EUROPEAN EQUITY UPDATE: Stocks in Europe extend on gains as traders gear up for tomorrow’s pivotal US CPI

Analysis details (09:10)

Equities in Europe kicked off the first session of the week with gains across the board following a similar performance from a holiday-thinned APAC session, which saw China and Hong Kong away on an extended weekend. US equity futures are posting mild gains, with marginal outperformance seen in the NQ (+0.6%) vs the ES (+0.4%), RTY (+0.3%) and YM (+0.3%). Geopolitical headlines are garnering much attention as Ukraine reportedly makes significant progress against Russia, as the latter abandons a key area of Izium. Meanwhile, the recent optimism on progress regarding the Iran nuclear deal is once again proving to have been misplaced, as Europe doubts Iran's sincerity, while Israel doesn’t think a deal will be struck before the US midterms in November. Aside from that, traders are gearing up for this week’s US CPI release which would follow “goldilocks” US jobs data and constructive Chinese inflation numbers in recent weeks. Back to the session, European bourses extended on the upside seen at the cash open but see varying degrees of gains at the time of writing (Euro Stoxx 50 +0.8%; Stoxx 600 +0.4%). The DAX 40 (+1.1%) narrowly outperforms as Autos drive the gains (Porsche +3.3%, Mercedes-Benz Group +2.8%, Volkswagen +2.9%) after similar upside was seen in US auto names on Friday – particularly amongst EV makers. Sectors in the region are mostly firmer, with Autos & Parts outperforming closely followed by Banks, Retail, and Basic Resource, whilst the flip side sees defensive sectors, with Healthcare, Food & Beverages, and Telecoms in the red. In terms of individual movers, in M&A, Rio Tinto's (+1.6%) second-largest shareholder opposes its acquisition of Turquoise Hill. In health care, Dutch Shareholders Associations said Philips’ (+2.0%) handling of the ventilator recall failed to inform shareholders properly, making Phillips responsible for EUR 16bln in losses. AstraZeneca (+0.1%) is looking to more than double its cancer drugs by 2030. In energy, Germany mulls direct intervention in energy markets to avoid a wave of insolvencies amid surging gas prices. National Grid (+0.3%) plans to avoid winter blackouts are under threat as proposed payments from government schemes are too low. Centrica (+1.2%) plans to voluntarily cap profits to reduce energy bills for households. In industrials, United Auto Workers union walked out of Stellantis’ (+2.3%) Kokomo plant in Indiana on Saturday, citing health and safety concerns. In communications, Ubisoft (-1.3%) and Netflix (NFLX) partner on Netflix's gaming business, and will next year launch three new mobile games.

12 Sep 2022 - 09:09- Research Sheet- Source: Newsquawk