EUROPEAN EQUITY UPDATE: Stocks primed for a week of losses as jobs data comes into view

Analysis details (09:53)

• European equities (Stoxx 600 +0.3%) trade with modest gains but are ultimately on course to close the week out with losses of around 1.3%. Fresh macro impulses for the region are lacking with markets still digesting the fallout from yesterday’s ECB policy meeting which saw the Bank pull the trigger on a 25bps hike, state that there is more ground to cover on hikes and end reinvestments under APP as of July.


• The handover from the APAC region was a limited one given market closures in Japan and South Korea with the Shanghai Comp. pressured after Chinese Caixin Services and Composite PMI data which showed the pace of China’s services activity slowed by more than expected.


• US equity futures (ES +0.4%, NQ +0.5%, RTY 0.4%) are up, and although the price action in May is ultimately continuing the horizontal patterns seen in April, stocks are on course to print losses this week. Overnight, tech mega-weight Apple’s (AAPL) earnings were well received, with iPhone sales above expectations, shrugging-off the smartphone demand slump and economic slowdown concerns; it notched up by 2.5% afterhours. Today’s trading dynamics will be shaped by the jobs report, where expectations have been emboldened after solid ADP data earlier in the week; we will also see the return of Fedspeak, with Governor Cook (voter) and the hawkish St Louis Fed President Bullard (non-voter) set to speak in the afternoon.


• Equity sectors in Europe are a mixed bag Energy names top of the pile alongside a pick-up in crude prices, whilst Basic Resources and Banking names are also on the front-foot with the latter attempting to claw back some of yesterday’s lost ground. To the downside, marginal underperformance has been observed in Travel & Leisure and Healthcare stocks with the former weighed on by IHG (-2.9%) following its Q1 trading update, albeit losses for the sector have been cushioned by post-earnings gains in IAG (+4.3%) which saw the Co. report an unexpected profit.


• Elsewhere, Adidas (+6.9%) is the best performing stock in the Stoxx 600 after sales figures exceeded expectations in what has been a tough quarter for the Co. whereby margins were weighed on by “higher supply chain costs, increased discounting, inventory allowances, adverse Yeezy impact and negative FX movements”. Finally, Software AG (-5.2%) is lower after giving its support to Silver Lake’s EUR 32/shr offer vs. the EUR 34/shr offer from Bain Capital which was reported to be non-binding and subject to specific conditions that were not achievable.

05 May 2023 - 09:53- EquitiesEU Research- Source: Newsquawk