EUROPEAN EQUITY UPDATE: Stocks eke out gains ahead of EZ inflation data

Analysis details (09:27)

• European equities (Eurostoxx 50 +0.8%) trade higher across the board following yesterday’s session of losses with the region attempting to claw back lost ground. The main macro focus for the region is on the upcoming Eurozone inflation data with yesterday’s soft prints from France and Germany seeing the market position itself for a below-consensus release; headline Y/Y HICP is expected to slip to 6.3% from 7.0% with the all-important super-core print set to fall to 5.5% from 5.6%.


• APAC stocks rose after the US House voted in favour of suspending the debt limit, while Chinese Caixin manufacturing PMI data showed an improvement, in contrast to the official PMI data released earlier in the week, helping to lift Chinese shares. Aussie shares gained after strong capex data. Nikkei 225 was supported by robust business capex and profits.


• US futures are flat with little in the way of firm direction with the main macro drivers currently amounting to progress being made in attempting to suspend the debt ceiling, decent manufacturing data out of China overnight, while slowing Eurozone inflation and Fed speak reduces expectations of a hawkish monetary impulse. ISM manufacturing data is out today, along with ADP/Challenger/weekly jobless claims data, all ahead of Friday's NFP report.


• Analysts at Barclays suggest that the buzz around AI is masking caution with “key investor types neutral on equities, hedged for downside, long cash and UW Cyclicals” and therefore positioning alone is not such a threat to stocks. Barclays adds that tech is not crowded (it stays overweight) and the FOMO move “may have legs”, that said “increased market polarisation across regions/factors/sectors is a challenge for active managers”.


• Equity sectors in Europe are mostly higher with Energy names top of the leaderboard following a bruising session yesterday, other gainers include media and auto names. To the downside, Real Estate is the only sector in the red with losses in the likes of Leg Immobilien, Aroundtown and Vonovia. In terms of individual updates, IMI will join the FTSE 100 at the expense of British Land as of June 19th, whilst Johnson Matthey (+1.2%) is said to be looking to sell its medical devices unit, according to Bloomberg sources. Remy Cointreau is now flat after paring opening gains post-earnings which saw the Co. report a beat on FY22 operating income. Finally, Leonardo (+2%) shares are higher alongside reports that the Italian gov’t removed an arms embargo on Saudi Arabia.

01 Jun 2023 - 09:33- Research Sheet- Source: Newsquawk