EUROPEAN EQUITY UPDATE: Stocks inch higher ahead of ZEW and more bank earnings

Analysis details (09:25)

• European equities (+0.3%) trade with marginal gains following the late surge on Wall Street yesterday. Macro updates for Europe remain on the light side ahead of ZEW survey at 10:00BST, on which, ING notes that it “has the advantage of being published earlier than the PMIs (due on Friday) so it is possible markets extrapolate its results. Consensus is for a continued improvement which would validate the recent bond sell-off”.


• The handover from the APAC region was a mixed one with focus on China after Q1 GDP and activity data were constructive and analysts have been upping their growth views for the world’s second largest economy in wake of the release.


• US equity futures (ES +0.1%, NQ +0.3%, RTY +0.1%) are slightly better than unchanged with traders set to be focussed on another round of bank earnings due today (BAC, BK, GS on deck) after a mixed showing out of the sector so far.


• Equity sectors in Europe have a positive tilt with outperformance in Banks, Basic Resources and Travel & Leisure. Of note for the latter, easyJet (+3.0%) shares have been supported by H1 prelim earnings which saw the Co. state that it “expects to outperform FY23 market expectations” and sees continued strong booking momentum into summer. Furthermore, the sector has also been bolstered by post-earnings gains from Entain (+2.6%) which saw the Co. report record levels of active customers in Q1. To the downside, Utilities, Real Estate and Telecoms names lag with the latter weighed on by post-earnings losses in Ericsson (-4.4%) which saw the Co. caution that "in Q2, we expect operators to remain cautious with capex investments and continue to adjust inventories."


• M&A activity saw GSK (-0.4%) reach an agreement to acquire Bellus Health (BLU) for a total equity value of GBP 1.6bln. Elsewhere, Legal & General has opted to vote for Teck's plan to support its spin-off rather than support Glencore's plan for the Co. HSBC (-0.1%) investors have been told by Glass Lewis to vote against special resolutions fuelled by HK minority investor group regarding potential spin-off, business restructuring and a revamp of dividend policy, according to Reuters. Finally, Airbus (-0.6%) has informed airlines of delivery delays for the A320neo-family jets slated for delivery in 2024, according to Reuters sources.

18 Apr 2023 - 09:25- EquitiesData- Source: Newsquawk