EUROPEAN EQUITY UPDATE: Stocks slump as earnings dominate on ECB day

Analysis details (09:05)

• European equities (Eurostoxx 50 -1.0%) trade very much on the backfoot following the late selling pressure in the US and a raft of large cap earnings. Equity sectors in Europe are mostly lower with the exception of Utilities, Chemicals, Basic Resources and Energy. To the downside, Autos and Parts is the clear laggard thanks to post-earnings losses in Volvo (-11.9%), Mercedes-Benz (-4.7%) and Volkswagen (-1.4%) with commentary from MBG noting that the rate of sales from the first three quarters in 2023 is seen remaining at approximately the same pace and as such, full-year sales are expected to be at the prior-year level. Banking names are also on the backfoot following disappointing earnings from Standard Chartered (-11.1%) after pre-tax profits fell short of estimates, whilst poorly received results from BNP Paribas (-3.8%) has sent their shares lower. Elsewhere, Danone (+1.8%) have been boosted after raising FY guidance, whilst a second consecutive guidance cut has weighed on WPP (-2.9%). Finally, lockdown favourite Hellofresh (-12.9%) sits at the foot of the Stoxx 600 after earnings revealed a drop off in active customers. Looking ahead, all eyes will be on the ECB which is expected to confirm a pause in its rate hiking cycle.


• APAC stocks traded lower across the board, following the weak lead from Wall Street as participants juggle earnings, geopolitics, and data as major central banks line up for their next confabs, with the ECB due today, while the BoJ, FOMC, and BoE are slated for next week. ASX 200 (-0.6%) was dragged lower by its Tech sector, mirroring a similar sectoral performance seen stateside. Energy, however, was among the better performers. Nikkei 225 (-2.2%) also saw its losses led by the Tech sector, whilst the losses in the JPY vs the USD failed to cushion the downside for the index. KOSPI (-2.7%) saw its chip sector languish, facing added headwinds as SK Hynix slumped over 4% post-earnings. Hang Seng (-0.4%) and Shanghai Comp (+0.5%) opened lower, but their losses were shallower than those of their regional peers, potentially amid stimulus optimism, while reports, before the Chinese market opened, suggested that US President Biden was expected to meet with Chinese Top Diplomat Wang Yi on Friday at the White House.


• US equity futures (ES -0.7%, NQ -1.3% and RTY -0.5%) remain on the backfoot with large-cap earnings continuing to dominate the market narrative after Alphabet closed lower by nearly 10% yesterday after results for its cloud business disappointed. The latest large-cap earnings victim is Meta (-4.4% pre-market) despite the Co. initially jumped 5% in after-hours trade following a huge beat on EPS and solid revenues before being dragged lower as some analysts focused on its cautious Q4 revenue guidance. Earnings are set to remain at the forefront with UPS, MRK, BSX, BMY, CMCSA, MA and many others due in the pre-market, whilst after-hours highlights include AMZN, INTC & F. From a macro perspective, with the Fed in its blackout period, focus will be on the data slate which today includes the advanced reading of Q3 GDP, Durables, IJC. Note, given the focus on the rates market and yesterday’s poor 5yr offering, traders will also be focused on today’s USD 38bln 7yr auction.

26 Oct 2023 - 09:05- Research Sheet- Source: Newsquawk