EUROPEAN EQUITY UPDATE: Stocks trade mixed but tilt more towards the green following Friday’s slaughter

Analysis details (10:23)

European cash markets have tilted more towards the green since the mixed cash open, and after APAC markets saw a downbeat session following the Wall Street decline on Friday. Fresh fundamental catalysts have been light in the European morning thus far, with the German Ifo Survey echoing the commentary seen in the flash PMI releases on Friday, whilst the OECD maintained its 2022 global growth forecast from its June release but downgraded its 2023 metric. For this year, the OECD upgraded the EZ metrics, and downgraded the US and China forecasts; the OECD said central banks should continue to tighten monetary policy to fight inflation, whilst suggesting fiscal policy response to the energy crisis should be targeted and temporary. Elsewhere, analysts at JP Morgan believe the “Fed could show dovish tilt in the next few months, especially as the terminal rate is already priced in at 4.6%, which should limit a further rise in long yields.” The desk adds that there could be an opportunity for a tactical bounce in growth stocks, whilst recommending staying overweight in Financials, Mining, and Energy. Back in Europe, bourses post varying degrees of gains and losses, with the Italian FTSE MIB (+1.1%) the clear outperformer after the Italian Centre-Right coalition led by Brothers of Italy’s (FdI) Giorgia Meloni has emerged as the clear victor of the September elections. The UK’s FTSE 100 (+0.1%) trimmed the initial gains sparked by the Sterling flash crash overnight as the currency attempts to regain some composure, although Banking names and Real Estate reside at the foot of the FTSE 100 with investor confidence in the UK hit following the jumbo “mini-budget”. The Dutch AEX (+0.3%) remains buoyed with the Tech sector outperforming, or trimming some of last week’s declines, with tech giant ASML (+2.4%) among the winners. Sectors overall are mixed (vs a mostly lower open) with Travel & Leisure and Autos the next top performers after Tech, at the time of writing, whilst Insurance, Utilities and Basic Resources are the current laggards. In terms of Monday M&A, Vodafone (-0.1%) is said to be looking to sell off a large stake in its GBP 12bln phone masts division in a bid to reduce its debt pile, according to sources via ThisIsMoney. JD Sports (-1.3%) is understood to be in talks to sell some of its fashion and beauty brands, as the Co. looks to refocus the business on its core sports fashion and outdoor brands. Pendragon (+20%) has reportedly received a fresh GBP 400m takeover approach from its largest shareholder, who tabled a GBP 0.29/shr offer (vs Friday's GBP 0.2270 close). TotalEnergies (+1.0%) is investing some USD 1.5bln in the planned expansion of a Qatari LNG plant; the Co. will hold a 9.375% stake in the North Field South. Intesa Sanpaolo (+2.0%) is waiting for prelim bids on a EUR 1bln NPL portfolio sale by the end of October. Melia (-0.9%) is said to be considering selling more hotels to reduce debt. Finally, Sainsbury's (+0.3%) said it is no longer in talks to sell 18 supermarket stores for LXi REIT, this will have no impact on financial guidance.

26 Sep 2022 - 10:23- Research Sheet- Source: Newsquawk