EUROPEAN EQUITY UPDATE: Stocks extend their early week slump

Analysis details (09:27)

European stocks (Eurostoxx 50 -0.5%) have extended on yesterday’s losses following the selling pressure in the US afternoon and a soft handover from the APAC region. Overnight, a rebound in Chinese PMI releases was unable to support sentiment as traders focused on upcoming risk events and a slew of earnings including Samsung Electronics which acted as a drag on the South Korean KOSPI. The macro focus for the Eurozone has been on the French inflation metrics which avoided an above-forecast outcome like we saw from Spain yesterday and therefore provided some relief for markets. That said, headline Y/Y CPI still rose from 5.9% to 6% in January with the harmonised metric advancing to 7% from 6.7% and therefore pushed back on the peak inflation narrative. Stateside, US futures (ES -0.3%, NQ -0.4%, RTY -0.2%) are extending on yesterday’s losses with the ES still holding above the 4k mark. Today’s US earnings slate is packed with heavyweights, including Caterpillar, Exxon, McDonald's, Pfizer. From a macro standpoint, the focus will also be on the closely-watched Employment Costs data for Q4. Sectors in Europe are mostly lower with Basic Resources and Financial Services bottom of the pile whilst Banking names outperform peers. Banking names have been supported by UniCredit (+8.3%) which is the best performer in the Stoxx 600 and helping to lift other Italian banking names after solid earnings and pledging to boost investor returns to EUR 5.25bln based on 2022 performance. However, upside for the sector has been capped by losses in UBS (-3.5%) with the Swiss Bank unable to benefit from a better-than-expected earnings release which was accompanied by cautious commentary. Elsewhere, chip names are on the backfoot following earnings and soft guidance from Samsung Electronics and NXP Semiconductors; ams-OSRAM (-3.3%) have also been dealt a blow following news that its CEO is to be replaced. Finally, shipping name Hapag-Lloyd (-2.6%) is lower on the session after falling alongside earnings and commentary which cautioned that freight rates had come down significantly by the end of last year. 

31 Jan 2023 - 09:27- Research Sheet- Source: Newsquawk