EUROPEAN EQUITY UPDATE: Stocks still unable to catch a break

Analysis details (09:28)

• European equities (Stoxx 600 -0.3%) trade marginally lower with the Stoxx 600 is on track to close the week out with losses of around 1%. From a macro perspective, not a great deal has changed for the region with the ECB now in its blackout period ahead of next Thursday’s meeting. On which, the latest poll from Reuters shows that the decision is expected to be a close call with 39/69 analysts surveyed expecting the ECB to stand pat on the deposit rate at 3.75% with the remaining 30 looking for a 25bps hike to 4.0%. As a guide, market pricing ascribes a circa 63% chance of an unchanged rate next week.


• Asia-Pac stocks were pressured following the tech-led declines on Wall Street due to Apple's China woes and as markets digested disappointing downward revisions to Japanese GDP data for Q2. ASX 200 (-0.2%) was led lower by continued underperformance in the commodity-related sectors and with union workers beginning strike action in some offshore LNG platforms, although losses in the index were stemmed by resilience in defensives. Nikkei 225 (-1.2%) retreated below the 33,000 level with risk appetite sapped by disappointing GDP revisions and slower wage growth in Japan. Hang Seng (Closed) remained shut due to severe rainfall and Shanghai Comp. (-0.2%) was subdued amid ongoing tech-related frictions as China seeks to expand its iPhone ban and with the US Commerce Department investigating the ‘made in China’ Huawei chip.


• US equities futures (ES Unch., NQ 0.1%, RTY Unch.) are trading around flat, as they struggle to resist the pressure seen over the past few days. Over the week, the Nasdaq fared the worst falling around 2.1% (S&P500 -1.5%, Rusell -1.0%), amid general tech selloff and as yields tilted higher throughout the week. The docket was lacklustre in yesterday's session with the Initial Jobless Claims the only data print of note; figure fell to a seven-month low of 216k (prev. 229k, exp. 234k). As for Fed speakers, Williams (Voter, Neutral) suggested rates are in a good place, which was concurred by Goolsbee (Voter, Dove) who mentioned that collectively the Fed forecast is that rates will have to stay up for a relatively extended period. Logan (Voter, Hawk) was perhaps a little more dovish than typical, suggesting it could be appropriate to skip at the next meeting though this does not imply a stopping of rate hikes. And back to today, the calendar remains thin, with Wholesale Sales the only noteworthy data release. Fed’s Barr (Voter, Neutral) is also due to speak, though is unlikely to give comments on monetary policy. Finally, across the border, traders will keep an eye on Canadian labour data.


• Equity sectors in Europe are mostly firmer with outperformance in Travel & Leisure, and Media names, whilst Energy and Construction marginally lag to the downside. In terms of stock specific updates, Computacenter sits (+7.3%) at the top of the Stoxx 600 post-H1 results, whilst Restaurant Group (+4.8%) shares are higher after Chairman Ken Hanna informed the Co. of his intention to not seek re-election. Elsewhere, ThyssenKrupp Steel CEO Osburg said that he would be open to discussions with Kretinsky re. him investing in the business, according to WAZ. Orange is said to be studying the purchase of TDF Fiber network, valued at EUR 1bln, according to Les Echos. Finally, Berkeley Group noted during its trading update that pricing remains resilient and above business plan levels, whilst also reaffirming its earnings outlook.

08 Sep 2023 - 09:28- Research Sheet- Source: Newswires