EUROPEAN EQUITY UPDATE: Stocks lose steam with Russia/Ukraine maintaining focus ahead of Powell part 2

Analysis details (10:25)

European equities have conformed to an overall downbeat and cautious mood (Euro Stoxx 50 -0.6%; Stoxx 600 -0.4%), as the optimism on Wall Street began losing steam in APAC hours before dissipating after the European cash open. The mood wasn't dented by a particular development nor headline, but investors look ahead to a meeting between Russia and Ukrainian officials reportedly set to take place today at 12:00GMT/07:00EST, although Russian President Putin's Aide Medinsky stated Russia is still waiting for the Ukrainian delegation to arrive. The risk remains that the meeting will not go ahead, whilst discussions themselves are not expected to lead to a breakthrough. Elsewhere, traders also keep on the radar Fed Chair Powell’s second appearance for the week, whilst ECB minutes are also on the docket. US equity futures are also subdued but to a lesser extent vs their counterparts across the pond, with the NQ (-0.2%) the relative marginal underperformer. Citi analysts lifted the US equities and Global Tech sector to “Overweight” – and suggested that both are growth trades which should benefit, relatively at least, from the recent drop in real yields. Back to Europe, the region sees losses to varying degrees, but the notable outperformer is the Austrian ATX (+1.9%) after continuously underperforming since Russia’s invasion into Ukraine, albeit the index remains well off its February highs. The UK’s FTSE 100 (-0.2%) and CAC 40 (-0.2%) see their losses cushioned by gains across the Basic Resources, Banks, and Energy names which currently stand as the top forming sectors. The sectoral breakdown sees some of the more cyclical sectors toward the top of the bunch, whilst Tech and defensives (Healthcare, Food & Beverages, Retail, Utilities) sit as the laggards. In terms of individual movers, Russia-exposed Polymetal (-28%) sits at the bottom of the Stoxx 600 as other UK-listed Russian stocks have been suspended from LSE trade. Separately, Russia is to be deleted from all FTSE Russell equity indices, according to Bloomberg. Furthermore, MSCI to reclassify MSCI Russia indexes from Emerging Markets to Standalone Markets status. As a reminder, the Russian stock market is closed again today. Elsewhere, Telecom Italia (-13%) and ITV (-13%) are hit post-earnings, with the former missing on revenue forecasts whilst refraining from proposing a dividend. Telecom Italia also reports a net loss of EUR 8.6bln in Q4 amid impairment charges related to the spin-off of its landline network. Deutsche Lufthansa (-7.2%) extends on the post-earnings losses seen at the open while the travel sectors facing Ukraine woes and headwinds from the surge in oil prices. In terms of interesting pre-market US stories, Germany’s Handelsblatt reported Tesla (-0.8% pre-market) has secured approval for its planned Berlin Gigafactory, and officials are looking to comment on the approval on a Friday presser. The report however suggested that production cannot immediately begin as other requirements need to be met beforehand.

03 Mar 2022 - 10:25- EquitiesImportant- Source: Newsquawk