EUROPEAN EQUITY UPDATE: Stocks find some composure after early Putin-induced risk aversion

Analysis details (09:35)

Stocks in Europe have clambered off worst levels with the region now trading mixed on the eve of the FOMC following initial Russian-induced downside. To recap, risk aversion materialised in the early hours before the cash open after Russian President Putin, in his televised speech to the nation this morning, announced that partial mobilisation will begin today (September 21st) whilst threatening the west with “All means of destruction, including nuclear ones”, and warned that this is not a bluff. The Russian Defence Minister Shoigu was interviewed in the minutes after Putin and suggested Russia is not fighting just against Ukraine, but NATO and the collective West. In the 30-minutes between Russian President Putin’s address and the commencement of the commentary from Defence Minister Shoigu a pronounced risk-off reaction has been seen alongside a substantial bid in the crude complex. Since then, the dust has settled and earlier moves have been trimmed, with US equity futures now trading on either side of the unchanged mark. European bourses kicked off the session lower but have now conformed to are mixed picture (Euro Stoxx 50 -0.2; Stoxx 600 +0.3%). The UK and Italian FTSEs are outperforming, with the former underpinned by underlying crude prices – with energy the clear sectoral outperformer. Defence names in Europe are bid, with the top of the Stoxx 600 littered by the likes of Rheinmetall (+8.5%), BAE Systems (+6.9%), Leonardo (+5.5%), Thales (+5.6%) as Russia ups the ante with partial mobilisation. Overall sectors are now more mixed, and the earlier defensive bias has somewhat dissipated. UK’s FTSE 100 (+0.7%) is supported by broader housing names amid reports that UK PM Truss is to announce plans to cut stamp duty in the mini-budget on Friday to drive economic growth, according to The Times. In terms of individual movers, Uniper (-20.7%) slumps as Fortum (+14.6%) intends to fully divest Uniper to the German state which intends to underwrite a EUR 8bln capital equity increase of Uniper at EUR 1.70/shr.

21 Sep 2022 - 09:35- Research Sheet- Source: Newsquawk