EUROPEAN EQUITY UPDATE: Stocks tick higher while clarity is awaited on a Trump-Xi call

STOXX 600: +0.5%

• European bourses opened modestly firmer across the board and have traded with an upward bias throughout the morning – currently at session highs.


• No clear driver for the upward bias, but seems to be a continuation of the upside seen following a constructive US JOLTS report in the prior session, which also filtered through into the APAC session, although some upticks were seen on the Final PMIs (more below).


• In terms of US-China relations, it has been reported that US President Trump will speak with Chinese President Xi on Friday. Most recently, earlier today, Trump posted that he likes President Xi, but he is very hard to make a deal with. Further details on the call are limited, but traders will keenly await the readout from the call on Friday.


• The European day so far has included Final Composite/Services metrics, which were mixed; the EZ wide figures were revised marginally higher, with the Composite climbing into expansionary territory. The accompanying report suggested that “we are confident that further key interest rate cuts by the European Central Bank and fiscal stimulus” will be enough to counteract the negative impact of tariff uncertainty.

Sectors: Positive

• European sectors hold a strong positive bias and aside from the top performer, the breadth of the market is fairly narrow.


• Basic Resources leads, with underlying metals prices boosted overnight given the risk tone; Tech and Industrials follow behind. For the latter specifically, Airbus has been lifted on reports that China is mulling ordering hundreds of jets (details below).


• The European auto sector has been in focus today. In the prior session, Germany’s VDA said China's rare earth curbs could halt auto output, cause production delays and outages, and recent SCMP reports seemed to echo these concerns. Thereafter, European auto supplier association, Clepa, said production lines and plants have already been shut and the impact will likely grow in the next 3-4 weeks. This sparked some modest pressure in the sector.

Majors: FTSE 100 +0.3%, CAC 40 +0.6%

• The FTSE 100 is incrementally firmer today but ultimately underperforming vs peers. No clear stock-specific mover driving the underperformance. Although the UK escaped the larger 50% steel tariff, a 25% levy would be in place instead of a 0% tariff. It is worth highlighting that the White House said that if the UK does not comply with certain measures, it also will be subject to the 50% tariff in July.


• Back to index movers; mining names populate the top of the index with metals prices generally boosted overnight. B&M European (-4%) sits at the foot of the pile following its FY25 results where it highlighted that sales performance was below expectations.


• The CAC 40 is performing about as well as peers; STMicroelectronics (+6%) tops the pile, with the Tech sector seemingly boosted by the risk tone. Airbus (+3.2%) follows closely behind, with the company boosted by Bloomberg reports that China is said to be mulling ordering hundreds of Airbus jets in a major deal – potentially up to 500 aircrafts. Elsewhere, Remy Cointreau (+1.5%) opened lower after reporting weaker-than-expected profits and withdrawing FY29/30 guidance. Though shares reversed around commentary from its CEO who said “the worst has passed and strategic actions are paying off”.

US Equity Futures: ES +0.1%, NQ +0.2%, RTY +0.5%

• Futures are broadly in positive territory, with some modest outperformance in the RTY, continuing the upside seen in the prior session.


• The US Day sees the release of the ISM services data for May; the consensus expectation is for the headline to tick-up slightly to 52.0 from 51.6. Ahead of the official US jobs data (due on Friday), the ADP's national employment report is expected to see 110k jobs added to the economy in May (vs prev. 62k); there will also be attention on the wages metrics - last time out, the median change in annual pay for job-stayers was +4.5% Y/Y, and for job-changers was 6.9% Y/Y. A few Fed speakers are also scheduled.


• Meanwhile, Barclays lifted its S&P 500 end-2025 price target to 6050 (prev. 5900).

04 Jun 2025 - 10:15- ForexData- Source: Newsquawk