EUROPEAN EQUITY UPDATE: Stocks on the march as traders digest Western sanctions on Russia

Analysis details (09:18)

European equities (Eurostoxx +1.5%) are trading on a firmer footing with some desks attributing the upside to the sanctions imposed by the West on Russia being less stringent than feared. The fact that Western nations appear to be “keeping their powder dry” for now has been framed as a deterrent against Russia considering a deeper incursion into Ukraine. For now, traders will be eyeing commentary from Russia on how it classifies the borders for LPR and DPR and whether they are seeking an expansion beyond the borders they currently reside in. From a diplomatic perspective, it is worth noting that US Secretary of State Blinken cancelled his meeting with Russian Foreign Minister Lavrov and a Biden-Putin summit is not on the cards, according to the White House. In order for both sides to come back to the table, the US states that Russia will need to de-escalate. So far, there have been no signs that a de-escalation is forthcoming. In a recent piece by Deutsche Bank, its analysts have suggested that "most European companies' direct sales and earnings exposure to the Russian economy is not material". US equity futures are trading higher (ES +1%) after the S&P 500 closed lower by 1% yesterday and in correction territory for the first time in two years. Sectors in Europe are mostly higher with Autos top of the leaderboard amid post-earnings gains from Stellantis (+5%) which saw the Co. report operating profit margins which exceeded expectations. Basic Resources are also outperforming peers with Antofagasta (+3.4%) a notable gainer within the sector. Danone (+3.4%) has buoyed the Food Beverage and Tobacco sector after FY results saw the Co. exceed expectations for revenue and EBIT. Elsewhere, Barclays (+2.6%) is a top performer within the FTSE 100 after the Co. posted record annual profits in FY results and announced it will buyback GBP 1bln of its shares. To the downside, Uniper (-3.1%) sits near the foot of the Stoxx 600 post-results which saw the Co. note that it is assessing the fallout from the German decision to suspend Nord Stream 2 certification.

23 Feb 2022 - 09:18- EquitiesResearch Sheet- Source: Newsquawk