EUROPEAN EQUITY UPDATE: Tentative mood amid the Thanksgiving lull and light newsflow

Analysis details (09:05)

• Equities in Europe kicked off the final trading session of the week flat and with minimal volatility amid a mixed lead from APAC and no trade from Wall Street yesterday – with US futures also flat across the board as trade remains thin. Major newsflow has been limited thus far with the US set for an early closure, whilst little optimism followed through from Israel and Hamas entering a four-day truce this morning, which has the scope to be extended, according to an Israeli official cited by LBC. On the data front, softer-than-forecast German Ifo across the board did little to spur any meaningful action in stocks despite moving FX and bonds.


• Major bourses opened flat/mixed (Euro Stoxx 50 Unch; Stoxx 600 Unch) with no major standout performers at the time of writing. The sectoral performance is mixed with Chemicals narrowly outperforming as BASF (+2.0%) rises amid reports that ADNOC is exploring a potential acquisition of Wintershell Dea, a European energy unit, backed by BASF. A deal could be valued at more than USD 11bln, according to sources cited by Bloomberg. Other top-performing sectors include Health Care and Travel & Leisure while Consumer Products and Services, Basic Resources, and Tech reside on the other end of the spectrum. Back to M&A, Swisscom's (-0.2%) Fastweb is exploring a deal for Vodafone's (+0.8%) Italian unit, according to Bloomberg citing sources, which comes after Vodafone rejected a EUR 11.25bln bid for the unit last year. In banking news, Barclays (+0.3%) is working on a GBP 1bln cost savings plan which could involve up to 2k job cuts, according to Reuters sources. In automotive news, Mercedes-Benz (-1.0%) and Porsche (-0.9%) fall after being downgraded to Equal Weight from Overweight at Barclays, possibly also weighing on German peers Volkswagen (-0.5%) and BMW (-1.1%), with the former’s losses cushioned as Volkswagen said a new platform will be ready for production in 2025; plans to develop 4 entry-level EV models on the new platform, and noted it will develop new EV platform for entry-level vehicles in China as it looks to boost sales. In tech, Nvidia told customers it is delaying the launch of the China-targeted H20 AI chip until Q1 2024 with the delay due to issues server manufacturers are having integrating the H20 chip, according to Reuters sources.


• In terms of overnight trade, ASX 200 was led higher by strength in utilities, financials, and the energy sector albeit with gains capped by tech weakness and after an Australian warship sailed through the Taiwan Strait which risks stoking frictions between Australia and its largest trading partner. Nikkei 225 outperformed on return from its holiday closure as participants digested data releases including national CPI which printed softer than expected although mostly accelerated from the previous month. Hang Seng and Shanghai Comp were pressured despite the lack of obvious catalysts, while PBoC liquidity efforts and news that China is mulling unprecedented support for the property sector by allowing banks to offer unsecured short-term loans to qualified developers have failed to support the risk tone.

24 Nov 2023 - 09:05- Research Sheet- Source: Newsquawk