EUROPEAN EQUITY UPDATE: Turnaround Tuesday runs out of steam

Analysis details (09:35)

European equities attempt to engineer a “turnaround Tuesday'' has begun to run out of steam after opening gains of around 0.8% for the Eurostoxx 50 have since been scaled back to circa 0.2%. The upside seen at the open had little in the way of a fundamental basis behind it and was more of an attempt to recoup lost ground. Given the tough economic backdrop for the region, any attempted rallies in stocks could continue to run into such headwinds, particularly as monetary tightening expectations continue to ramp up. Today’s price action followed a pretty despondent APAC session which saw the ASX 200 endure heavy losses on account of a catch-up play from yesterday’s market holiday. Stateside, futures are faring better than their European peers with the e-mini S&P up some 1% after entering bear market territory yesterday whilst the NQ outpaces peers with gains of 1.2%. Today’s session is likely to be dominated by talk of a 75bps hike from the FOMC tomorrow following a seemingly coordinated attempt by the Fed to guide market expectations via trusted journalists as opined by Bloomberg’s Authers. In terms of desk commentary, JPMorgan strategist Marko Kolanovic – who has been super bullish on equities amid their recent slide – thinks the US will avoid a recession, re-emphasising his recent arguments that consumer strength, Covid reopening and recovery, as well as policy stimulus in China will provide support. Sectors in Europe are showing a somewhat mixed picture with notable outperformance in Banking names following the increasingly favourable yield environment. Elsewhere, energy names are gaining amid upside in underlying crude prices which remain supported by uncertainty over Russian oil supply and the limited capacity in OPEC+ to bolster output. To the downside, Media, Real Estate and Travel & Leisure names lag peers with the latter unable to hold onto opening gains. Air France (-8.6%) is the standout laggard for the sector following a EUR 2.25bln rights issue. In terms of individual movers, Atos (-19.1%) is the clear underperformer in the Stoxx 600 after announcing a strategy to sell assets and split its operations which has resulted in CEO Belmer departing the Co.

14 Jun 2022 - 09:33- EnergyImportant- Source: Newsquawk