EUROPEAN EQUITY UPDATE: Stocks grind higher ahead of US PPI

STOXX 600: +0.6%

• European bourses began the European morning on a strong footing, and continued to gradually edge higher as the morning progressed; indices generally reside just off session highs.


• Positivity today stems from Bloomberg reports that the Trump team is looking at gradual tariff hikes month-by-month of 2-5%.


• The European docket has been light today aside from ECB’s Holzmann, who noted that he does not “think ECB can lower rates too quickly, core inflation is still closer to 3% than 2%”.

Sectors: Positive

• European sectors hold a strong positive bias, with only a few industries residing in negative territory.


• Autos takes the top spot, closely followed by Technology; the pair benefiting from reports of a “gradual” Trump tariff hike. The optimism has allowed the likes of Mercedes Benz and BE Semiconductor to palm off initial pressure, despite receiving broker downgrades. These reports have also lifted metals prices, and as such Mining names are generally in the green.


• Retail is underperforming today, pressured by post-earning results from JD Sports, which cut FY25 guidance; although, Ocado’s update was much more positive, but unable to prop up the sector. Energy is also on the backfoot today, but has pared some of its losses and Energy climbs higher in the European morning. Much of the downside stems from losses in BP (-2.4%); the oil-giant is expected to report an impairment of USD 1-2bln and flagged a decrease in upstream production Q/Q.

Majors: FTSE 100 +0.2%, CAC 40 +0.9%, DAX 40 +0.6%

• The FTSE 100 is the worst performer in Europe and holds around the unchanged mark. In terms of stock specifics, Persimmon (+4.7%) tops the index after it reported a strong 2024 trading statement; it expects FY underlying PBT to be around the upper end of market expectations. Elsewhere, for retail names; JD Sports (-10%) sinks after it cut FY25 adj. pretax profit citing challenging and volatile markets. Ocado (+11%) was much more positive after it delivered its highest-ever level of sales over the peak Christmas period.


• The DAX 40 is posting modest gains, generally in-fitting with peers. Bayer (+1.6%) gains after its head of Pharmaceuticals said it is focusing on reducing its EUR 38bln debt. Elsewhere, Daimler Truck (+1.1%) benefits after Amazon ordered 200 vehicles from the co. as the US-giant aims to meet its net-zero carbon goals by 2040. Sticking with autos, Mercedes Benz (+1%) continues to edge higher despite receiving a downgrade at Goldman Sachs.

US Equity Futures: ES +0.5%, NQ +0.7%, RTY +0.6%

• Futures are entirely in the green, with modest outperformance in the NQ, after underperforming in the prior trading day.


• The US Day sees the release of December PPI figures, which are expected to see the headline rate rise to 3.4% Y/Y from 3.0%, and the core rate at 3.8% Y/Y from 3.4%; the data comes ahead of Wednesday's CPI release. In the afternoon, the Fed will release its latest Discount Rate minutes. Elsewhere, the RCM/TIPP gauge of economic optimism, NFIB business optimism, and the December Federal Budget stats will be released. Fed’s Williams and Schmid are due to speak.

14 Jan 2025 - 09:55- Fixed IncomeData- Source: Newsquawk