EUROPEAN EQUITY UPDATE: Stocks soft with the Stoxx 600 returning to flat WTD

Analysis details (09:32)

European stocks (Stoxx 600 -0.5%) trade predominantly lower with the Stoxx 600 on track to close the week out pretty much flat after initial upside this week faded in the latter half. Incremental macro developments explicitly for the region have been lacking today and as such, Europe has taken the lead from the soft US and APAC handovers. Stateside, US futures are mixed/flat (ES -0.1%, NQ -0.2%, RTY +0.2%) and unable to claw back much in the way of lost ground from yesterday’s declines as traders continue to assess the ramifications of a potential tighter Fed path than was anticipated pre-NFP. Hawkish remarks from various Fed officials have played a role in this week’s price action with focus turning to next week’s CPI and retail sales data which could offer the next inflection point for Fed pricing. Ahead of those reports, today’s focus will be on the prelim Uni. of Michigan data where a small improvement to the headline is expected with traders to pay close attention to the inflation sub-indices. The latest BofA Flow Show revealed that stocks funds saw USD 7.4bln of outflow in the week to Wednesday, Feb 8th with the regional breakdown showing USD 7.7bln outflows for the US (first outflow in 3 weeks), USD 0.7bln out of Europe (first outflow in 4 weeks), USD 1.1bln out of Japan (third consecutive week), EM USD 1.3bln outflow (first in 8 weeks). By sector for the US, USD 1.1bln went into financials, USD 1bln into tech, USD 1.2bln out of energy, USD 1.1bln out of healthcare. Sectors in Europe are mostly softer with Retail names bottom of the pile amid heavy losses for Adidas (-15%) after the Co. flagged potential losses from unsold Yeezy stock. To the upside, Energy names are the clear outperformers alongside strength in the underlying crude benchmarks, triggered by comments from Russian Deputy PM Novak that the nation is to voluntarily cut production by 500k BPD in March. Standard Chartered (-5.6%) is a notable laggard on the session after First Abu Dhabi Bank said it is not evaluating an offer for the Co. Elsewhere in the banking sector, the Dutch state intends to sell its stake down in ABN AMRO (-0.3%) to just under 50% (currently 56%). While Swiss heavyweight Roche (-2%) is at the foot of the SMI after news that a shareholder is looking to sell down a 2.5% stake in the Co. Finally, Barclays (-0.6%) were seen lower at the open (have since recouped some losses) after source reporting in the FT that the Co. is being probed by the UK’s FCA for suspected persistent failings around its compliance and anti-money laundering procedures.

10 Feb 2023 - 09:32- Research Sheet- Source: Newsquawk