EUROPEAN EQUITY UPDATE: Stocks on the front foot after a week of more tariff turmoil

STOXX 600: +0.5%

• European equities kicked off the last trading day of the week flat/lower but lifted off worst levels and into the green despite a lack of fresh fundamentals this morning, but with some positivity reverberating from the APAC session. - Overnight, some attributed the gains in China to speculation that the PBoC could opt for a RRR cut before the weekend, although this speculation was derived from PBoC comments yesterday that reiterated support pledges and stated that it will lower rates and the RRR at a 'proper time' (prev. appropriate time), keep liquidity ample and guide social financing costs lower - that being said, some believe China would want to gauge the impact of Trump policies before preemptively announcing support.


• In trade-related newsflow, US President Trump said he is not going to change his mind on the April 2nd tariffs and will not bend on Canadian metals nor the April 2nd tariffs, while he added they do not need Canada's cars, energy or lumber.


• In the US, sentiment could be underpinned by the likely aversion of a US government shutdown, after Democrat Senate leader Schumer reversed course and backed the spending bill.


• In geopolitics, Russian President Putin supported the idea of a ceasefire but stressed that the ceasefire must lead to a final settlement of the conflict and solve the root causes of the conflict, while Ukrainian President Zelensky claimed that Russian President Putin is preparing a rejection of the ceasefire proposal but is scared to say this directly to US President Trump.


• On the data front, figures out of the UK this morning showed GDP falling by -0.1% M/M in January (exp. 0.1%, prev. 0.4%), with the 3m/3m measure at +0.2% (exp. 0.3%), and the annualised rate at 1.0% Y/Y (exp. 1.2%). Analysts said that the data will not be a major concern for the BoE, which is focussing on inflation, but it did result in a slight dovish repricing, with money markets now seeing the next rate cut in June, with easing expectations for end-2025 at around 54bps.

Sectors: Mostly firmer

• Mostly firmer after a mixed start to Friday with no overarching theme but with a slight cyclical bias.


• Consumer Products and Services, Basic Resources, and Tech reside at the top of the bunch following recent tariff-related underperformance.


• Media and Optimised Personal Care Drug and Grocery sit as the laggards.


• Autos & Parts failed to benefit from the rebound in other tariff-related sectors as BMW (-2.3%) drags on its sectoral sentiment post-earnings. On the flip side, Daimler Truck (+0.7%) sees a +5-15% increase in adj. operating profit in 2025, despite a 15% drop in EBIT for 2024, which came amid weaker demand and cost challenges in Europe.


• Kering (-13%) slumped after reports that Demna Gvasalia, former Balenciaga creative director, will take charge of Gucci's creative direction in July. Note, that Gvasalia sparked controversy in 2022 following the unorthodox ad campaigns. JP Morgan analysts dubbed the move a "controversial choice," citing early feedback on social media and fashion blogs.

US Equity Futures: ES +0.7%, NQ +0.9%, RTY +0.9%, YM +0.5%

• US equity futures have regained some poise after the S&P 500 entered technical correction territory on Thursday, having now fallen by 10.1% from its all-time peak.


• The upside in US indices is being attributed to the likely aversion of a US government shutdown, after Democrat Senate leader Schumer reversed course and backed the spending bill.


• The data highlight of the US Day is the prelim University of Michigan sentiment indicators for March, where the headline is expected to ease to 63.1 from 64.7, conditions are seen easing to 65.0 from 65.7, though expectations are seen inching up to 64.3 from 64.0; as always, there will be attention on the inflation gauges, with the current one-year ahead expectation at 4.3%, and the 5-10 year metric at 3.5%.

14 Mar 2025 - 10:00- ForexGeopolitical- Source: Newsquawk