EUROPEAN EQUITY UPDATE: Stocks firmer again, FTSE leads on a catch-up play

Analysis details (09:25)

• European equities (Eurostoxx 50 +0.2%) once again trade on the front foot with the FTSE 100 (+1.3%) outperforming peers in a catch-up play from yesterday’s UK market holiday. In terms of incremental market updates, there hasn’t been a great deal to shout about amid a lack of central bank commentary since the Jackson Hole Symposium. Data highlights have included the UK BRC shop price inflation release for August which eased to its lowest level since October 2022; driven by cooling food inflation. Elsewhere, German GfK Consumer Sentiment fell to -25.5 from -24.4 vs. Exp. -24.3 with the report noting "The chances that consumer sentiment can sustainably recover before the end of this year are dwindling more and more". Looking ahead for the session, there is a lack of notable highlights for the region and therefore direction may be sought from elsewhere, potentially via US JOLTS data (see below for details).


• APAC stocks traded with an upward bias following the positive lead from Wall Street, with little in terms of fresh catalysts to dictate price action heading into month-end. ASX 200 (+0.7%) was supported by its gold, mining, and materials sectors but with the gains modest intraday, though the upside was hampered by the index’s IT and Healthcare sectors. Nikkei 225 (+0.1%) was caged after opening higher, with the index supported by its machinery sector, while Toyota shares waned after reports it is to suspend operations at 12 plants amid system failures, with no timeline for recovery.  Hang Seng (+1.9%) and Shanghai Comp. (+1.2%) saw another session in the green, with the gains in the former more pronounced as index heavyweights are again buoyed by the recent stock support measures.


• US equity futures (ES -0.1%, NQ -0.1%, RTY -0.1%) are trading marginally in the red, paring back some of the gains seen in yesterday’s lacklustre session. The only data release of note was the Dallas Fed Manufacturing Index, which showed a slight improvement to -17.2 (prev. -20.0), though did show some increasing inflationary pressures with the wages/benefits index up 16 points, further indicating that the manufacturing sector remained under strong pressure. The docket for today picks up, with markets awaiting Home Price data, and Consumer Confidence, though the focus for today will be on JOLTS data. With Fed Chairman Powell, amongst various other Fed speakers attentive to recent tight labour market trends, this release will be the first employment data (of three more this week) to give an insight into whether the labour market is showing signs of cooling. The current market expectations are for Job Openings to decrease to 9.465mln (prev. 9.582mln), though some do forecast the figure ticking higher, to 9.685mln. Away from data, market participants will look out for comments from Fed’s Barr (Voter, Neutral) and will keep an eye out for earnings from NIO, PDD Holdings and Catalent.


• Equity sectors in Europe are mostly higher with the exception of Tech, which very marginally lags in the red. To the upside, Basic Resource names outperform with some of the UK mining names having their first chance to react to the positivity surrounding China over the weekend, which also followed through to today’s session. Real Estate names reside near the top of the leaderboard, again though, this appears to be more of a UK story with some of the domestic homebuilders higher on the session. In terms of individual updates, NN Group (+10.6%) is by some distance the best performer in the Stoxx 600 following encouraging H1 results, with the same being the case for Bunzl (+3.2%). Elsewhere, Liontrust Asset Management (+2.6%) are firmer following confirmation that their tender offer for GAM Holdings has been unsuccessful; FT has subsequently reported that GAM’s entire board has stepped down. Finally, for Telecom Italia (+0.6%), according to a draft decree cited by Reuters, the Italian Treasury can take full ownership of its cable unit Sparkle as part of a joint bid with KKR for the Telecom Italia grid.

29 Aug 2023 - 09:25- Research Sheet- Source: Newswires