EUROPEAN EQUITY UPDATE: Stocks steady ahead of Chair Powell's address

Analysis details (09:27)

European equities (Eurostoxx 50 +0.1%) are a touch firmer following the downbeat price action seen on Monday which was largely attributed to the fallout from last week’s NFP report. The handover from the APAC region was a largely mixed one with the ASX 200 the laggard in the region after the RBA lifted the Cash Rate by 25bps to a fresh decade-high and signalled further rate increases ahead. US equity futures (ES +0.2%, NQ +0.3%, RTY +0.1%) are trading flat/incrementally firmer ahead of remarks from Fed Chair Powell. The market is almost completely pricing a 25bps rate hike at the Fed’s March meeting, while expectations of the terminal rate have converged to 5.00-5.25%, in line with the Fed’s SEP projections; the market sees a small probability of a rate cut in November, but it is more meaningfully priced for December with around 85% conviction. Elsewhere, analysts at Citi suggest that there are elevated risks of profit taking for the Eurostoxx 50 as positioning moves higher and average long profit levels continue to increase. Citi adds that net positioning for the FTSE 100 is neutral and more bearish for the DAX 40. Sectors in Europe are mixed with Energy the clear outperformer amid post-earnings gains from BP. BP reported a doubling in profits, a 10% increase in its dividend and plans for a further USD 2.75bln buyback. Banking names are also on the front-foot amid the recent pick-up in yields, whilst BNP Paribas (+1.3%) has provided the sector with support post-results. To the downside, Real Estate and Consumer products names lag. Elsewhere, individual updates have largely been skewed negatively with ams-OSRAM at the foot of the Stoxx 600 post-earnings which saw the Co. note that it "sees muted demand situation in key markets in Q1". Siemens Energy (-3.6%) shares have been hit after reporting a widening net loss, whilst Carlsberg (-1.4%) has also been weighed on post-results. Finally, Carrefour (-2.8%) is one of the worst performers in the CAC 40 after a broker downgrade by Exane which was accompanied by a price target cut to EUR 16 from EUR 16.5 (currently EUR 17.00).

07 Feb 2023 - 09:27- EquitiesResearch Sheet- Source: Newsquawk