EUROPEAN EQUITY UPDATE: Stocks edge higher as Sintra gets going

Analysis details (09:22)

• European equities (Eurostoxx 50 +0.4%) trade on the front foot, albeit off best levels as opening gains were trimmed. Some enthusiasm was seen ahead of the cash open alongside a pick-up in Chinese markets, however, this gradually waned amid a lack of fresh macro drivers for Europe. Today’s regional focus will likely fall on central bank commentary as the ECB’s Sintra forum gets underway. Initial remarks from President Lagarde added very little to the mix with the central banker reaffirming the messaging from the June meeting by stating that "Barring a material change to the outlook, we will continue to increase rates in July." Other forthcoming speakers from the Bank include Italian dove Panetta and German hawk Schnabel as well as Netherlands’ Elderson.


• Asia-Pac stocks were mostly higher after the risk tone gradually improved following the predominantly negative handover from the US. ASX 200 (+0.5%) was positive as strength in financials and cyclical sectors picked up the slack from the losses in tech and telecoms. Nikkei 225 (-0.5%) was pressured and continued its pullback from the 33,000 level amid increasing speculation that the recent currency weakness could force the BoJ’s hand regarding YCC. Heng Seng (+1.9%) and Shanghai Comp. (+1.2%) were firmer with Hong Kong led by gains in tech and property after the PBoC’s continued liquidity efforts, while Premier Li pledged to roll out effective policy measures and it was also reported that US Treasury Secretary Yellen is planning a trip to China early next month.


• US equity futures are seeing modest gains with the Nasdaq 100 (+0.4%) attempting to recoup some of its tech-driven losses on Monday, while the Russell 2000 (+0.3%) continues grinding higher following yesterday's gains. Traders will be looking to see whether yesterday’s price action whereby tech names were sold at the expense of small caps and banks will be repeated and therefore is part of a broader trend which could see a change in leadership for the market. Looking ahead, market participants will be awaiting a slew of data, with Consumer Confidence, Richmond Fed (June), New Home Sales and Durable Goods (May) as the highlights out of the US.


• Equity sectors in Europe are mixed with Banks top of the leaderboard whilst Autos and Parts lag. Although not a part of the Stoxx 600 Autos index, Aston Martin shares are potentially suppressing sentiment for the sector with Co. shares lower by around 4.5% despite announcing that it aims to hit its adj. profit and revenue targets by 2024-2025. Elsewhere, Prosus (+9.8%) is one of the best performers in the Stoxx 600 after FY results which saw the Co. state it is on track to achieve its profitability target. Other gainers include NN Group (+1.3%) following a broker upgrade at Deutsche Bank and Accor (+1%) after it raised its FY23 RevPar view and announced it should be able to return around EUR 3bln to investors between 2023-27. To the downside, JD Sports (-4.7%) sits at the foot of the Stoxx 600 following its latest trading update, whilst BT Group is suffering at the hands of a broker downgrade by UBS.

27 Jun 2023 - 09:22- Research Sheet- Source: Newsquawk