EUROPEAN EQUITY UPDATE: Stocks eke out mild gains, markets await Biden-Xi

Analysis details (09:32)

European equities (Eurostoxx 50 +0.3%) are posting mild gains thus far following the upside seen on Wall Street on Friday after the European close. Fundamental updates for Europe specifically have been light, with a bulk of the macro narrative focusing on China and US inflation. On the former, some positivity was observed following reports that the PBoC and China's Banking and Insurance Regulator told financial institutions to extend support for property firms. Less encouragingly, Beijing authorities stated on Monday they are to further strengthen COVID prevention and control measures and reminded residents not to go out unless necessary; the measures are seen as a response to the mounting pressure of soaring cases in the city. Stateside, futures are on the backfoot (ES -0.4%, NQ -0.7%, RTY -0.4%) with some weight on the US equity complex likely a combination of the recent rally running out of steam with the ES unable to hold above the 4K mark and comments from Fed 2022 voter Waller who noted that the market got ahead of itself in reacting to last week’s CPI release, adding that the Fed would need to see a string of reports before taking its foot off the gas. On a political footing it is worth noting that Democrats have won the battle for Senate control after taking Nevada and Arizona, meaning that the Georgia Senate runoff on December 6th will merely determine the margin that Democrats have in the chamber, not its balance of power, Politico reports. The focus for the session ahead will fall on the Biden-Xi meeting at 0930GMT, ahead of which, it has been reported that Biden will make it clear in the meeting with Chinese President Xi that the US does not seek competition or conflict. In terms of desk views, Morgan Stanley’s Wilson notes that in the wake of a deterioration in business activity and subsequent growth outlook, 2023 earnings estimates remain too high. Sectors in Europe are mixed with outperformance observed in Personal Care Drug and Grocery, Telecom and Tobacco names, whilst Real Estate and Travel & Leisure lag peers. It’s been a busy morning of newsflow for the Healthcare sector with Roche (-3.6%) a notable laggard and dragging with SMI lower (-0.4%) after the Co.’s Alzheimer’s drug did not meet its primary endpoint. Elsewhere, AstraZeneca (+1.8%) after higher after positive updates for Lynparza and Imfinzi drugs, whilst Merck AG (+6%) are near the top of the Stoxx 600 after a broker upgrade at Bank of America. Finally, Credit Suisse (+1.7%) are firmer after the Saudi National Bank said it has not come across any information that may raise concern re. the governance of the Co. and is supportive of the transformation plan.

14 Nov 2022 - 09:32- Research Sheet- Source: Newsquawk