EUROPEAN EQUITY UPDATE: Stocks tilt lower with the region unable to benefit from better-than-feared PMIs

STOXX 600: -0.2%

• European bourses are trading with little in the way of a clear bias. Geopolitical tensions resurfaced early doors after Ukraine's Air Force stated that Russia used 574 drones and 40 missiles in an overnight attack. Thereafter, attention pivoted to the data slate with France kicking off proceedings with a solid flash PMI report for August, followed by a mostly positive German release. The EZ-wide print saw the composite move further into expansionary territory with the accompanying report noting that "economic activity has picked up in both manufacturing and services". However, "U.S. trade policy is leaving its mark. Foreign orders in the eurozone manufacturing sector have declined for the second month in a row". Little follow-through was seen in European bourses, with global equity sentiment currently hampered by the tech-led selling pressure seen on Tuesday and Wednesday.

Sectors/movers: Negative/Positive

• Equity sectors show a mostly negative tilt with stock-specific updates relatively light. Energy names sit at the top of the leaderboard amid upside in underlying crude prices as traders digest comments from Russian Foreign Minister Lavrov yesterday that Russia and China need to be involved in future security guarantees, whilst Ukraine stated that Russian launched a substantial drone and missile strike overnight. To the downside, Media names lag with Wolters Kluwer (-2.2%) a notable underperformer in the sector following a PT reduction at Morgan Stanley. Other lagging sectors include Consumer products and services and Autos and Parts.


• In terms of stock-specific updates, Mercedes-Benz (-0.6%) is reportedly in talks to source four-cylinder petrol engines from BMW (-0.6%), with production potentially starting in 2027. The move comes as Mercedes faces weak sales, political hurdles sourcing from China, and a need to secure combustion units for plug-in hybrids, according to Manager Magazin. Flutter (+2.2%) shares are higher following news that the CME Group and Flutter’s FanDuel are partnering to launch event-based contracts in the US. Safran (+1.2%) shares are on the rise after being upgraded to Outperform from Market Perform at SocGen.

US Equity Futures: ES U/C, NQ +0.1%, RTY -0.2%

• US equity futures are trading mixed/flat after yesterday's mostly soft close, which saw a continuation of big-tech weakness. From a macro perspective, FOMC minutes had little follow-through into the broader indices as the hawkish takeaways were somewhat tempered by the minutes not incorporating the latest NFP data and chunky two-month revisions. The next inflection point for Fed pricing will likely come via tomorrow's Jackson Hole appearance by Fed Chair Powell. However, many desks are of the view that he will struggle to out-dove the market and likely retain a cautious stance to policy loosening given that there is still one more jobs and CPI report due before the September confab. For today's data docket, the highlights come via weekly claims metrics and the August flash PMI report.


• From a stock-specific standpoint, upcoming focus will be on earnings from retail heavyweight Walmart (WMT), which will be parsed for any impact of the trade war on margins and consumer spending habits. Elsewhere, Meta (META) has frozen hiring in its AI division after a costly spree that added over 50 researchers and engineers, WSJ reports. UnitedHealth (UNH) has created a new board-level “public responsibility committee” to oversee financial, regulatory and reputational risks, aiming to restore trust with shareholders and regulators.

21 Aug 2025 - 10:20- EnergyGeopolitical- Source: Newsquawk