EUROPEAN EQUITY UPDATE: Stocks supported by soft inflation prints

Analysis details (09:25)

• European equities (Eurostoxx 50 +0.9%) trade on the front-foot with sentiment bolstered by soft regional German CPI data from North Rhine-Westphalia, followed by a sub-forecast outturn from Spain ahead of the mainland German figure today at 13:00BST and Friday’s EZ-wide release.


• The handover from the APAC region was largely positive with the exception of the Nikkei 225 (-0.4%) which was pressured heading closer to fiscal year-end amid mild upside in Japanese yields, and with notable weakness across large transportation/logistics companies.


• Stateside, US futures hold onto recent gains which saw the Nasdaq 100 index re-enter a technical bull market yesterday having risen by 20% from its December lows and the S&P 500 close above its 50DMA for the first time since March 6th. Today sees the release of US Q4 GDP and Q4 PCE; there is a chance that these will be ignored, given that the more timely February PCE figure is set to be released on Friday. Additionally, weekly initial jobless claims data is also due. The next couple of days, which will help traders frame the readings in the context of the upcoming May 3rd FOMC meeting, sees a speaker slate which includes Barkin (non-voter), Collins (non-voter) and Kashkari (voter) today, while the influential NY Fed chief Williams (voter), the hawkish Governor Waller (voter) and Fed’s Cook (voter) are due on Friday.


• In terms of desk views, analysts at Bernstein highlight that Europe is the only region that is still seeing earnings upgrades; sector upgrades include industrials, consumer discretionary, banks and telecoms, whilst downgrades include energy, tech and health care.


• Equity sectors in Europe are mostly firmer with outperformance in Real Estate amid the pullback in yields, whilst the Retail sector is also on a firm footing following gains in H&M. H&M sits at the top of the Stoxx 600 post-Q1 earnings which saw the Co. print an unexpected net profit of SEK 540mln vs. exp. loss of SEK 1.12bln. To the downside, Optimised Personal Care, Drug & Grocery names alongside Food, Beverage and Tobacco sit in the red.


• In terms of individual movers, Philips (+7.5%) has benefitted from reports suggesting the Co. expects to reach recall settlements this year. Petrofac (+58%) is substantially higher on the session after securing a circa EUR 13bln offshore wind framework deal with Hitachi Energy. Finally, SSE (+2.6%) is higher after raising FY adj. EPS guidance.

30 Mar 2023 - 09:25- Fixed IncomeData- Source: Newsquawk