EUROPEAN EQUITY UPDATE: Stocks firmer though the FTSE 100 lags weighed on by AstraZeneca

Analysis details (09:52)

• European equities (Eurostoxx50 +0.3%) building on yesterday's gains; though the FTSE 100 (-0.1%) marginally lags. The docket for the European session has been packed with important EZ & UK PMI Flash data. EZ PMIs showed a deeper decline into contractionary territory. The release adds to concerns of an end-2024 technical recession for the EZ as a whole, given increased pressures in the bloc's two largest economies. The UK PMI data was more optimistic, with only the Manufacturing metric falling deeper into a contraction, whilst both Services and Composite came in stronger than expected. The accompanying release notes that “The service sector’s resilience and sticky inflation picture will add to speculation that it’s too early for the Bank of England to be talking about cutting interest rates”. Looking ahead markets will await speak from BoE’s Ramsden (Hawkish), the first scheduled speaker after yesterday’s hold at the BoE. A few ECB members are also due to appear today, including; Centeno (Dove), Vasle (Neutral), Kazimir (N/A), Muller (Hawkish), Vujcic (Neutral) & Simkus (Hawkish).


• European sectors have a strong positive bias; Automobiles & Parts and Basic Resources are the clear outperformers, with the former seemingly benefitting from broad-based gains within the sector; Stellantis (+2.9%), BMW (+2.2%), Volvo (+1.9%). It can be noted that Renault (+2.1%) is supported after an announcement that it is to buy back up to 200k shares. Basic Resources is led higher by the likes of Rio Tinto (+1.4%) and Anglo American (+2.1%) which have benefited from a positive risk tone in the commodities market. To the downside, Chemicals underperform, hampered by Symrise (-9.2%) after the Co. adjusted its FY23 adj. EBITDA margin to 19-19.5%, below the previous guidance of 20%. Industry peers such as Croda (-1.7%) are also lower following the news. In terms of individual movers, Avanza (-2.5%) is in the red after it was downgraded to Sell from Neutral at UBS. Campari (-2.9%) is weighed on after the Co. agreed to purchase Courvoisier from Beam Suntory for USD 1.2bln, with Net Debt/EBITDA adj. expected to increase to 4x from 2.6x on the deal closing. FTSE 100 heavyweight, AstraZeneca (-1.9%) is capping the gains of the UK Index – with fresh details light for the Co.


• Asia-Pac stocks traded mostly higher after the positive handover from Wall St where sentiment remained underpinned amid encouraging data and as yields continued to decline following the recent dovish Fed pivot, while the region also digested mixed Chinese activity data. ASX 200 (+0.9%) was led higher by the commodity-related sectors after gains in oil and metal prices which helped the index shrug off the latest flash PMIs from Australia which slightly improved but remained in contractionary territory. Nikkei 225 (+0.9%) was lifted at the open and briefly returned to above the psychological 33,000 level as it conformed to the global constructive mood. Hang Seng (+2.7%) and Shanghai Comp. (-0.5%) were varied with notable outperformance in the Hong Kong benchmark amid tech strength although the mainland lagged after mixed Chinese data in which Industrial Production topped estimates but Retail Sales disappointed despite showing double-digit percentage growth, while House Prices continued to decline and attention was on the PBoC which maintained its 1-year MLF rate at 2.50% but delivered a record net injection through the facility.


• US equity futures (ES +0.2%, NQ +0.3%, RTY +0.9%) are entirely in the green, having traded mixed in yesterday’s session. The markets today will await US Capacity Utilisation, Industrial Production, NY Fed Manufacturing, but the main data point for today will be US PMIs, where both metrics are expected to tick down slightly from the prior. Fed’s Williams (Neutral) is the first scheduled (13:30 GMT / 08:30 ET) speaker following the FOMC meeting on Wednesday, whilst BoC Governor Macklem is also to give remarks later in the session.

15 Dec 2023 - 09:52- Research Sheet- Source: Newsquawk