EUROPEAN EQUITY UPDATE: Stocks kick-off February on the front foot following a disappointing January

Analysis details (09:57)

European equities (Stoxx 600 +0.9%) have kicked the first trading session of the month off on a firm footing after what was a disappointing outturn in January. Fresh macro drivers for the region are light ahead of Thursday’s ECB policy announcement with the EZ PMIs unable to move the dial. The gains in Europe have taken place in the context of a mostly firmer APAC session which was subject to market closures in China and Hong Kong on account of the Lunar New Year. After yesterday’s stellar gains (S&P 500 +1.9%, Nasdaq +3.4%), US equity futures are a touch softer (ES -0.3%, NQ -0.1%, -0.3%) with initial gains fading throughout the European session. Focus for the US today will fall upon the ISM Manufacturing release and JOLTS metrics due at 15:00GMT/10:00EST and large cap earnings from UPS, Exxon, Gilead, Starbucks, Alphabet, Paypal and AMD. In a recent note, JPM’s Kolanovic reiterated his call to “buy the dip” with a focus on cyclicals and small caps with the analyst viewing the recent equity market sell-off as “overdone”. Elsewhere, analysts at Liberum view growth stocks as being “oversold” but suggest that it is too early to buy at the moment with prices yet to bottom out. Sectors in Europe are mostly firmer (Basic Resources outperforms) with the exception of Telecoms with Vodafone (-2.3%) a laggard within the group despite a show of support from shareholder Abrdn in response to recent activist pressure from Cevian Capital. Banking names have been supported by gains in UBS (+5.6%) which is the best performer in the Stoxx 600 after Q4 results exceeded expectations and saw the company increase its buyback program to as much as 5bln; almost a doubling from prior guidance. Elsewhere, HeidelbergCement (+2.1%) is the best performer in the DAX post-prelim FY 21 results, whilst Siltronic (+1.2%) has been in focus throughout the session after the German Economy Ministry said it was unable to complete the review of the proposed takeover by GlobalWafers prior to Monday's deadline. 

01 Feb 2022 - 09:56- EquitiesResearch Sheet- Source: Newsquawk