EUROPEAN EQUITY UPDATE: Stocks lower as de-risking takes the helm into potential US/EU trade letter

STOXX 600: -0.8%

• Stocks have trundled lower in the final session of the week, as traders de-risk into trade updates.


• In terms of the driver this morning, US President Trump suggested the EU would receive a letter sometime on Friday. Earlier in the week, it was said the Bloc was offered a 10% rate, with exemptions on certain sectors including aircraft, autos and liquor. And more recently, Trump said the EU was being ‘very nice’ to the US in trade talks.


• In UK specifics, data this morning showed GDP contracting for a second consecutive month, falling by a rate of -0.1% M/M in May (exp. +0.1% M/M). Chancellor Reeves noted it was disappointing data.


• The docket is lacking in EZ-specific data releases on Friday, leaving the focus on trade developments; in addition to the EU updates, traders will be looking for any updates on the US-Canada front, where President Trump threatened a 35% tariff on Canadian goods from August 1st, as well as US-Brazil updates, where President Lula responded to Trump’s threat of 50% tariffs stating that Brazil can survive without US trade, and will seek other partners.

Sectors: Negative

• Continue to hold the negative bias they opened with. Composition of those in the red remains the same, with the likes of Consumer products and services, media and banks, underperforming.


• However, to the top lies Energy, being led by 13% weighting BP (+2.2%), who noted upstream production was expected to be higher on the quarter.


• To the downside, it's mostly a profit taking play after China-stimulus related gains yesterday. Consumer products and services sits at the bottom with the top 3 constituents LVMH, L’Oreal and Richemont posting losses in excess of 1.7%.


• Elsewhere, banks are being weighed on after DNB (-7.4%) posted Q2 NII, Net Commissions/Fees lower than expected and a CET1 18.3%.

Individual Movers

• DNB -7.7%: Q2 NII, Net Commissions/Fees lower than expected, CET1 18.3%.


• BP +2.2%: Upstream production expected to be higher Q/Q.


• Brunello Cuccinelli -1.1% (Outperforming other Luxury names today): Revenue rises to 684mln, +10.2% Y/Y; Retail Sales +10.3%.


• Carrefour +0.3%: Agreed to sell nine French stores for EUR 70mln.

US: ES -0.5%, NQ -0.5%, RTY -0.9%

• Equity futures are posting losses into the final open of the week. RTY is faring the worst, pulling back after outperformance in small caps on Thursday.


• Focus this session remains on the trade front, with Secretary Rubio meeting his Chinese counterpart in Malaysia today, and a US-EU letter expected.


• Elsewhere on the calendar, In North America, Canada's labour market is expected to show unchanged employment in June, though the jobless rate is seen ticking up by one-tenth to 7.1%. The Treasury's dealer meeting agenda will be out today, where buybacks may be a discussion topic this quarter, Wrightson's analysts suggest. Towards the US close, Federal Budget data for June is expected to see the deficit narrow to USD 11bln from 316bln in May, though the range of forecasts remains wide.

11 Jul 2025 - 09:55- ForexData- Source: Newsquawk