EUROPEAN EQUITY UPDATE: Stocks on the front foot, Ermotti back at the helm

Analysis details (09:27)

• Stocks in Europe (Eurostoxx 50 +0.7%) trade on the front foot in an extension of the week’s marginal gains which have largely been attributed to a receding in concerns over banking sector contagion. Incremental macro updates for Europe have been somewhat lacking with the next data release of note being Eurozone inflation due on Friday’s docket.


• The handover from the APAC region was a mostly positive one with outperformance in Hong Kong markets as tech stocks surged on Alibaba’s plan for a six-way split which has prompted hopes that other tech names could follow suit.


• Stateside, US equity futures (ES +0.7%, NQ +0.8, RTY +1.0%) have pared away the downside seen on Tuesday, which was driven by underperformance in large cap names, as well as Tech and Communications sectors. The data docket is relatively benign for the day, which should allow the consolidative trading patterns to continue into the US GDP data (third look, released Thursday).


• Equity sectors in Europe have a positive bias with clear outperformance in tech amid gains in Infineon after it raised guidance on account of “resilient business dynamics in its core automotive and industrial segments." This, allied with post-earnings gains from Micron, has prompted upside in peers such as STMicroelectronics (+4.7%) and ASM International (+3.2%); the latter was also upgraded at Morgan Stanley. To the downside, Retail names are the standout laggard amid post-earnings losses in Next (-6.8%) with the Co. offering a particularly cautious outlook. Elsewhere, Auto names are also in the red with Mercedes-Benz Group (-2.7%) lower after news that the Co's third largest holder, Kuwait's sovereign wealth fund, is reportedly looking to sell 20mln shares at a price guidance of EUR 69.27/shr (vs EUR 71.89 close on Tuesday). Finally, the big news story of the day comes from UBS whereby former CEO Ermotti is to take the helm once again to help oversee the incorporation of Credit Suisse into the Co.’s operations. The news has been well-received by the market and has made the Co. one of the best performers in the SMI with gains of 2.5%.

29 Mar 2023 - 09:27- Research Sheet- Source: Newsquawk