EUROPEAN EQUITY UPDATE: Stocks on weaker footing with Travel & Leisure lagging amid broker downgrades

Analysis details (09:33)

• European equities (Eurostoxx50 -0.3%) are on a weaker footing following a negative handover from the APAC session. There were a few European data prints today, including UK Halifax House Prices, French Trade and German Industrial Output, with the latter continuing to print dire economic data. UK House Prices data showed the MM figure fell to 0.5% (prev. 1.1%), Halifax notes that the resilience in house prices is attributed to a shortage of properties available, as opposed to buyer demand - and that pressures such as inflation and broader cost of living means “we expect to see downward pressure on house prices into next year”. Looking ahead markets will await Italian Retail Sales, EZ Employment (Final) and GDP (Revised).


• European sectors have a heavy negative bias, with only Utilities and Food Beverage & Tobacco holding onto marginal gains. Towards the downside; Real Estate, Retail and Travel & Leisure are the underperformers. The latter is hampered by the likes of IAG (-2.9%), Air France (-6.3%) and Lufthansa (-4.3%), which all received downgrades at JP Morgan. As for Real Estate, the sector is weighed on by a couple of German Cos such as Leg Immobilien (-3.7%) and Vonovia (-2.4%), which could potentially be a factor of the poorer German Industrial Production data earlier in the session. In terms of individual movers, Ipsen (+1.9%) is trading higher after the Co. confirms that US FDA grants priority review for NDA for elafibranor for the treatment of rare cholestatic liver disease. The worst performing stock in the Stoxx600 is Games Workshop (-9.9%) after the Co. provided a poor trading update. Thyssenkrupp (-4.7%) is also in the red after Reuters reported that Co. could need to hand over cash to keep some of some pension liabilities to win over investor Kretinsky as a co-owner of its Steel unit.


• Asia-Pac stocks declined following the weak handover from Wall St where risk sentiment soured after more soft labour data, while participants also digested mixed Chinese trade figures which showed the first expansion in China’s exports since April although imports surprisingly contracted. ASX 200 (-0.1%) was subdued amid notable underperformance in energy following the recent drop in oil prices to multi-month lows and with mixed trade data from both Australia and its largest trading partner. Nikkei 255 (-1.8%) was the worst hit and slipped back beneath the 33,000 level amid headwinds from a firmer currency and higher yields. Hang Seng (-0.8%) and Shanghai Comp. (-0.1%) were somewhat varied with the mainland choppy after mixed Chinese trade data in which exports expanded but the surprise contraction in imports suggested weaker domestic demand, while the Hong Kong benchmark suffered after Moody’s revised its credit outlook for the special administrative region to negative.


• US equity futures (ES -0.2%, NQ -0.1%, RTY -0.3%) are trading weaker, with NQ meandering on either side of the unchanged mark. Looking ahead, traders will await US IJCs and Wholesale Sales – though markets will ultimately be attentive to the big NFP report tomorrow. In terms of stock specifics, the internet’s favourite GameStop (GME, -6.4%) is falling after the Co. missed on its revenue metrics.

07 Dec 2023 - 09:36- Research Sheet- Source: Newsquawk