EUROPEAN EQUITY UPDATE: Stocks supported after Chinese rumours boosted regional stocks whilst risk events loom

Analysis details (09:50)

Equities in Europe are firmer across the board (Euro Stoxx 50 +1.3%; Stoxx 600 +1.2%), but to varying degrees following positive APAC handover which saw Chinese stocks surge. The catalyst for the strong performance in China was reportedly due to an unverified social media post that circulated overnight online that a committee was being formed to assess scenarios on how to exit COVID Zero, according to Bloomberg, although the Chinese Foreign Ministry later said that they are not aware of the situation. On that note, China’s Zhengzhou said that the city will lift the temporary control for COVID-19 low-risk regions and gradually resume normal life, according to Global Times. The Hang Seng saw upside of around 6% at one point before closing higher by 5.2% (Hang Seng Tech Index rose as much as 9.3%) whilst the Shanghai Comp notched 2.6% of gains. The equity complex was lifted in tandem, whilst some bullish vibes for the complex may have arisen from the RBA opting for a 25bps hike rather than a 50bps move overnight. Elsewhere, US equity futures are firmer by 0.6-1.0% and off best levels, with the NQ leading the gains ahead of the FOMC announcement tomorrow and the US jobs report on Friday. Back in Europe, the UK’s FTSE 100 (+1.5%) is the outperformer across core markets, with the index lifted by Basic Resources and Energy amid price action in the underlying commodities (following the China news), whilst BP (-0.1%) initially opened higher after topping earnings estimates and announcing a further USD 2.5bln share buyback programme, but gains dissipated shortly after, potentially on scrutiny of oil majors’ profits, with some calling for bigger and bolder windfall taxes on oil firms. Sectors in Europe are all in the green with Basic Resources, Consumer Products and Retail among the top performers, whilst the more defensive Food & Beverages, Healthcare, and Telecoms reside towards the bottom of the bunch. In terms of other interesting movers, Ocado (+35.4%) is soaring and sits at the top of the Stoxx 600 and FTSE 100 after signing a partnership with South Korea’s Lotte shopping to build a network of robotic warehouses using Ocado’s Smart Platform.

01 Nov 2022 - 09:50- Fixed IncomeResearch Sheet- Source: Newsquawk