EUROPEAN EQUITY UPDATE: Stocks pause for breath after a stellar start to the year

Analysis details (09:18)

European equities (Eurostoxx 50 -0.4%) trade on the backfoot following the late selling pressure on Wall Street yesterday. Fresh macro impulses for Europe have been lacking and as such the region has followed suit to the lacklustre lead from the APAC session (ex-Japan which saw gains on catch-up trade from yesterday’s market holiday). Goldman Sachs has raised European stocks to overweight from neutral for the 12 months ahead, citing tailwinds from China’s reopening and lower energy prices. This also comes as a separate note from GS shows it no longer forecasts a 2023 recession for the Eurozone and now expects growth of 0.6%. US futures are marginally softer (ES -0.2%, NQ -0.2%, RTY -0.2%) following yesterday’s mixed close with the ES just about managing to hold on to 3900 status. At 14:00GMT, Fed Chair Powell will be speaking on 'central bank independence and the mandate – evolving views', and accordingly, some believe that there is a risk that he disappoints those who are looking for fresh insight on the current monetary policy outlook. Nevertheless, we have a primer here discussing the areas of commentary we will be focussing on (any hints of laying the groundwork for a policy pivot). Data-wise, the release of the NFIB small business optimism gauge, weekly RedBook retail sales data, and the Fed’s discount rates minutes are due. Sectors in Europe are lower across the board with laggards comprising Retail, Industrial Goods & Services and Construction names. In terms of individual updates, Bayer (+0.6%) activist investor Ubben has called on the Co. to hire a new CEO from outside of its management, adding that breaking-up the Co. is not necessary to create value, "but it has to be on the table", according to the FT. Shell (unch.) has confirmed that the UK Governments Energy Profits Levy will factor into their decision making re. the North Sea and they are now assessing projects on a case-by-case basis. Elsewhere, today’s equity newsflow has been dominated by broker moves (please see our morning Equity sheet for full details).

10 Jan 2023 - 09:18- Fixed IncomeData- Source: Newsquawk