EUROPEAN EQUITY UPDATE: Stocks see gains in the calm before the risk storm

Analysis details (09:05)

• Equities in Europe kicked off the first session of the week on the front foot following a mixed APAC session, which saw the region mostly cautious whilst Australian markets observed a holiday. Chinese markets were subdued as Goldman Sachs warned that the region's property weakness will likely be a multi-year growth drag on China's economy, although losses were shallow amid some expectations for potential PBoC rate cuts as more banks reduced their deposit rates.


• US equity futures meanwhile are tilting higher after Wall Street closed mostly with modest gains on Friday, although price action is comparably limited vs Europe as traders gear up for tomorrow’s US CPI, then the June Fed meeting on Wednesday – with markets currently leaning towards a June skip, depending on the inflation data; ES +0.3%. After that, the ECB and BoJ announcements are due on Thursday and Friday respectively, with the former set to hike by 25bps whilst the latter is expected to stand pat on policy settings. It’s also worth noting that Friday marks Q2 quad-witching, although open interest and volumes remain skewed towards the June contracts for now.


• Back in Europe, stocks have been edging higher (Euro Stoxx 50 +0.9%; Stoxx 600 +0.6%) despite a distinct lack of newsflow and amid a light European calendar. The DAX narrowly leads the gains (+1.0%) with Adidas (+4.6%) the top gainer following a broker upgrade, whilst Rheinmetall (+3.4%) tracks higher after its CEO said a EUR 17bln valuation is realistic over the medium term. Auto Names are also faring wall following the state-side sectoral gains on Friday, whilst Volkswagen (+2.0%) is reportedly planning the largest reorganisation in decades, according to Handelsblatt citing a top manager; "The first step is to reduce costs", the paper said. Elsewhere, supermarkets are faring well with the sector bolstered by reports via La Figaro suggesting Casino (+7.9%) could merge with Carrefour (-0.5%). Elsewhere, gamins names are boosted with Ubisoft (+2.8%) firmer after the Co. and Microsoft (MSFT) revealed the cinematic trailer for Star Wars Outlaws, to be released in 2024, while CD Projekt (+7.5%) surges as it is to release the Phantom Liberty DLC expansion for Cyberpunk on September 26th. On the flip side, energy names are pressured by the recent post-OPEC slide in Energy prices, whilst mining names are subdued amid price action in underlying base metals. Finally, Glencore (+0.8%) bucks the trend as it confirmed it has submitted an alternative proposal to acquire Teck's steelmaking coal business.

12 Jun 2023 - 09:05- Fixed IncomeEU Research- Source: Newsquawk