EUROPEAN EQUITY UPDATE: Subdued sentiment in Europe amid tariff rhetoric; NVDA nurses modest post-earnings downside

STOXX 600: -0.6%

• European bourses are in the red (ex-FTSE 100), with sentiment hit amid the latest Trump tariff related commentary on the EU. On the former, the US President said that he will be announcing tariffs on the EU very soon and that the EU can try to retaliate on tariffs, as well as noted that EU tariffs are to be 25% on autos and other things.


• Indices opened negative across the board, edged a little lower, before bouncing off worst levels in recent trade - which comes alongside some modest upside in NVIDIA shares in the US pre-market (see US section for details).


• On the data front; Spanish headline inflation metrics edged a little higher in February, whilst the core figures continued their downward trend. EU Sentiment data was mixed; Economic Sentiment edged up a little higher whilst Services was a little lower.


• Ahead, markets will await EU Sentiment data and the ECB Minutes.


• On that, at its January confab, the ECB implemented a 25bps rate cut, lowering its Deposit Rate to 2.75%. The policy statement emphasised a meeting-by-meeting, data-dependent approach without committing to a specific path. Despite the easing, policymakers viewed the policy as still "restrictive." Markets will look for any signals regarding the ECB's future stance, particularly in light of comments from Germany’s Schnabel about potentially evaluating further rate cuts.

Sectors: Negative

• European sectors hold a strong negative bias, and with those in the green only modestly so.


• Telecoms remains afloat, joined closely by Travel & Leisure and then Energy.


• Autos is by far the clear underperformer, as the sector reacts to US President Trump’s commentary that EU tariffs are to be 25% on autos and other things. Media follows behind, after dire WPP results and losses in Ocado hits the Retail sector.

Others: FTSE 100 +0.1%, DAX 40 +1%, CAC 40 -0.3%

• The FTSE 100 is modestly lower and trading around the mid-point of a 8,699-725 range. Rolls-Royce (+15.5%) soars after reporting strong headline metrics and launching a GBP 1bln share buyback – peers such as Melrose (+1.8%) and BAE Systems (+1.8%) also gain. Elsewhere, Aviva (+1.4%) benefits after its FY results topped expectations; it also noted that it is confident on the outlook for 2025 and beyond. To the downside, WPP (-17%) slumps after its LFL Adj. Revenue fell beneath expectations, highlighting weaker client discretionary spending – its guidance was also light. Outside of the FTSE 100, Ocado (-15%) sinks as double-digit growth failed to offset losses, despite narrowing them; the co. says it remains on track to turn cash flow positive in 2026. BP (+0.8%) jumped higher modestly on reports that Elliott is ramping up pressure on BP according to Bloomberg sources; Elliott believes the new plan does not go far enough, and lacks urgency.


• The DAX 40 is significantly lower, largely a factor of the significant losses seen in the Autos sector (as mentioned above); Porsche AG (-3%), BMW (-2.7%), Volkswagen (-2.5%). Elsewhere, Beiersdorf (+3.1%) tops the pile after it reported +6.5% Y/Y growth on its Sales figure.

US Equity Futures: ES +0.5%, NQ +0.6%, RTY +0.7%

• Futures are firmer across the board, with the RTY outperforming; focus is on the all-important NVIDIA, which is higher by around 0.7% pre-market after its latest earnings report.


• On that, the co. beat on top and bottom lines, saw a surge in data centre revenues, though guided a slower rate of expansion; and while Q1 sales guidance was above expectations, gross margins are seen easing in Q1; overall whilst the metrics are good, they are not the blockbuster figures that investors may have been hoping for.


• The US Day sees the release of the second estimate of Q4 GDP, where the headline is expected to be unrevised at 2.3% (the deflator and prelim PCE prices are expected to be confirmed at 2.2% and 2.5% respectively). January's durable goods orders are seen rising 2.0% M/M following a decline of 2.2% in December. Weekly initial jobless claims are expected to inch up to 21k from 219k; continuing claims (these coincide with the BLS survey window for the February jobs data) are seen at 1.872mln from 1.869mln. Fed speak comes via Fed’s Barkin, Schmid, Barr, Bowman, Hammack & Harker.

27 Feb 2025 - 10:20- ForexUS Research- Source: Newsquawk