EUROPEAN EQUITY UPDATE: Stocks slip at the start of the week following a myriad of central bank hawkishness

Analysis details (10:29)

Stocks in Europe have conformed to the losses seen on Wall Street on Friday and in APAC markets overnight, with the risk aversion emanating from a myriad of hawkish central bank updates since Fed Chair Powell’s address, including ECB sources flagging calls for QT talks this year. US equity futures are weaker across the board with the tech-laden NQ (-1.3%) the underperformer vs the ES (-1.0%), RTY (-1.1%) and YM (-0.9%). The week is littered with risk events including the US NFP, and ISM PMIs, alongside influence from month-end rebalancing and several Fed speakers. In terms of commentary, Morgan Stanley’s Wilson believes that “Almost all of the weakness for stocks during 1H22 was due to the Fed and tighter financial conditions. The 2H outcome will ultimately be determined by earnings expectations for next year, in our view. As a result, equity investors should be laser-focused on this risk, not the Fed, particularly as we enter the seasonally weakest time of the year for earnings revisions, and inflation further eats into margins and demand.” Back in Europe, the FTSE 100 is closed today on account of the UK bank holiday, whilst peers meander around worst levels (Euro Stoxx 50 -1.5%; Stoxx 600 -1.1%). Sectors are all in the red, but defensive are faring better, with Media, Food & Beverage, Telecoms and Healthcare towards the top of the bunch, whilst Tech and Industrials lag at the time of writing. In terms of individual movers, Monday M&A sees Boskalis (+2.9%) and HAL Holding agreeing on a higher offer of EUR 33/shr for Boskalis. In health care, Bayer (-3.0%) initiated a landmark Phase III study programme to investigate oral FXIa inhibitor asundexian as it seeks to refresh a portfolio facing cheap competition. In energy, Germany said gas-storage facilities were filling up faster than planned and predicted that an October target of 85% capacity could be achieved in early September. In financials, Credit Suisse (-0.7%) is reportedly mulling long-term plans for its Chinese business.

29 Aug 2022 - 10:29- Research Sheet- Source: Newsquawk

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