EUROPEAN EQUITY UPDATE: The new month brings further losses for European stocks

Analysis details (09:43)

European equities (Eurostoxx 50 -1.6%, FTSE 100 closed) have kicked the week off on the backfoot amid a holiday-thinned and negative lead from Asia. Overnight, stocks in the APAC region (Hong Kong and China closed) were seen lower following the heavy losses on Wall St. on Friday as well as disappointing PMI metrics from China which saw manufacturing and non-manufacturing prints delve deeper into contractionary territory and fall short of analyst estimates. With regards to the COVID situation in China, things appear to be improving in Shanghai with a city official stating that 5 districts will be permitted to resume public transport, however, Beijing remains a source of concern after officials tightened restaurant dining in services with other venues operating at half capacity. The main development on the Russia-Ukraine situation has been surrounding the potential EU oil embargo on Russia with reports suggesting that Germany could end its dependence on Russian oil by the end of Summer. Hungary remains opposed to an EU-wide ban on Russian oil, however, Politico’s Playbook suggested that some sort of exemptions could be offered to Hungary and Slovakia. Elsewhere, this morning’s Eurozone manufacturing PMI metrics were accompanied by downbeat commentary from S&P Global (EZ-wide 55.5 vs. flash 55.5 and March’s 56.5) with analysts noting “Manufacturing output came to a near standstill across the eurozone in April, with production merely edging higher at the slowest rate since June 2020". Stateside, US futures (ES +0.4%, NQ +0.6%) are attempting to claw back some of the lost ground from Friday where the S&P 500 saw its sharpest daily decline since June 2020. The upside action in US futures is being framed as technical after Friday’s selling, and the focus will shift onto a big week full of potential catalysts, including the FOMC meeting (Weds) – which is expected to bring a 50bps rate hike and QT – ISM surveys, and the key US jobs report. Sectors in Europe are predominantly lower with the exception of the Optimised Personal Care Drug and Grocery nixed which is near-unchanged. Auto names are the standout laggard, however, this appears to be more of a technical issue with a slew of German automakers trading ex-div today. Elsewhere, Tech remains out of favour whilst weakness is also observed in Construction and Industrial Goods names. In terms of individual movers, Adler (-21.5%) shares are subject to aggressive selling pressure after KPMG declined to offer an opinion on 2021 accounts which then triggered the resignation of all board members with a 2021 mandate. Finally, Deutsche Bank (-2.4%) shares are on the backfoot after Glass Lewis said that investors should abstain from a vote approving management actions during FY21 at the upcoming AGM due to ongoing money-laundering investigations

02 May 2022 - 09:43- EquitiesData- Source: Newsquawk