EUROPEAN EQUITY UPDATE: traders continue to run with early October gains

Analysis details (09:29)

European equities (Eurostoxx 50 +2.6%, Stoxx 600 +2.0%) have kicked the session off on the front foot in an extension of the gains seen yesterday as stocks look to recover from the losses endured during September. In terms of fresh fundamentals for today’s session, there hasn’t been a great deal of incremental updates for the region. However, the decision by the RBA to deliver a smaller-than-forecast interest rate hike in an otherwise quiet/holiday-thinned APAC session has garnered attention with investors mindful over whether other central banks could underdeliver on policy tightening. US futures (ES +1.5%, NQ +1.8%, RTY% +1.7%) are also firmer on the session following yesterday’s strong showing on Wall St. which saw the majors close the session out with gains in excess of 2% post-soft ISM and a retreat in yields. Today’s data slate from the US includes August’s JOLTS and Factory Orders metrics, whilst the speaker slate might garner more attention as markets continue to look out for a potential “policy pivot” by the FOMC and whether any other policymakers flag concerns over financial stability; comments are due today from Logan, Williams, Daly and Jefferson. Back to Europe, sectors are higher across the board with Travel & Leisure top of the pile with airlines supported (IAG +4%, RyanAir +4.4%, easyJet +2.6%) following news that Heathrow is to end its 100k daily passenger cap on October 29th. Tech is also on a notably firmer footing with chip names supported by the latest monthly update from Foxconn which noted September sales grew 40.4% Y/Y with Q3 better than expected. In terms of laggards, defensive sectors such as Health Care and Utilities sit near the bottom of the pile, albeit still in positive territory. In terms of individual movers Credit Suisse (+4.5%) is the best performer in the SMI following the recent turbulence in its share price with a further memo noting that “speculating that we have a liquidity issue simply would be completely false". Elsewhere, Greggs (+9.5%) is the best performer in the Stoxx 600 following an encouraging Q3 update which noted sales growth of 14.6%. Finally, Legal & General (+4.6%) is near the top of the FTSE 100 after noting that it maintained positive momentum over H1 and continues to deliver into H2. Furthermore, the Co. noted that volatility has increased significantly but had a limited business impact.

04 Oct 2022 - 09:29- Research Sheet- Source: Newsquawk