EUROPEAN EQUITY UPDATE: Stocks tread water amid light news flow ahead of quad witching

Analysis details (09:39)

Equities in Europe modestly extended on the gains seen at the open despite a lack of fresh fundamental catalysts, but ahead of Q3 quad-witching tomorrow. Sentiment has remained tilted to the upside after equities on Wall Street regained some composure following the hot CPI-induced slide this week, whilst APAC stocks saw mild gains overnight. Focus today will likely be on the Shanghai Cooperation Organization (SCO) Summit (Full Newsquawk Primer available here) alongside a deluge of US data including Philly Fed, Retail Sales, Jobless Claims and Industrial Production. Aside from that, the European morning has been somewhat slow thus far; US equity futures trade sideways with a mild upside bias at the time of writing, with a relatively broad-based performance seen across the major contracts. European majors remain in the green (Euro Stoxx 50 +0.3%; Stoxx 600 +0.3%) but the mood across the region is tentative and awaiting the next catalyst. Sectors are mostly firmer but with no defensive/cyclical bias. Banks reside as the standout outperformer, in part due to yields, whilst Spanish banks are also supported by reports that Spain is open to modifying bank tax to avoid conflicts with the ECB. The other side of the spectrum sees Utilities, Real Estate, and Retail. On broader sectors, strategists at Morgan Stanley believe Banks, Energy, Food & Beverages and Tobacco stocks provide the most attractive yields alongside dividend growth and suggest this can provide a defensive cushion during market turbulence. In terms of movers, H&M (-1.6%) shares are softer after reporting a smaller-than-expected rise in net sales whilst also suggesting Q3 got off to a weak start. Shell (+0.2%) is unfazed by the report that CEO Ben Van Beurden is to step down. THG (-20.5%) plumbs the depths after cutting the FY outlook. Finally, the Healthcare sector saw several broker moves at Credit Suisse: AstraZeneca (+0.8%) downgraded to Neutral, GSK (+0.3%) upgraded to Neutral from Underperform, Novartis (-0.1%) downgraded to Underperform from Neutral, and Roche (+2.1%) upgraded to Outperform from Neutral.

15 Sep 2022 - 09:43- Research Sheet- Source: Newswires