EUROPEAN EQUITY UPDATE: Tentative gains in Europe ahead of ZEW data

Analysis details (09:36)

Stocks in Europe are trading in marginal positive territory (Eurostoxx 50 +0.3%) with incremental macro newsflow for the region light ahead of ZEW data at 10:00BST which will likely add to this week’s slew of concerning data points on the growth front. The release will be taking place in the context of low water levels on the Rhine and a gas levy in Germany; both of which should hamper domestic growth prospects and has prompted ING to suggest that “it would need an economic miracle to avoid a recession in the second half of the year”. The APAC session was a mixed one with focus in the region on China following reports that China is considering issuing government-guaranteed bonds to provide liquidity to certain property developers, while PBoC-backed press noted that China needs additional policy stimulus to increase economic growth. Stateside, US futures are mixed/flat (ES -0.1%, NQ -0.1%, RTY Unch.) following yesterday’s firmer close on Wall St. which saw outperformance in tech/growth due to the yield impulse in which the Treasury curve bull-steepened after the big tumble in US survey data. Today’s US docket sees industrial production, housing starts and building permits, while there is no scheduled Fedspeak ahead of Wednesday’s FOMC meeting minutes. On the earnings front, US giant Walmart (WMT) and Home Depot (HD) will report in the premarket. Sectors in Europe are mixed with outperformance in Basic Resources following yesterday’s session of losses. Earnings from BHP (+4%) have bolstered the sector (Glencore +2.3%, Anglo American +2%, Rio Tinto +1.3%) after the mining-heavyweight reported a jump in FY22 profits. Elsewhere, upside is also observed in Telecom and Utilities names. To the downside, Real Estate and Consumer Products and Services sit in marginal negative territory with the latter hampered by losses in Richemont (-1.8%) with the Co.’s Chairman urging shareholders to oppose the appointment of former LVMH (MC FP) executive Trapani to the board, writing that he is not independent. In terms of individual movers, Delivery Hero (+7.3%) sits at the top of the Stoxx 600 with the Co. reassuring investors that it will reach profitability by 2023. Elsewhere, Watches of Switzerland (+3.5%) shares have been boosted by its latest earnings release, whilst GSK (+2.9%) and Sanofi (+2.6%) continue to attempt to shrug off losses stemming from recent litigation concerns. To the downside, Sonova (-14.4%) is at the foot of the Stoxx 600 after cutting FY 22 guidance whilst Danish-listed Pandora is also a notable laggard post-Q2 results.

16 Aug 2022 - 09:36- EquitiesData- Source: Newsquawk