EUROPEAN EQUITY UPDATE: Stocks slip with the ECB set to stick to a 50bps hike

Analysis details (09:20)

After a solid showing yesterday, European equities (Eurostoxx 50 -0.6%) are on the backfoot with markets still on a tentative footing. Pressure for stocks was also observed in the wake of source reporting that the ECB is leaning towards a 50bps hike this week amid concerns over credibility and stubborn inflation. Furthermore, accompanying projections will still show inflation significantly above 2% target in 2023, slightly above in 2025, according to Reuters. Overnight, Asian stocks were mostly positive, following the gains in global counterparts although the advances in the region were limited as participants also digested mixed Chinese activity data. US equity futures are slightly negative (ES -0.2%, NQ -0.1%, RTY -0.5%), though the S&P 500 E-Mini is clinging to the 3,900 handle; action has been capped by its 200DMA (rolling contract) at around 3,946 ahead of key upcoming data releases, which include the PPI and retail sales reports today, weekly jobless claims data on Thursday, and the University of Michigan prelim. sentiment data on Friday. There is a sense that the banking issues relating to the smaller, regional financial institutions are indeed contained; the larger banks appear to be in good shape, and many have seen deposit inflows as a result of recent fears. Equity sectors in Europe are mostly lower with Retail names faring worse than peers amid post-earnings losses in Inditex (-2.9%) and H&M (-5.9%). Elsewhere, Basic Resource and Energy names are also suffering amid downside in underlying commodity prices with crude prices slipping to fresh YTD lows yesterday. In the banking sectors, Credit Suisse (-6.2%) is once again enduring another miserable session with losses exacerbated by comments from the head of the Saudi National Bank, the largest shareholder with a 9.9% stake, that it will absolutely not provide more assistance to the Co. Finally, BMW has seen opening gains fade amid broader selling pressure in the equity space. Co. shares were initially supported by Q4 results which saw the Co. deliver solid earnings and flag expectations of profitable growth in 2023.

15 Mar 2023 - 09:20- Research Sheet- Source: Newsquawk