EUROPEAN EQUITY UPDATE: Stocks extend on Monday’s advances

Analysis details (09:25)

• European equities (Eurostoxx 50 +0.4%) trade higher across the board in a continuation of the gains seen on Monday. In terms of fresh incremental drivers, there isn’t a great deal to add to the current narrative beyond the abating of concerns over the banking sector with European banks notably firmer at today’s cash open.


• Asia-Pac stocks were mixed, following early advances led by energy, though gains were capped as North Korean nuclear rhetoric stoked geopolitical concerns.


• US equity futures are mixed (ES +0.1, NQ -0.2%, RTY +0.2%) after paring back modest overnight gains. Traders are again beginning to price the prospect of an FOMC May rate hike at 50-50. The Fed is in data dependent mode, and officials speaking thus far have reiterated that the primary focus is on inflation, rather than banking issues. Highlights for the day ahead include an appearance from the Fed's supervisory chief Barr at a Congressional panel, the Conference Board's gauge of Consumer Confidence for March, FHFA and CaseShiller housing data. On the earnings front, MKC and WBA are due to report before the market open, while MU and LULU are the highlights for the after market close releases.


• In terms of desk views, JPMorgan's equity strategist Marko Kolanovic is still urging a defensive bias, noting that the recent episodes in the banking sector serve to highlight the uncertainty stocks are facing. JPM is more constructive on US vs European equities, and favours sectors that benefit from lower bond yields (like tech). Meanwhile, as we approach month-end, Citi's rebalancing model reveals a buy signal for global equities, and a sell signal for global bonds.


• Equity sectors in Europe are mostly firmer with Energy names top of the pile following yesterday’s largest daily gain for crude since October. Other gainers include Basic Resource and Banking stocks, whilst to the downside, Real Estate is the Standout laggard, followed by Tech.


• In terms of individual movers, Telecom Italia (+1.5%) is on a firmer footing with reporting from Bloomberg noting that State-backed lender CDP is reportedly planning to increase its offer for Telecom Italia's landline unit. Alongside support from firmer energy prices, BP (+2.0%) are in the green following news that the Co. and ADNOC have agreed on a non-binding pact to take Newmed Energy (DKDRF) private. In terms of broker action, Citi has added AstraZeneca (AZN LN), BP (BP/ LN), Covestro (1COV GY), Equinor (EQNR NO) Glencore (GLEN LN), Heineken (HEIA NA) & Vestas (VWS DC) to its European focus list, whilst removing, AB InBev (ABI BB), Roche (ROG SW) & Sandvik (SAND SS).

28 Mar 2023 - 09:25- EquitiesResearch Sheet- Source: Newsquawk