EUROPEAN EQUITY UPDATE: Stocks rise with eyes on NVIDIA earnings

STOXX 600: +0.8%

• European bourses opened stronger across the board and have continued to slowly grind higher as the session progressed; currently at highs.


• Today’s docket has been quiet thus far; German GfK Consumer Sentiment fell a touch, but had little impact on futures price action.

Sectors: Positive

• European sectors hold a strong positive bias; the defensive theme seen in the prior session seems to be winding down a touch this session, with Healthcare/Utilities towards the foot of the pile.


• Basic Resources is by far the clear outperformer, lifted by strength in metals prices (details in the FTSE 100 section). Food Beverage & Tobacco is stronger (but towards the middle of the pile), after AB InBev (+7%) pops open the bottle and celebrates reporting record revenue in Q4.


• Autos sector reside towards the bottom of the pile following poor Stellantis (-5.6%) results which saw H2 revenue slightly beat expectations whilst EBIT was considerably short; the co. also noted it had burnt through EUR 6bln of cash in FY24 amid fall in income. On a more positive note, the auto-maker expects to return to rev. growth in 2025. Elsewhere, Aston Martin (-9.8%) opened higher after generally in-line / modestly lower results and highlighted that it expects FCF to “materially improve”; shares eventually fell as the morning progressed.


• For Chip names; ASM International (-2.2%) reported a beat on its headline Q4 figures but its Orders fell short; Q1 rev. guidance range fell within analyst expectations. On China, the co. notes that sales is expected to fall in 2025.


• Media and Telecoms are both hampered by post-earning losses in Wolters Kluwer (-5%) and Deutsche Telekom (-3.8%) respectively.

Others: FTSE 100 +0.8%, DAX 40 +1.2%, CAC 40 +1%

• The FTSE 100 is firmer today, with gains broad-based; mining names are at the top of the pile, given the strength in metals prices, and particularly in copper, amid commentary via US Commerce Secretary Lutnick who said they will investigate the possible imposition of tariffs to rebuild the US copper industry and there will be no exemptions or exceptions; Antofagasta (+3%), Glencore (+2.6%). To the bottom of the pile, Hikma (-4%) sees losses after reporting weaker results.


• The DAX 40 outperforms in Europe, lifted by a few post-earning movers from within the index. Fresenius (+6.8%) tops the pile after reporting strong Q4 results; elsewhere, Munich Re (+5.1%) also gains after the co. beat on its FY results and provided FY25 guidance; the co. did highlight that the LA forest fires will cost around EUR 1.2bln. As for E.On (+4%) it gains after mixed results, but did increase its dividend.-The CAC 40 is one of the better performers thus far, with gains largely attributed to strength in the Luxury sector after Kepler upgraded a few names from within the sector; LVMH (+2.5%), Kering (+2.1%) and London-listed Burberry (+4%) were all upgraded, whilst Hermes (+0.2%) was downgraded.

US Equity Futures: ES +0.5%, NQ +0.8%, RTY +0.4%

• Futures are firmer across the board with clear outperformance in the tech-heavy NQ, ahead of after-hour earnings from NVIDIA (+2.3% pre-market). As a reminder, tech was a key underperformer on Tuesday amid the the potential US tightening of chip exports to China, with soft consumer confidence data pointing to growth concerns, also hitting sentiment.


• On that, KeyBanc believes NVIDIA's strong results should ease concerns that DeepSeek could hinder near-term AI capital expenditure. Despite previous worries over constraints related to the ramp-up of GB200 NVL servers, KeyBanc anticipates NVIDIA will exceed expectations and offer guidance for Q1 that is conservatively and moderately higher than consensus. NVIDIA's Q4 EPS is expected to be USD 0.83, with revenue forecast at USD 35.08bln. The consensus breakdown shows Data Centre revenue at USD 30.77bln, Gaming at USD 3.28bln, Professional Visualisation at USD 486mln, and Automotive at USD 449mln. Gross profit margin is expected at 73.5%, with operating expenses at USD 3.4bln. For Q1, forward guidance sees revenue at USD 55.93bln and EPS at USD 1.25.


• Note that the Bloomberg implied move on NVIDIA earnings is +/- 9.87%.


• Markets are also expecting remarks from President Trump (and Executive Orders), speak from Fed’s Barkin & Bostic, a 7-year Note Auction, and the data slate includes home sales and the weekly EIA report.

26 Feb 2025 - 10:00- ForexData- Source: Newsquawk