EUROPEAN EQUITY UPDATE: Stocks grind higher whilst ECB speakers at Davos are abundant

STOXX 600: +0.7%

• European bourses began the session on a modestly firmer footing, but sentiment continued to improve as the session progressed – with a more pronounced bid following commentary via ECB Lagarde (details below).


• As it stands, indices generally reside at session highs; the Stoxx 600 hit a fresh record high, currently at 529.60.


• The EZ-specific data docket has been light today; more focus has been on a slew of ECB speakers who have appeared in Davos. Kicking off with Knot, noted that he sees little obstacles to another cut in January. Thereafter, President Lagarde said “no immediate US tariffs were her expectation”; though ECB’s Stournaras noted that “possible US tariffs would speed up rate cuts in the Eurozone”.

Sectors: Positive

• European sectors hold a strong positive bias, with only a handful of sectors residing in the red.


• Industrial Goods tops the pile, joined closely by Insurance and Healthcare to form the top 3 performers. Insurance is lifted by Munich Re and Hannover Re, which both received broker upgrades at HSBC.


• Telecoms is found at the foot of the pile, with Utilities also on the backfoot, but faring much better than the losses seen yesterday.

Majors: +1%, FTSE 100 +0.4%

• The DAX 40 is by far and away the clear outperformer in Europe thus far, for a few reasons; firstly, Adidas (+6.7%) tops the index after the co. reported very strong Q4 prelim results, reporting 19% Y/Y growth in its rev. figure. Elsewhere, Siemens Energy (+6.5%) also gains, as it pares back the prior day’s Trump induced losses; further positivity stems from comments via the Chairman who noted that they do not think its current US offshore orders are at risk, and Trump’s orders refer to new projects. Elsewhere, Munich Re (+3.3%) and Hannover Re (+2.7%) both benefit from broker upgrades; for autos, Porsche SE (-2.2%) was downgraded, whilst BMW (+2%) was upgraded.


• The FTSE 100 gains after is a little firmer today; Intermediate Capital Group (+5.5%) tops the index after it reported a strong Q3 Trading Statement. Elsewhere, easyJet (-2.7%) reported a 52% reduction in losses and noted of a positive outlook in FY25 – despite this, shares move lower.

US Equity Futures: ES +0.5%, NQ +0.9%, RTY +0.2%

• Futures are entirely in the green, with clear outperformance in the tech-heavy NQ after US President Trump announced a USD 500bln AI infrastructure investment in the US – which includes a JV between OpenAI, Softbank and Oracle; the latter gains 8.4% in pre-market trade.


• Other pre-market movers include Netflix (+15%) after it reported blockbuster earnings; the co. reported strong headline metrics, record subscriber gains and plans to raise prices.


• The US Day sees the release of weekly MBA mortgage applications data. December's leading index data is also due today.

22 Jan 2025 - 09:55- EquitiesEconomic Commentary- Source: Newsquawk