EUROPEAN EQUITY UPDATE: Stocks remain subdued following Apple's post-event selloff and ahead of US CPI

Analysis details (10:11)

• European equities (Eurostoxx50 -0.7%) are trading on the backfoot following on from risk-off sentiment seen in the Asian markets overnight. Taking a step back to the macro level, UK GDP Estimates MM indicated a fall of 0.5% (prev. 0.50%, exp. -0.2%), with accompanying commentary adding that this is the first month since June 2022 that all three sectors contributed negatively to GDP this month. That being said, Pantheon Macro does not believe this is the start of a falling trend for the GDP metric and suggests sharp falls in the health and education sector, largely credited to strikes, must be taken into consideration.


• To recap, Asia-Pacific stocks were pressured following the tech-led declines on Wall St owing to the post-Apple event disappointment and with participants cautious ahead of the upcoming US CPI data. ASX 200 (-0.7%) declined as tech stocks mirrored the underperformance seen in US counterparts and with nearly all sectors on the retreat aside from energy and utilities after further upside in oil prices. Nikkei 225 (-0.2%) swung between gains and losses with early advances seen following mixed PPI data and the improvement in BSI large industry surveys, although the index eventually slipped with money markets now pricing the BoJ to exit negative rates in January compared to a previous pricing of an exit in September next year. Hang Seng (-0.1%) and Shanghai Comp. (-0.5%) were initially kept afloat amid strength in the energy names and with developers underpinned as some cities further loosened restrictions for the sector, but then conformed to the soured mood.


• US equity futures (ES -0.1%, NQ -0.1%, RTY -0.1%) are trading marginally weaker, with markets seemingly tentative ahead of US CPI, due at 13:30 BST / 08:30 ET today. In terms of what to expect, headline inflation is expected to rise to 3.6% Y/Y (prev. 3.2%) while the core rate is seen easing to 4.3% (prev. 4.7%), with higher energy prices likely to drive the headline up. In terms of stock specifics, Apple has very much been in focus for today after shares closed lower by 1.7% following the widely anticipated Apple event, in which the Co. announced the Watch Series 9, iPhone 15 and iPhone 15 Pro. There was some disappointment following the event, with the innovation curve seemingly flattening (according to some takes) and as the Co. opted to maintain prices the same on its iPhone 15 device. The Co. continues to take the headlines today, with the Chinese Foreign Ministry announcing it has not issued a ban on the purchase of Apple iPhones, pushing back on recent reports that Chinese public sector workers were banned from using Apple devices. However, Bloomberg then reported that China announced it had noticed “some” security issues regarding the iPhone. Markets seemingly do not know what to make of the conflicting reports, with Co. shares flat on the session.


• Equity sectors in Europe are mainly in the red, with Retail and Industrial Goods and services at the bottom of the pile. The former is dragged down by Inditex (-2.4%), which although beat on analyst estimates, the Co. announced it expects a -3.5% FX impact on sales in FY23. Towards the top of the pile, Autos are marginal gainers at the time of writing amid reports that the European Commission is to begin an anti-subsidy investigation into Chinese EVs, after a suggestion that Chinese EV prices are kept artificially low by subsidies. This news drove the likes of Volkswagen and BMW higher by over 3% apiece before the automakers almost entirely reversed the gains, potentially amid caution as they await a response from one of their main markets, China.


• In terms of individual movers, MorphoSys (+5.5%) benefits after the FDA grants a Fast Track designation for its drug Tulmimetostat, and Aviva (+2.1%) gains on news that the Co. are to exit Singlelife Joint Venture, for a total consideration of GBP 0.8bln incl. debt instrument sale. On the downside, BP (-1.1%) shares are hampered after the Co. confirmed that CEO Bernard Looney is to resign with immediate effect, whilst Alstom (-3.60%), the worst performer in the Stoxx600, is lower after being initiated with Underweight at Barclays.

13 Sep 2023 - 10:11- Research Sheet- Source: Newsquawk