EUROPEAN EQUITY UPDATE: Stocks gain ahead of US NFP; Anglo American slumps post update

Analysis details (09:34)

• European equities (Eurostoxx50 +0.4%) are firmer, with moves to the upside picking up in recent trade. The European session today has been fairly quiet except for German CPI (Final), which was unrevised. The docket for today remains bare; BoE Inflation Attitudes Survey will provide some impetus for traders – though markets will ultimately be awaiting today's US NFP report at 13:30 GMT / 08:30 ET.


• European sectors have a slight positive bias; Consumer Products & Services, Retail and Travel and Leisure are all found towards the top of the pile. The latter is making back some of the losses seen yesterday, having underperformed yesterday. Consumer Products & Services is propped up by Luxury names; LVMH (+1.9%), Moncler (+3.2%) and Kering (+2.4%) are all outperforming with little by way of fresh catalysts for the names, though may be benefitting from a read-across after gains in Retail, bouncing back following yesterday’s Uyghur-related reports. To the downside, albeit marginally, is Real Estate as it continues yesterday’s losses. In terms of individual movers, Nordic Semiconductor (+4.5%) is the best performing stock in the Stoxx600, potentially benefiting from a Morgan Stanley upgrade for the Semiconductor sector to Attractive from In-Line. This has helped lift other semiconductor companies such as ASM International (+1.3%). Anglo American (-5.6%) is extending losses, after the Co. forecasts a 4% cut in production in the coming years. Siemens Energy (-3.1%) is underperforming after being downgraded at JP Morgan, whilst Sainsbury’s (+3.1%) benefits from an upgrade at Goldman Sachs.


• Asia-Pac stocks eventually traded mostly higher but with gains limited as sentiment remained cautious heading into the incoming US NFP jobs report and after the recent BoJ speculation. ASX 200 (+0.3%) finished marginally higher although trade was choppy as weakness in financials and tech was offset by resilience in the commodity-related sectors, in particular, energy following confirmation of early merger talks between Woodside Energy and Santos to form an AUD 80bln Australian gas giant. Nikkei 225 (-1.8%) underperformed amid pressure from a firmer currency after speculation that the BoJ could exit NIRP sooner than thought with markets pricing around a 20% chance they could lift rates at the December meeting, while a downward revision in Japan’s Q3 GDP to a deeper annualised contraction of -2.9% (exp. -2.0%) also clouded over the risk tone. Hang Seng (+0.1%) and Shanghai Comp. (+0.1%) just about shrugged off the early indecision amid a lack of fresh drivers with the downside cushioned after the PBoC conducted a net liquidity injection for the first time this week.


• US equity futures (ES Unch., NQ +0.1%, RTY +0.2%) are trading around the unchanged mark as markets await US NFP later today. The consensus looks for +180k nonfarm payrolls to be added to the US economy in November (prev. 150k); unemployment rate is seen unchanged at 3.9%. Within BofA's Flow Show, the bank believes that a headline NFP print of 125-175k adds strength to the soft-landing narrative; a <100k print signals a hard landing. Away from the employment data, markets will await UoM Inflation Expectations, with traders taking a particular focus on the long-term outlook, where the last month figure remained at a 12-year high at 3.2%.


• In this week's BofA Flow Show, stocks saw inflows of (USD) 6.2bln, 93.2bln to cash and 51mln to bonds, whilst gold saw outflows of 0.4bln. Looking at the regional flows, the US saw inflows of 8.5bln, 1.3bln into EM whilst Europe and Japan saw outflows of 0.3bln and 0.5bln respectively. Delving further, large caps saw inflows into large clips of 4.3bln, 1.3bln to small caps whilst value (0.9bln) and growth (7.1bln) stocks both saw outflows. And taking a look at sentiment, the BofA Bull & Bear Indicator rose to 3.8 (prev. 2.7).

08 Dec 2023 - 09:36- Research Sheet- Source: Newsquawk