EUROPEAN EQUITY UPDATE: Stocks wane while Germany’s CDU Leader Merz failed to secure an initial vote to become Chancellor

STOXX 600: -0.4%

• European bourses opened mostly firmer/flat and traded tentatively on either side of the unchanged mark.


• Though the risk tone soon slipped after the HKMA said it has been lowering its duration in US Treasury holdings; the exchange fund has been diversifying into non-US assets. This sparked some modest pressure in US equity futures; downside which filtered through into the European equities complex.


• Thereafter, another bout of pressure was seen after it was reported that Germany’s CDU Leader Merz failed to secure an initial vote to become Chancellor.


• The European day thus far has included a number of EZ PMIs (Final) – these metrics were generally revised higher; the accompanying report suggested that "many members of the European Central Bank (ECB) have been hinting at another interest rate cut in June, and these latest figures seem to support their stance”.

Sectors: Mixed

• European sectors opened with a positive bias, but now show a mixed picture as the risk tone slipped a touch.


• Food Beverage & Tobacco takes the top spot, closely followed by Utilities. To the downside, Basic Resources sits right at the foot of the pile – losses largely driven by Anglo American after Peabody said it may terminate its deal for its coal mine assets.


• For the Pharma industry; US President Trump said he will announce pharmaceutical tariffs over the next two weeks, while he signed an order to reduce regulatory barriers to domestic pharmaceutical manufacturing and will have an announcement next week related to the cost of medicines.

Others: FTSE 100 U/C, DAX 40 -1%, CAC 40 -0.5%

• The FTSE 100 marginally outperforms in Europe, as the UK returns from holiday. In terms of stock specifics; BP (+1.2%) gains amid weekend reports that Shell (-1%) is weighing a takeover of the Co. – though talks are at an early stage. Anglo American (-4%) sits at the bottom of the index after Peabody said it may terminate its deal with the miner, due to damages to its coal mine. In M&A: AB Foods said it is in discussions with Endless, regarding a potential transaction of its Allied Bakeries business. Elsewhere, Deliveroo (+2%) has agreed to be taken over by DoorDash in a GBP 2.9bln deal.


• The DAX 40 is underperforming vs peers, with a recent small bout of pressure seen following reports that Germany’s leader Merz failed to secure a majority needed to become Chancellor in the first round of voting in parliament – this ultimately presents a risk for his fiscal reform measures. As for stock specifics; Continental (+1%) gains after reporting better-than-expected Q1 results and maintained guidance; Fresenius Medical Care (+5%) also topped expectations. Elsewhere, MTU Aero (-4%) dips after its results disappointed. Outside of the DAX 40; Hugo Boss (+5%) popped at the open after a Q1 beat and reiterating guidance; though the Co. did continue to highlight ongoing economic volatility/uncertainty.

US Equity Futures: ES -0.8%, NQ -1%, RTY -0.9%

• Futures are broadly in the red, reflecting the subdued mood seen in Europe.


• Some modest pressure was seen in contracts after the HKMA said it has been lowering its duration in US treasury holdings; the sheexchange fund has been diversifying into non-US assets.


• North American day ahead: The US international trade deficit is seen widening to USD 136.9bln from 122.7bln; Canada's trade stats are also due. Elsewhere, the RCM/TIPP economic optimism data for April will be released.


• Notable corporate earnings due today include: MPC, GPN, AEP, CEG, SHOP, ZTS, DUK, MAR, TDG, ADM, SMCI, RIVN, COTY, EA, ANET, MOS, AMD.

06 May 2025 - 10:00- EquitiesData- Source: Newsquawk