EUROPEAN EQUITY UPDATE: Stocks soft as tech concerns weigh

STOXX 600: -0.2%

• European bourses are trading on the backfoot in a reversal of some of yesterday's upside and following on from the tech-led selling pressure seen Stateside. Incremental macro drivers for the region have been few and far between aside from developments on the geopolitical stage. On which, the latest reports suggest that the White House is reportedly eyeing Budapest for peace talks with Ukraine President Zelensky and Russian President Putin. Any solution to the conflict could underpin sentiment in the region. However, any such moves may be tempered if the selling pressure in the US picks up pace. Furthermore, traders are also mindful of an expected slowdown in Q3/4 data on account of the trade conflict with the US.

Sectors/movers: Mixed

• Sectors are overall mixed with a slightly defensive tilt given the current risk environment. Food, Beverage and Tobacco sits at the top of the leaderboard with Nestle (+1.2%) leading some of the upside, other sectors outperforming include Utilities, Telecoms and Insurance. To the downside, Basic Resource names lag, whilst Industrials are also on the backfoot as the positive mood music from the geopolitical sphere this week acts on a drag of the likes of Rheinmetall (-0.8%) and Hensoldt (-1.4%).


• Other notable movers include United Utilities (+1.2%) and Aberdeen Group (+0.7%) following positive broker upgrades. Alcon (-10%) is a notable laggard in Europe after providing weak sales guidance alongside Q2 results. K+S (-3.3%) shares have been knocked lower by a broker downgrade at Berenberg.

US Equity Futures: ES -0.3%, NQ -0.4%, RTY -0.3%

• US equity futures are extending their move lower after major indices finished mostly lower yesterday with the declines led by the mega-cap tech stocks which resulted in the underperformance of the Nasdaq. The FT cited the tech weakness to a MIT paper questioning returns from new technology and noted that “95 per cent of organisations are getting zero return” from their investments in gen AI", while Meta (META) was also reported to downsize its AI division and some executives are expected to leave. As such, performance of tech will be closely monitored during today's trade.


• From a macro perspective, FOMC minutes are due later today. However, they will likely be deemed as stale in some quarters given the aforementioned August jobs report hit just a few days after the meeting. Fed's Bostic and Waller are due on today's speaker slate. Note, the subject matter for the latter is on Blockchain payments.

20 Aug 2025 - 09:55- ForexGeopolitical- Source: Newsquawk