EUROPEAN EQUITY UPDATE: Stocks soft in a busy morning of corporate updates

Analysis details (09:24)

• European equities (Eurostoxx 50 -0.4%) are enduring a session of losses in sympathy with global peers in what has been an exceptionally busy morning of corporate earnings for the region. Equity sectors have a negative tilt with Real Estate, Retail and Travel & Leisure near the bottom, whilst minor outperformance has been observed in the Food, Beverage and Tobacco sector amid post-earnings gains in Heineken (+1.4%) with the Co. confounding some fears that it could lower guidance. Deutsche Bank (+6.5%) shares are surging after well-received Q3 results which saw them beat on revenues and profits; other notable bank earnings today include Lloyds (-0.3%) and Santander (flat) with the former unable to benefit from stronger-than-expected profits. Elsewhere to the upside, ASM International (+7.6%) is one of the best performing stocks in the Stoxx 600 post-earnings with Dassault Systemes (+5.4%) also supported by encouraging results. To the downside, Kering (-3.2%) shares have been dragged lower by soft Q3 revenues, whilst Reckitt Benckiser (-2.7%) is on the backfoot despite announcing a GBP 1bln buyback with negativity stemming from soft LFL sales. On the macro front, German IFO data came in firmer-than-expected but was unable to prompt much in the way of upside for stocks with yesterday’s soft PMI releases still looming large.


• APAC stocks traded mixed following a firmer lead from Wall Street as eyes turned to earnings from heavyweights Microsoft and Alphabet. ASX 200 (flat) slipped into the red after Aussie CPI topped expectations across the board, which led to hawkish revisions to some analysts' RBA calls. Real Estate led sectoral losses, but the index was cushioned by outperformance in its Mining sector. Nikkei 225 (+0.6%) was supported by recent JPY weakening as export-related sectors outperformed with some potential tailwinds after Bloomberg sources yesterday suggested that the BoJ saw little need to change its "will not hesitate to take additional monetary easing measures" forward guidance. Hang Seng (+0.2%) and Shanghai Comp (+0.4%) surged at the open with sentiment in the region boosted by reports that Chinese President Xi made an unprecedented visit to the PBoC in a "sign of focus on the economy." Hong Kong markets outperformed as large-caps posted gains between 4-6%, and tech also felt some tailwinds from Microsoft's earnings and guidance.


• US equity futures trade on the backfoot with focus in the US on after-hours large cap earnings. Microsoft shares are up 3.5% in pre-market trade after the Co. beat on top and bottom lines with results driven by solid cloud revenues and guidance amid demand for AI products. Offsetting some of the positivity in the tech sector is Alphabet with the Co. lower by 6.4% pre-market despite beating on top and bottom lines as investors focused on disappointing metrics for its all-important cloud computing unit (operating income USD 266mln vs. exp. 433.6mln). With the main highlight on the macro docket coming via US New Home Sales before commentary from Fed Chair Powell (but, in the blackout period), it’s likely that earnings will remain top of mind for investors with the pre-market earnings slate including the likes of TMUS, TMO, HLT, ROP, GD, ADP, BA and HES with META and IBM due after the closing bell.

25 Oct 2023 - 09:24- Research Sheet- Source: Newsquawk