travel & Leisure made their ways up the sectoral ranks whilst the Swiss SMI (-0.1%) is pressured by its large healthcare sector, which resides as a laggard amid an anti-defensive tilt in the broader sectors – Roche, Novartis, and Nestle post losses of 0.6-0.8% and currently caps Stoxx 600 upside. Delving into sectors, Consumer Products is supported by the likes of Puma (+3.1%) and Adidas (+2.3%) after Nike (+6.0% pre-market) reported stellar numbers yesterday. Energy has been losing ground alongside crude prices as China warns of COVID risks whilst EU ministers meet to tackle the rise in energy prices. Financials are supported by post-Powell yields with the German 10yr topping 50bps in the European morning. In terms of individual movers, Just Eat Takeaway (+3.2%) and McDonald’s announce long-term global strategic partnerships to drive delivery growth. Nokian (+3.3%) announced it is no longer investing in production in Russia but is to maintain its car tyre factory in the region, although the gains today could be on the broader upside in Autos & Parts in what is another day of macro-influenced price action.

22 Mar 2022 - 09:31- EquitiesResearch Sheet- Source: Newsquawk