EUROPEAN EQUITY UPDATE: Stocks in Europe recover off lows whilst tariffs woes and geopolitics cap upside

STOXX 600: +0.3%

• European bourses opened mixed, but sentiment gradually improved as the morning progressed to display a more positive picture in Europe, paring back some of the hefty losses seen in the prior session.


• US President Trump provided some updates on his tariff plans in the past day, saying that he will announce tariffs on cars, semiconductors, chips, pharma and probably lumber over the next month or sooner, while he is looking at a 25% tariff on lumber and forest products. It was separately reported that EU Trade Commissioner Sefcovic said the EU is prepared to talk with the US about reducing its 10% tariff on cars as part of a broader negotiation aimed at avoiding a transatlantic trade war, according to POLITICO.


• The EZ-docket has been light thus far; German Producer Prices printed below expectations. Focus ahead will be on some commentary via ECB’s Makhlouf, Nagel and EZ Consumer Confidence.

Sectors: Positive

• European sectors display a positive bias after initially opening mixed.


• Basic Resources is the clear outperformer, with gains facilitated by strength in metals prices alongside post-earning upside in Anglo American (discussed below).


• Banks are towards the middle of the pile; Lloyds (+3.6%) saw its profit plunge 20%, but optimism stems from a GBP 1.7bln share buyback.


• Healthcare is found at the foot of the pile with US President Trump noting that he will announce tariffs on cars, semiconductors, chips, pharma and probably lumber, over the next month or sooner; negative results from Zealand Pharma (-3%) is also weighing.


• For the Autos sector, both Mercedes (-2.5%) and Renault (-2.4%) dip after their results. The former missed on its headline metrics and its FY25 guidance disappointed, noting that EBIT is seen significantly lower Y/Y. Its CFO noted that the impact on car margin of increase tariffs from EU into US from 2.5% to 10% would be up to 100bps before any mitigation measures.

Others: FTSE 100 -0.2%, DAX 40 +0.6%, CAC 40 +0.7%

• The FTSE 100 is a little lower and currently trades within the midpoint of a 8,677-700 range. In terms of stock specifics, Centrica (+9.2%) sits at the top of the index after the co. reported strong results and announced a GBP 500mln share buyback. Mining names are broadly in the green; Anglo American (+3.7%) gains after it reported generally softer/in-line metrics, highlighting diamond write downs. The Co. put a GBP 2.9bln valuation on its De Beers business, which may be helping sentiment. The entire sector is broadly in the green, benefiting from strength seen in metals prices.


• The DAX 40 is stronger today, with the magnitude in-line with peers; Infineon (+3%) gains after it secured German state aid worth EUR 0.92bln for a new semiconductor manufacturing site. Elsewhere, Siemens (+1.5%) sold about 2% of its share capital in Siemens Healthineers (-2.2%). As discussed earlier, Mercedes Benz (-3.2%) bottoms the pile.


• The CAC 40 is firmer today, peaking thus far at 8,156. Schneider Electric (+6%) tops the pile and is the clear outperformer after it reported strong headline metrics and proposed its FY dividend above expectations; its 2025 guidance also impressed. To the downside, Carrerfour (-7%) is the clear laggard; the co. reported mixed results and noted that it is cautious on consumer demand in 2025. Airbus (-1.2%) edges lower after its results; it marginally beat on Revenue whilst the Adj. EBIT missed. Pressure may also stems from President Trump, who said he would not consider buying a plane from Airbus.

US Equity Futures: ES -0.2%, NQ -0.2%, RTY -0.3%

• Futures are modestly lower across the board, with slight underperformance in the RTY, as it continues the losses seen on Wednesday.


• The US Day sees the release of weekly initial jobless claims (215k expected vs prior 213k; note: this week's initial claims coincide with the BLS survey window for the February jobs report) and continuing claims (1.871mln expected vs prior 1.85mln). The Philly Fed's manufacturing gauge is expected to pare to 20 in February from 44.3 in January. Meanwhile, the US leading index is expected to print -0.1% M/M again.


• On today's speakers' slate, Fed's Goolsbee (2025 voter), Fed's Musalem (2025), and Fed's Barr (voter) are scheduled; additionally, US Treasury Secretary Bessent will be speaking in the premarket.

20 Feb 2025 - 10:15- ForexData- Source: Newsquawk