EUROPEAN EQUITY UPDATE: Stocks fail to benefit from dovish BoJ

Analysis details (09:35)

European equities (Eurostoxx 50 +0.1%) trade with little in the way of firm direction with a dovish BoJ overnight unable to provide the region with much in the way of tailwinds. In an otherwise contained APAC lead, the Nikkei 225 (+2.5%) was the standout outperformer after the BoJ defied some market bets and stuck with its ultra-easy policy settings and reaffirmed its dovish guidance. Stateside, US futures are around the unchanged mark, continuing the lacklustre action seen this week. The E-Mini S&P 500 future is still trading above the 4,000 handle, with traders noting that the index is not deviating too far from the 200dma around 4,016 for the Mar’23 contract. On the earnings front, Fundstrat notes that, of the 6% of S&P 500 companies that have reported thus far, overall earnings results were beating analyst estimates by a median 6%, with 74% of those reporting topping estimates. Today’s retail December sales data will give a glimpse of how Americans spent over the holiday season, but many analysts have said they are more interested in how trends play out from January, where many expect consumers to retrench in the face of economic uncertainties and possible recession later this year. There is a chunk of Fedspeak due today by way of 2023 voters Harker and Logan, and non-voters Bostic and the influential Bullard. On European earnings, Barclays notes that “Q4 EPS growth estimates are the lowest in two years. We see room left for short covering, if less severe. FY23 cons. remains too high for us, but brighter global growth prospects ease downside risk, for now. If rates volatility subsides, we think equities and cyclicals can cope with a mild profits recession in '23.” Equity sectors in Europe are mixed with outperformance in technology and Travel & Leisure. The latter is bolstered by Q4 results from Just Eat Takeaway (+13.7%) and ASM International (+8.1%) who are the top two performers in the Stoxx 600. To the downside, Real Estate and Chemicals lag. In the luxury sector, Richemont (+2.2%) has been able to shrug off a miss on quarterly sales figures prompted by poor performance in China, whilst Burberry (+1.3%) is also firmer on the session despite similar headwinds flagged in its latest sales update. Elsewhere, BASF (-0.1%) have pared opening losses seen after prelim FY22 results flagged misses for revenues and adj. EBIT, whilst Continental (-3.1%) sits at the bottom of the DAX 40 following prelim Q4 earnings.   

18 Jan 2023 - 09:35- Research Sheet- Source: Newsquawk