EUROPEAN EQUITY UPDATE: Stocks trade lower following the Wall Street and APAC losses

STOXX 600: -0.7%

• European bourses opened lower across the board, in a continuation of the pressure seen on Wall St/APAC trade and have traded at subdued levels throughout the morning thus far.


• Trade updates have been light in the past couple of days. Newsflow has been focused on US Budget updates, where the House Rules Committee passed Trump’s “One Big, Beautiful Bill” overnight – now a floor debate is underway, with voting expected just after 10:15 BST/05:15 EDT - timing speculative.


• Back to Europe, the data docket has been packed. Starting with German Ifo, Expectations and Business Climate rose whilst Current Conditions fell a touch – overall German businesses seem to be cautiously optimistic about the new Government’s spending plans.


• As for PMIs, in order of release: France (Services a touch lower, Manufacturing beat), Germany (Manufacturing incrementally below expectations, whilst Services printed below the most pessimistic of analyst expectations which surprisingly dragged the Composite into contractionary territory), EZ (echoed a similar theme to Germany).


• Interestingly, the accompanying release for both the German/French releases highlighted that “input cost inflation accelerated, signalling a squeeze on profit margins”. For Germany specifically, "Overall, our nowcast model, which considers the PMI among other factors, calculates that activity of service providers will barely expand in the second quarter”.


• Overall, ECB pricing for the next meeting (June) was little changed; currently suggesting a 99% probability of a 25bps reduction. Ahead, a few ECB speakers are due including de Guindos and Elderson.

Sectors: Negative

• European sectors hold a strong negative bias, with only Basic Resources and Chemicals marginally holding in positive territory.


• Consumer Products is underperforming after LVMH’s cautious comments on the Luxury sector (see below).


• Chemicals names are faring better vs peers, with Bayer (+1.7%) doing much of the heavy lifting. The Co. benefits from a WSJ report which suggests the US HHS Secretary's move will “go easier than expected on pesticides in farming”.

Majors: FTSE 100 -0.6%, CAC 40 -0.7%

• The FTSE 100 is in the red and performing about as well as peers. For the index; BT (-3%) moves lower after reporting weaker FY results, with a significant miss in its Pretax Profit – 2026 guidance was also disappointing. Intertek (-4%) bottoms the index after its results. Outside of the FTSE 100: Johnson Matthey (+29%) soars after the Co. agreed to sell its catalyst unit to Honeywell for GBP 1.8bln. As for data, UK PMI data was released; Manufacturing was a little lower whilst Services edged incrementally higher – overall the index was little moved.


• The CAC 40 is the European underperformer today, with the downside driven by losses in the Luxury sector; Hermes (-2%), LVMH (-1.5%). Bloomberg reported that LVMH warned its investors and analysts the demand remains soft in the Luxury space, citing lack of consumer confidence – particularly in China. The piece goes on to add that the Co. may show no improvement this quarter vs the last one.

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

• Futures are modestly higher across the board, attempting to recover some of the hefty losses seen on Wednesday; the pressure was attributed to deficit concerns and following a weak US 20yr auction, which sparked sell-US trade.


• The US Day sees the release of weekly jobless (exp. 230k vs prev. 229k) and continuing claims (exp. 1.885mln vs prev. 1.881mln) data, with the former coinciding with the BLS' survey window for the May jobs report. US existing home sales are seen edging higher in April. US Flash PMIs are also on the docket.

22 May 2025 - 09:55- ForexData- Source: Newsquawk