EUROPEAN EQUITY UPDATE: Stocks slip further as sentiment sours on the final day of the month, quarter, and half-year

Analysis details (10:30)

It’s been a downbeat session for global equities thus far as sentiment deteriorates further from the mixed leads seen on Wall Street yesterday and in APAC overnight. The erosion in sentiment cannot be pinned on one particular factor, but traders must be wary of the upside risk to volatility today given month/quarter/HY-end. US equity futures have succumbed to the glum mood, with the NQ (-1.4%) narrowly underperforming vs the ES (-1.1%), RTY (-1.1%) and YM (-1.0%). Wells Fargo’s strategists (in a note dated yesterday) believe that stocks will not be able to sustain a rally until the Fed moves from 50bps-75bps rate hike increments to 25bps, with the desk expecting further stock market losses this summer. The analysts suggest a potential positive near-term catalyst could be weaker-than-expected June CPI data, whilst negative factors include softer corporate earnings and a US 2yr yield above 3.5%. Meanwhile, HSBC strategists used the most recent bounce in risk assets to further reduce risk exposure, citing leading indicators pointing to a “sharp impending growth slowdown”. Back in Europe, a sea of red is seen across the majors (Euro Stoxx 50 -2.1%, Stoxx 600 -1.6%), but the losses vary. Sectors are all in the red but portray a clear defensive bias. Autos & Parts, Banks and Retail are among the laggards and are weighing on the CAC 40 (-2.3%), DAX 40 (-2.3%) and FTSE MIB (-2.2%). Meanwhile, less painful performances in Media, Healthcare, Energy, Telecoms, and Consumer Staples help cushion the FTSE 100 (-1.7%), AEX (-1.4%), and SMI (-1.4%) relative to the peers above. Individual movers today are largely dictated by the broader risk aversion, but one standout stock is Uniper (-17%), whose shares slumped after the Co. withdrew its FY outlook citing supply restrictions from Gazprom and expects H1 adj. net income significantly beneath the prior year.

30 Jun 2022 - 10:30- EquitiesData- Source: Newsquawk