EUROPEAN EQUITY UPDATE: Stocks inch higher ahead of US CPI

Analysis details (09:35)

• European equities (Eurostoxx 50 +0.3%) predominantly trade mostly firmer in what has been a session characterised by quiet macro conditions. The FTSE 100 (+0.1%) is the marginal laggard amid headwinds from the firmer GBP after the UK unemployment rate unexpectedly held steady in the 3M period to September (vs. expectations of a 10bps increase), whilst headline earnings growth printed at 7.9% in the 3M/YY period to September vs. expectations of a decline to 7.4%. Equity sectors in Europe are mixed with Basic Resources at the top of the leaderboard thanks to gains in Glencore (+3.4%) following news the Co. is to buy 77% Teck Resources’ (TECK) steelmaking coal operations for USD 6.93bln. Elsewhere, Media names have been supported by Informa (+5.9%) after the Co. raised FY guidance. To the downside, Travel & Leisure lags with Entain (-3.4%) dragged lower by a broker downgrade at Jefferies. Vodafone (-1.6%) has trimmed opening gains and reversed lower post-earnings with some noting soft performance of its Italian operations. Delivery Hero (+4.1%) is one of the better performers in the Stoxx 600 after the Co. raised its outlook for GMV, whilst K&S (+4.2%) also benefited from a well-received earnings release. Finally, the Dubai Airshow continues to generate a lot of headlines with Egypt Airlines set to order 10 A350-900s from Airbus (+0.2%), whilst the Emirates Airlines President said he is not purchasing Airbus’ A350-1000 until engine performance issues have been fixed.


• Asia-Pac stocks eventually traded mixed with gains capped as markets await incoming US CPI data. ASX 200 (+0.8%) was led by strength in the commodity-related sectors with outperformance in energy after the recent rebound in oil prices although further upside, which helped participants shrug off weak Consumer and Business Confidence data. Nikkei 225 (+0.4%) advanced amid earnings releases and with Japan’s government said to consider corporate tax breaks as an incentive for companies that implement an 8% wage increase. Hang Seng (-0.1%) and Shanghai Comp. (+0.3%) were indecisive following mixed New Yuan Loans and Aggregate Financing data which both weakened from the prior month, while price action was also kept rangebound ahead of the Biden-Xi meeting with the leaders said to announce a deal on a fentanyl crackdown by China.


• US equity futures (ES +0.2%, NQ +0.3%, RTY +0.1%) are trading modestly firmer as sentiment returns following yesterday’s day in the red, ahead of today’s US CPI at 13:30 GMT / 08:30 ET. The figure is expected to show a cooling in the headline rate of annual inflation, though the core measure of annual inflation is expected to be unchanged. Away from the data, there are a number of Fed members due to speak, with Jefferson to talk pre-CPI and Barkin, Barr and Goolsbee to give their remarks post-data. The notable earnings release for today is Home Depot., which is up by around 0.4% in pre-market trade. The monthly fund manager survey from Bank of America has been released and says investors remain cautious on macro but have turned bullish on interest rates. Most surveyed (74%) see a soft landing or no landing for the US economy, with most (76%) of the view that the Fed has concluded its hiking cycle. In terms of asset allocation, BofA says investors have also moved overweight equities for the first time since April 2022, with cash balances declining to the lowest since November 2021.

14 Nov 2023 - 09:35- Research Sheet- Source: Newsquawk