EUROPEAN EQUITY UPDATE: Wall St. gains puts Europe on the front-foot

Analysis details (09:25)

European equities (Stoxx 600 +0.6%) trade on the front-foot with the Stoxx 600 on course to close the week out with gains of around 1%. Stocks are firmer following a mostly positive APAC lead Asia- amid tailwinds from the US; the Nikkei 225 outperformed peers after data which showed Tokyo-area headline and core inflation began to soften, while the Unemployment Rate edged lower. China shares gained after strong Caixin Services and Composite PMI data which showed the fastest pick-up in activity since August, but upside was capped heading into China’s ‘Two Sessions’. From a macro standpoint in Europe, Final Services and Composite PMI data out of France were revised up a touch for February, the German measures were revised down, while the aggregate Eurozone readings were revised lower too. US equity futures (ES flat, NQ +0.1%, RTY flat) trade around the unchanged mark ahead of ISM services data, where the headline is expected to pare back a touch. Particular attention will be on the prices component, after a hot reading within the manufacturing data earlier in the week exacerbated a hawkish repricing of the expected course for rates this year. The latest BofA Flow Show (in the week to March 1st) revealed that global equity funds saw outflows of USD 7.4bln. For the regional breakdown, US funds saw USD 10.6bln of outflows (fourth straight week), whilst USD 0.2bln exited European funds. Equity sectors in Europe are mostly higher with Media names the standout laggard amid post-earnings losses in Universal Music Group (-4.8%) which sits at the foot of the Stoxx 600. To the upside, Basic Resource names are the standout outperformers, followed by Tech, Telecoms and Autos. Deutsche Lufthansa (+5.5%) is the best performing stock in the Stoxx 600 following Q4 results which saw the Co. forecast a significant improvement in EBIT for 2023. Ericsson (+4%) shares are seeing some relief after agreeing to pay a USD 206mln penalty for anti-bribery violations. To the downside, earnings releases have sent the likes of Pearson (-1.9%), Rightmove (-1.8%) and Ferragamo (-1.6%) shares lower, whilst a broker downgrade at Citi sees Admiral (-2.9%) as one of the worst performers in the Stoxx 600.

03 Mar 2023 - 09:25- Research Sheet- Source: Newsquawk