EUROPEAN EQUITY UPDATE: Stocks soft alongside banking jitters and a packed earnings slate

Analysis details (09:33)

• European stocks (Eurostoxx 50 -0.7%) have begun the session on the backfoot amid a heavy corporate earnings slate with incremental macro newsflow for the region on the light side.


• APAC stocks were mostly lower after the losses on Wall Street where banking sector fears resurfaced as First Republic Bank shares fell by 50% due to an exodus of deposits and with the lender considering up to USD 100bln in asset sales.


• US equity futures are mixed although the Nasdaq-100 is adding over 1% after well received earnings reports from tech heavyweights Microsoft (MSFT) and Alphabet (GOOG); both saw top- and bottom-line beats, but additionally, above expected cloud revenue for the former and a return of growth in ads sales for the latter have shown a resilience in Big Tech. For today, earnings will once again take centre stage again (TMO, BSX, HUM, ADP, AMT, GD, BA, META, NOW, PXD), ahead of macro updates on Thursday (US advanced Q1 GDP) and Friday (PCE and Employment Costs data).


• Equity sectors in Europe are mostly lower with some of the variance within industries attributed to earnings and other systemic factors. The Banking sector is currently the laggard within the region after a soft showing yesterday (post-UBS and Santander earnings) and aforementioned fears over First Republic Bank. Elsewhere, Industrial Goods and Services names are also on the backfoot alongside post-earnings declines in Safran (-3.3%) which saw the Co. raise caution over supply chain risks. Tech is another sector very much in the red with ASM International (-11.7%) one of the worst performers in the Stoxx 600 after it warned that memory market demand weakened and is expected to remain low for the rest of 2023. To the upside, Telecom names are in positive territory and outperforming peers alongside post-earnings gains in Orange (+1.6%) with the Co. confirming guidance and flagging benefits of price hikes.


• Other notable movers include GSK (-1.6%) which has failed to benefit from better-than-expected profit and revenue figures, whilst healthcare name Roche (-1.2%) is also softer post-results. Finally, in the retail sector Kering (-2.3%) is softer post-earnings after underwhelming compared to peers LVMH and Hermes, whilst Puma (-3.1%) is also lower on the session, cautioning that it expects low to mid-single-digit sales growth, due to high inventory levels in trade and continued market headwinds.

26 Apr 2023 - 09:33- EquitiesEconomic Commentary- Source: Newsquawk