EUROPEAN EQUITY UPDATE: Stocks on the front-foot in a busy morning of large-cap earnings

Analysis details (09:22)

European equities (Eurostoxx 50 +1.0%) trade higher across the board following an exceptionally busy morning of earnings reports from across the region. On the macro front, the delayed release of German CPI saw the Y/Y rate advance to 8.7% from 8.6% (exp. 8.9%) with Capital Economics of the view that inflation in the Eurozone likely fell by less than estimated by Eurostat in the flash release. Analysts at Jefferies suggest that the increase in earnings and PT upgrades shows that analysts have underestimated the recovery in Europe and state that investors should hold an optimistic bias towards Europe (ex-UK). The handover from the APAC region was a mixed one with some cautiousness observed following the losses on Wall St, whilst Chinese stocks bucked the trend on account of strength in tech names and a PBoC liquidity injection. US futures (ES +0.6%, NQ +0.9%, RTY +0.8%) are on the front-foot following yesterday’s soft showing with today’s data highlight coming in the form of the weekly jobs figures which will be of particular focus given the strong NFP report. Sectors in Europe are mostly firmer with Industrial Goods and Services top of the pile following post-earnings gains in Siemens (+7.1%) after the German heavyweight beat on profit expectations and raised FY23 EPS and revenue guidance. Elsewhere, the energy sector continues to benefit from the recent upside in energy prices and the gains post-earnings from BP earlier in the week. It’s been a busy morning for the banking sector amid earnings from Credit Agricole (+4.2%) and Credit Suisse (-4.4%) with the latter sent lower amid a larger-than-expected Q4 net low and ballooning outflows (CHF 110.5bln vs. prev. Q/Q 12.9bln). Also of note for the sector, Standard Chartered (+7.6%) spiked higher following reporting from Bloomberg that First Abu Dhabi Bank is reportedly mulling a bid for the Co. after the UK takeover rules lapse. Elsewhere in the UK, it has been an equally busy morning of earnings with AstraZeneca (+4.2%) the second-best FTSE 100 performer after Q4 profits exceeded expectations, whilst post-results gains for Unilever (+0.4%) have been more modest as the Co. flagged increasing cost inflation this year alongside a beat on EPS and sales. To the downside, British American Tobacco (-5.6%) shares are on the backfoot after the Co. reported a miss on sales and guided FY23 global tobacco industry volumes -2% Y/Y. 

09 Feb 2023 - 09:22- Research Sheet- Source: Newsquawk