EUROPEAN EQUITY UPDATE: Stocks eke out marginal gains as newsflow remains light in summer trade

Analysis details (09:31)

European equities (Stoxx 600 +0.4%, +0.9% WTD) trade mostly firmer and are on track to post marginal gains for the week. Newsflow for the session thus far has been on the light side aside from focus on the situation on the Rhine River. The latest reporting indicated that the river is on track to breach its critical level for navigability today and potentially trigger disruptions to trade of fuels across the continent, according to German government data cited by Bloomberg. The handover from the APAC session was a mixed one following the similarly indecisive lead from Wall St. with the Nikkei 225 (+2.6%) the main outlier overnight on account of catch-up gains following yesterday’s market closure. US futures trade on a similarly firm footing to their European counterparts (ES +0.5%, NQ +0.6%, RTY +0.6%) in a week which has been dominated by the inflationary outlook following CPI and PPI releases. Ahead, further evidence of price pressures in the US economy will come via the prelim release of the Uni. of Michigan sentiment data whereby the 1yr and 5yr inflation expectations metrics will be closely eyed. The latest Bank of America Flow Show revealed that equity funds received USD 7.1bln of inflows in the week to August 10th with the regional breakdown noting that US funds saw USD 11bln of inflows (largest in eight weeks), Japan USD 0.2bln outflows (outflows for the past three weeks), Europe USD 4.8bln outflows (outflows for the past 26 weeks). From a sectoral standpoint, tech saw its largest inflow in six weeks of USD 0.6bln, whilst materials observed USD 0.7bln of outflows. Sectors in Europe are currently mostly firmer with notable outperformance in the Travel & Leisure sector on account of gains in Flutter Entertainment (+10.1%) post-H1 earnings which have lifted Entain (+3.1%) in sympathy. Elsewhere, the Healthcare sector has once again been in focus after GSK (+2.2%) and Sanofi (-0.1%) both released statements downplaying concerns over potential litigation over Zantac (which has weighed heavily on shares this week) with the former suggesting that “Plaintiff litigation (is) inconsistent with the scientific consensus”. To the downside, the tech sector is marginally lagging peers following the softness observed on Wall St. yesterday. Finally, Uniper (+8.2%) is a notable outperformer in the region after noting that the Australian LNG it receives could be swapped for Atlantic gas to supply Europe as part of preparation for possible European shortages in the winter.

12 Aug 2022 - 09:29- EquitiesData- Source: Newsquawk