EUROPEAN EQUITY UPDATE: Stocks higher with mining names boosting the FTSE100 higher

Analysis details (10:01)

• European equities (Eurostoxx50 +0.6%) are extending gains, with clear outperformance in the FTSE100 (+1.1%), which has been lifted by mining-related stocks (details below). The European session has been focused on EZ manufacturing PMI data, which saw slight upward revisions (bar Italy) to the final results. The accompanying commentary noted that “the improvements are mostly timid, lacking the dynamism needed to declare an upward trend." Looking ahead, markets will await commentary from ECB President Lagarde who is both slated to speak before mid-day.


• European sectors are mostly in the green, with significant outperformance in Basic Resources, being propped up by mining stocks including; Anglo American (+6.4%), Antofagasta (+4.37%), Rio Tinto (+3.5%), Glencore (+2.9%). The former two received broker upgrades at UBS, which has helped lift the sector as a whole. Interestingly, Antofagasta received a downgrade at Jefferies – which has ultimately been overpowered by the broker moves at UBS. Away from Basic Resources, the breadth of the market is fairly narrow, with Technology and Industrial Goods & Services also towards the top of the pile. To the downside, Food Beverage and Tobacco teeters around the unchanged mark alongside Optimised Personal Care & Grocery. The latter is weighed on by Tesco (-1.3%) after the Co. was downgraded to Underweight from Neutral at JP Morgan. Taking a look at some individual movers, Signify (+5.9%), is extending gains after the Co. announced cost reductions and expects annualised savings in excess of EUR 200mln. The worst performing stock in the Stoxx 600 is Bechtle (-5.8%), after the Co. launched an offering of up to EUR 300mln of convertible bonds.


• Asia-Pac stocks began the new month subdued with price action rangebound as markets paused following the November rally amid another busy day of economic releases, while the conflict in Gaza also resumed. ASX 200 (-0.2%) was dragged lower by underperformance in tech and consumer-related sectors amid the upside in yields. Nikkei 225 (-0.1%) traded indecisively as encouraging data releases, including a lower unemployment rate, offset the headwinds from early currency strength. Hang Seng (-1.1%) and Shanghai Comp. (+0.1%) were mixed following the PBoC’s substantial net liquidity drain and failed to benefit from the surprise return to expansion territory of Chinese Caixin Manufacturing PMI. Though, according to Bloomberg, China state-owned capital operating Co. reportedly bought ETFs on Friday, which helped to lift the Shanghai Comp. out of negative territory late in the session.


• US equity futures (ES +0.1%, NQ Unch., RTY +0.5%) are trading on the front foot, albeit to a lesser extent in comparison to their European counterparts. In terms of the day ahead, markets will await US ISM Manufacturing PMI and unemployment metrics out of Canada. Fed’s Goolsbee (2023 Voter, Dove), Cook (Voter, Neutral) and Fed Chair Powell are also scheduled to speak throughout the day, with the latter likely to be in focus. SGH Macro’s Duy says “I expect Powell will follow recent commentary with a risk that he is more dovish because if there is a chance of a March cut, he needs to start normalizing that at the next FOMC meeting” – and with recent dovish-leaning commentary from Fed’s Waller (Hawk), Powell’s commentary will be of great interest, to see if he concurs with Waller’s recent rhetoric.

01 Dec 2023 - 10:01- Fixed IncomeData- Source: Newsquawk