EUROPEAN EQUITY UPDATE: Stocks lose steam with news flow light ahead of PCE

Analysis details (09:58)

Equities in Europe have now conformed to losses across the board (Euro Stoxx 50 -1.2%; Stoxx 600 -0.9%) after initially adopting the mixed handover from APAC. The tides turned for the worse shortly after the European cash open despite a distinct lack of fresh catalysts at the time. The losses are more pronounced in Europe as the region catches up the Wall Street’s downside, whilst US equity futures are mostly firmer but off earlier highs, and the RTY (-0.6%) underperforms the NQ (+0.8%) and ES (+0.2%) as Apple (+4.7% pre-market) stands strong following its earnings. In terms of some insight from Goldman Sachs, the analysts believe that the recent equity drawdown will prove to be a correction in a long bull market cycle “rather than the start of a new bear market and see remaining downside risk as limited so long as economies continue to grow.”, and thus, the desk notes that any significant weakness at an index level should be seen as a buying opportunity. GS also downgraded US Financials to “neutral” from “overweight” whilst upping US Energy to “overweight” from “neutral”. Back to Europe, broad-based losses are seen across the Euro benchmarks, whilst the UK’s FTSE 100 (-0.6%) and the Swiss SMI (-0.7%) see slightly shallower losses – with the regional sectors posting a clear defensive tilt and Healthcare among the top gainers. Delving deeper into the sectors, Retail stands strong at the top with H&M (+6.0%) lifting the sector after strong metrics, whilst Personal & Household Goods lost some shine as LVMH (+1.2%) opened higher by over 5% post-earnings before trimming gains. On the other side of the spectrum, Energy and Banks give up some recent gains whilst Tech stands as the laggard – with the wires also noting the European Tech Index has fallen into bear-market territory. In terms of individual movers, Leonardo (+1.5%) is firmer after upping its guidance, whilst Volvo (-4.0%) sits towards the foot of the Stoxx 600 despite respectable earnings, with the chip situation continuing to be a headwind for the sector, as per Toyota’s commentary overnight and Tesla’s similar remarks the day before.

28 Jan 2022 - 09:57- Energy- Source: Newsquawk