EUROPEAN EQUITY UPDATE: Stocks eke out gains in the pre-Xmas lull

Analysis details (09:25)

European equities (Eurostoxx 50 +0.3%) have modestly extended on yesterday’s solid showing with incremental macro drivers grinding to a halt ahead of the festive period. The session follows on from a mostly constructive APAC session (ex-mainland China) with the Hang Seng the regional outperformer as property names cheered reports via state media that China is to push the construction of major projects and equipment upgrades. Stateside, US futures (ES +0.1%, NQ +0.1%, RTY +0.1%) are posting marginal gains with the ES able to hold above the 3900 mark following yesterday’s healthy gains post-US Consumer Confidence. After-hours earnings from Micron (-2% pre-market) disappointed with the Co. forecasting a deeper-than-expected Q2 loss and announcing plans to cut its headcount by 10%. Elsewhere, the US could be heading for a government shutdown after lawmakers failed to agree on the terms for concluding the debate over the USD 1.7tln Omnibus Spending Bill and therefore are unable to proceed to a vote; as it stands, funding currently runs until Friday. In terms of desk views, BofA strategists suggest that small caps could benefit as investors begin to anticipate a recovery rather than a recession in 2023. BofA notes that small caps could act as a good inflation hedge given their relative cheapness to large caps and could also act as a source of demand as investors look for alternatives to tech. Sectors in Europe are mostly firmer with energy the outperformer following gains in underlying crude prices. Elsewhere, Banking names are also on a firmer footing, whilst Autos and Real Estate are the only two sectors in the red. Standout individual movers are few and far between with stock-specific newsflow exceptionally light during today’s session.

22 Dec 2022 - 09:25- Research Sheet- Source: Newsquawk