EUROPEAN EQUITY UPDATE: Stocks slip but remain on track for a week of gains

Analysis details (09:28)

Stocks in Europe are on the backfoot (Eurostoxx 50 -0.6%, Stoxx -0.4%) in early trade, albeit are still on track see the week out in positive territory with the Stoxx 600 up around 2.2% WTD. Price action for Europe follows on from the soft close on Wall St. which saw indices post losses of around 1% for the S&P 500 as Fed officials continued to push back against the notion that a policy pivot is forthcoming. As has been the case throughout the week, there hasn’t been a great deal of fresh incremental newsflow for Europe to digest and as such, stocks have continued to be at the whim of broader risk dynamics elsewhere. Stateside, US futures (ES -0.3%, NQ -0.5%, RTY -0.2%) are also softer on the session with attention turning to today’s NFP release whereby the headline rate of payrolls growth is expected to resume cooling in September, with the consensus looking for 250k payroll additions (vs 315k in August); the jobless rate is seen unchanged at 3.7%, and there will also be focus on the participation rate after a welcome rise in August. Fed speak today includes Fed’s Williams (15:00BST/10:00EDT), Kashkari (16:00BST/11:00EDT) and Bostic (17:00BST/12:00EDT). Elsewhere, the latest BofA flow show noted that global stocks funds saw USD 3.3bln of outflows in the week to 5th October with the regional breakdown noting that the US saw outflows of USD 3.4bln, Europe has now seen outflows for 34 consecutive weeks (USD 0.6bln), whilst EM saw inflows of USD 0.7bln. From a sector standpoint, the main outlier was materials which posted USD 2.4bln of outflows. Sectors in Europe are predominantly softer with Technology comfortably bottom of the pile, whilst to the upside Banking names are performing well amid upside in Credit Suisse (+4%). Gains in Credit Suisse have been stoked by reports via Bloomberg that the Co. has offered to repurchase up to CHF 3bln worth of debt securities. That said, it’s also worth noting cautious commentary from Moody’s which stated that the Co.’s CET1 ratio could slip below 13% by the end of the year and if it stays at such levels consistently, it would be credit negative. Elsewhere, Adidas (-2.2%) is softer on the session following news that it is reviewing its Yeezy partnership with Kanye West, whilst Renault (+4.1%) is the best performer in the CAC after a broker upgrade at Oddo.

07 Oct 2022 - 09:27- Research Sheet- Source: Newsquawk