EUROPEAN EQUITY UPDATE: Stocks grind higher despite a tense geopolitical space as month-end looms before the FOMC, BoE and NFP

Analysis details (09:15)

• Stocks in Europe kicked the week off higher across the board following a mixed APAC lead which saw the Nikkei and ASX close in the red, whilst Chinese markets drifted into positive territory as earlier losses were stemmed in the mainland amid hopes of improving US-China ties after US Secretary of State Blinken met with Chinese Foreign Minister Wang Yi and agreed to work towards a Biden-Xi meeting in November. Traders this week look ahead to a plethora of risk events including the BoJ, FOMC, BoE, Refunding and NFP, whilst participants are also cognizant of geopolitics alongside month-end flows. As a reminder, UK clocks have moved back an hour and thus the LDN-NY time gap has narrowed to four hours from five hours, this will last for this week before reverting to five hours next week. US equity futures trade firmer across the board to varying degrees with mild outperformance in the NQ at the time of writing.


• Stocks in Europe are firmer across the board with sentiment in the region also boosted by softer flash inflation metrics from Spain alongside the German state of North Rhine Westphalia, whilst the commentary from ECB’s Vujcic, who suggests “the ECB is finished with rate hikes for now” were somewhat counterbalanced by ECB hawk Kazimir who said it is too early to declare victory and say the job is done. Stocks in Europe briefly took a breather from their upward momentum, which also coincided with reports that Israeli tanks on the outskirts of Gaza City blocked the road between the north and south of the Strip, signalling a potentially large-scale Israeli operation. Gains in the region resumed after German Flash Q3 GDP metrics were better than feared, albeit both Q/Q and Y/Y contracted ahead of the EZ-wide measure on Tuesday.


• Sectors in Europe are now all in the green with no overarching theme or bias and with fluidity in terms of sectoral performance. Energy started the day as the laggard following losses in underlying crude prices, but banks briefly fell to the bottom of the bunch after equity strategists at JPM downgraded the European Banking sector to Underweight from Neutral and advised clients to open shorts in European Banks. HSBC however bucks the sectoral trend and is firmer following earnings in which it announced a USD 3bln share buyback. On the flip side, Travel and leisure benefits from the lower oil prices while Healthcare is bolstered after Novartis met the primary endpoint in a kidney-related Phase III trial, while GSK also announced its Jemperli trial met the overall survival endpoint.

30 Oct 2023 - 09:15- Research Sheet- Source: Newsquawk