EUROPEAN EQUITY UPDATE: Stocks slump once again as sentiment remains sullied

Analysis details (09:27)

European equities (Eurostoxx 50 -0.6%, Stoxx 600 -0.9%) are once again underwater as the selling pressure from yesterday has bled through into today’s session. The APAC session was a despondent one as participants responded to recent bearish themes including US curbs against China, while a flare-up of COVID cases has been met with another wave of lockdowns as authorities reiterate their Zero COVID credentials. In Europe, the fundamental backdrop remains the same as it was at the start of the week with the recent escalation in tensions between Russia and Ukraine and the ongoing rise in global bond yields continuing to grip sentiment. Stateside, US futures (ES -0.6%, NQ -0.6%, RTY -0.7%) are also on the backfoot with the e-mini S&P briefly dipping below 3600 at one stage in a continuation of yesterday’s losses. Attention has been placed on comments from JPM’s Chief Jamie Dimon, who continued to sound warning alarms for both the US economy and for stocks. Dimon warned that a US recession would be seen in the next 6- to 9-months. The S&P 500 is down around 25% vs its all-time high, but the influential bank CEO would not be surprised by another 20% slide from current levels, which would put the index at levels below 3,000, though this will hinge on whether we see a hard or soft landing. Sectors in Europe are mostly softer with underperformance observed in Chemicals after a disappointing Q3 earnings report from Givaudan (-6.1%) has sent their shares to the foot of the Stoxx 600. Elsewhere Basic Resources and Energy names are also being hampered by price action in underlying commodity prices whilst Glencore (-2.7%) acts as a drag for the former after receiving an investor lawsuit in the UK’s high court in relation to 2011 and 2013 investor losses. To the upside, Retail names outperform peers with Next (+1.2%) a standout gainer in the sector following a broker upgrade at Numis. Elsewhere, and as a cautionary note for other UK lenders, the boss of Santander (-1.5%) UK said the bank is putting aside more money for potential defaults linked to the cost-of-living crisis after seeing a pickup in customers falling behind on mortgage and loan payments.  Finally, Repsol (-3.5%) is another laggard within the region following its Q3 production update.

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