EUROPEAN EQUITY UPDATE: Stocks supported by strong Chinese PMIs

Analysis details (09:45)

Overnight, APAC stocks were mostly positive as the region digested a slew of data releases. From Australia, we saw weaker GDP growth and softer CPI. In China, the Manufacturing PMI saw its fastest pace of expansion in over a decade; Capital Economics said the data was exceptionally strong, and consistent with expectations for a rapid near-term rebound in Chinese economic activity. The positivity from the APAC session filtered into European trade with stocks in the region mostly firmer (Eurostoxx 50 +0.3%). That said, traders are mindful of further inflationary impulses from the Eurozone after German North-Rhine Westphalia CPI rose from the prior on both a M/M and Y/Y basis vs. expectations of a cooling for the 13:00GMT mainland release; subsequent regional releases from Germany have been more mixed. Elsewhere on the data front, manufacturing PMI was unrevised at 48.5 with the report noting that it was “the first increase since last May and a further improvement in the underlying trend from the low seen back in October”. Stateside, US futures (ES +0.3%, NQ +0.4%, RTY +0.5%) are also on the front foot following yesterday’s soft close on Wall Street. Focus for the US session ahead will be on the ISM manufacturing survey for February which is expected to show some improvement, but the headline is still likely to remain under the 50-mark; ahead of the ISM data, S&P Global’s final US manufacturing PMI for Feb will be released. Fed voter Kashkari will be speaking before the US open. Equity sectors in Europe are mixed with Basic Resource names the clear outperformers amid upside in underlying metals prices post-Chinese PMI metrics. To the downside, Real Estate names are on the backfoot once again alongside the continued increases in global bond yields, soft earnings from Persimmon (-9.2%), a miss on UK Nationwide House Price data and the UK’s CMA commencing a market study into the homebuilding sector. Euronext (+5.1%) shares have been supported by news that it has withdrawn its indicative takeover offer for Allfunds (-12.6%). Moncler (+5.4%) shares have been supported following FY results which saw the Co. exceed expectations and highlight its strong start to 2023. On a less encouraging footing, notable post-earnings losers include Eurofins Scientific (-9.5%), Just Eat Takeaway (-9.4%), ASM International (-4.7%) and Puma (-3.3%). Finally, BNP Paribas (-3%) shares are lower after Belgium opted to sell a circa 2.7% stake in the Co.

01 Mar 2023 - 09:45- Research Sheet- Source: Newsquawk