EUROPEAN EQUITY UPDATE: Stocks supported ahead of Sintra mega-panel

Analysis details (09:25)

• European equities trade on the front-foot (Eurostoxx 50 +0.5%) as the region plays catch up to the afternoon gains on Wall Street. Macro updates for the region have been on the light side and as such events in Sintra will take centre stage with a panel featuring ECB President Lagarde, Fed Chair Powell, BoE Governor Bailey, BoJ Governor Ueda set to take place 14:30BST/09:30EDT. All of the participants on the panel have spoken recently; ECB's Lagarde does not see rate hikes ending in the near-term, Fed boss Powell told lawmakers last week that further rate hikes will be appropriate, the BoE moved hawkishly last week and Governor Bailey continues to place inflation fighting at the core; meanwhile, BoJ's Ueda is expected to slowly but steadily move BoJ's YCC policy towards an exit.


• Asia-Pac stocks traded mixed and only partially sustained the momentum from the gains on Wall St. ASX 200 (+1.0%) was positive with nearly all sectors in the green after softer-than-expected monthly CPI data from Australia added to the bets for the RBA to keep rates unchanged at next week’s meeting. Nikkei 225 (+2.0%) gained amid tailwinds from recent currency weakness and with Japan leaning towards extending support measures for gas and electricity bills. Hang Seng (+0.1%) and Shanghai Comp. (flat) were subdued after Chinese Industrial Profits remained at a steep contraction and with the US considering new curbs on AI chip exports to China.


• US equity futures are flat/lower after the upside seen Tuesday, which was underpinned by solid economic data that pushed back against recession narratives, showing an economy that is resilient in the face of Fed rate hikes. The Nasdaq 100 future marginally underperforms this morning alongside WSJ reporting that the Biden administration may restrict AI chip exports to China to prevent US rivals from gaining technological power, and the Commerce Department is expected to implement rules requiring licenses for chip shipments, as part of expanded export control measures.


• Analysts at Barclays note that “FOMO has seen frustrated bears turning into reluctant bulls” and therefore positioning has normalised and risk has become more symmetric. However, “an ever-delayed US recession, OK earnings, AI frenzy and low vol” could prompt more cash deployment by mutual funds. From a regional perspective, the desk notes that the EU/UK is now for sale as flow shift back to the US.


• Equity sectors in Europe are firmer with the exception of Basic Resource names which are being hampered by softness in underlying metals prices. To the upside, Tech is top of the leaderboard following yesterday’s solid showing on Wall Street with other gainers including Construction, Industrial Goods and Autos. In terms of individual updates, broker action has proved supportive for Siemens Energy (+5.8%), Sage Group (+4.1%), Carrefour (+3.3%), Wizz Air (+1.7%), Ryanair (+1.7%) and Vodafone (+1.6%). Elsewhere, Roche (+1.4%) has benefited from the FDA’s decision to reject Bayer’s jointly produced Eylea drug; Roche received approval for a similar drug last year. Finally, reporting via Bloomberg suggests that UBS is to cut more than half of Credit Suisse workforce of 45k, starting from next month.

28 Jun 2023 - 09:25- Fixed IncomeData- Source: Newsquawk