EUROPEAN OPEN: MC FP sales disappoints; PUM GY slashes outlook; VOW3 GY lowers guidance; RCO FP beats; STM FP to buy NXPI sensor business for USD 950mln; NWG LN tops profit estimates

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  EUROPEAN OPEN: European equities are lower after the open on Friday; on the week, futures of the road Stoxx 600 are on course to snap last week's losses, though the narrower Euro Stoxx 50 is poised to end the week flat. Earnings remain in focus, with notable updates from VOW3 GY, MC FP, RCO FP, NWG LN, recapped below. Overnight, APAC stocks were lower after a mixed handover from Wall Street; China's central bank injected CNY 601.8bln via reverse repos, largest daily net injection since January, to curb a bond market selloff. In Japan, Tokyo core CPI rose 2.9% Y/Y in July (prev. 3.1% in June), marking its first sub-3% reading since March. Despite the slowdown, food inflation remained high, maintaining pressure on PM Ishiba following his election setback linked to voter anger over persistent price rises. Elsewhere, BoJ officials see scope to consider a rate hike later this year following a new US-Japan trade deal, which they believe reduces economic uncertainty and allows focus on tariff impacts through upcoming data, according to Bloomberg citing sources. In wake of yesterday's ECB meeting, sourced reports indicate that ECB policymakers have set a high bar for a September rate cut, which would require a deterioration in data and lower projections. In the UK, retail sales data disappointed expectations, rising +0.9% M/M in June (exp. 1.2%), and while the annual rate bounced back, it fell short of expectations at +1.7% Y/Y (exp. 1.8%, prev. -1.1%). Pantheon Macroeconomics said "what looks like poor ONS seasonal adjustment has introduced unnecessary volatility in retail sales over the post-Easter period," adding that "the close correlation between the ONS and seasonally unadjusted BRC data between March and June suggests that major seasonality remains in the official data" and "genuine sales growth was likely stronger than recorded in May and weaker in April." Ahead, Germany's Ifo data for July, US durable goods are the highlights; on the geopolitical front, Iranian officials are meeting UK, French and German diplomats in Istanbul for nuclear talks, which aim to ease the standoff over Tehran’s atomic programme amid growing Western concerns.


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  STOCK SPECIFICS: In Tech, Intel (INTC) shares fell over 4% in extended trading after CEO announced factory project cancellations, and criticised predecessor Pat Gelsinger’s spending as excessive, raising investor concerns about a shift toward cost-cutting over technological leadership, despite a PC market rebound driven by pre-tariff inventory build-ups. STMicroelectronics (STM FP) will acquire part of NXP’s (NXPI) sensor business for up to USD 950mln in cash, including a USD 900mln upfront payment and USD 50mln tied to milestones; the deal, aimed at expanding ST’s MEMS portfolio, is expected to close in H1 2026. In financials, NatWest (NWG LN) reported H1 operating pretax profit +18% Y/Y, slightly above forecasts, and raised its 2025 return on tangible equity guidance to 16.5%; it also announced a GBP 750mln share buyback. UniCredit (UCG IM) launched a EUR 1.8bln tranche of its 2024 share buyback, part of a EUR 3.57bln programme; beginning today, it will repurchase up to 110mln shares (around 7% of share capital). In notable broker updates, Deutsche Bank (DBK GY) was downgraded at Citi. In energy, Eni (ENI IM) Q2 adj. net profit fell 25% Y/Y to EUR 1.13bln, adj. EBIT dropped 35% to EUR 2.68bln, and revenue fell 14% to EUR 18.77bln, pressured by lower Brent prices and EUR strength; production declined 3% Y/Y. The company returned 1bln euros via dividends and buybacks. Of note for UK defence names, UK and Australia signed a 50yr treaty to deepen the AUKUS submarine pact, expected to generate up to GBP 20bln in British exports over 25yrs; over 21,000 UK workers will be involved at the peak, reinforcing defence and economic ties. In consumer sectors, LVMH (MC FP) Q2 revenue in its key fashion and leather goods division fell 9% organically (exp. -7.8%), as demand weakened in Japan and China; the decline highlights luxury buyers pulling back on high-end purchases. Puma (PUM GY) cut its FY outlook, and now expects a loss in adj. EBIT terms, citing weak demand and tariff concerns. Preliminary Q2 results disappointed, with its new CEO facing pressure to revive momentum in sports and athleisure categories. Volkswagen (VOW3 GY) cut its 2025 outlook, now expecting an operating margin as low as 4% (prev. at least 5.5%), citing US tariffs, restructuring costs, and a shift toward lower-margin EVs affecting Audi and Porsche earnings. Remy Cointreau (RCO FP) Q1 organic sales +5.7% (exp. +2.3%), helped by a low US base; China sales declined, but were “limited”. FY operating profit is now seen down mid- to high-single digits (prev. saw mid- to high-teens); it said the anticipated tariff impact was revised down to EUR 45mln (prev. saw EUR 65mln), with reduced China duties. Carrefour (CA FP) reported Q2 LFL sales +4.4% (vs 2.9% in Q1), led by gains in France; H1 revenue was EUR 46.56bln (vs EUR 44.86bln Y/Y); will sell its Italy unit to NewPrinces for EUR 1bln. Michelin (ML FP) H1 sales fell 3.4% Y/Y to EUR 13.03bln (exp. 13.08bln), segment operating income dropped 18.5% to EUR 1.5bln (in line), and net income fell 27.8% to EUR 840mln (exp. 1.01bln), hit by weak tire demand and tariff fears; guidance was maintained despite ongoing macro and FX uncertainty.

TODAY'S AGENDA:

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  DAY AHEAD: In Europe, the German Ifo survey for July is expected to show the three main indices rising slightly. The US docket features durable goods data for June (exp. +0.1% M/M from +0.5% previously). The Atlanta Fed GDPnow tracker for Q2 will be updated (currently tracking growth of 2.4%). In the afternoon, Baker Hughes will release its weekly rig count data. Today's CRA slate could see potential updates from Fitch Ratings and Moody's on Turkey (currently rated BB- and B1, respectively), DBRS on Belgium (AA), Moodyʼs on Denmark (AAA), and Fitch on Finland (AA+). In geopolitics, Iranian officials are meeting UK, French and German diplomats in Istanbul today for nuclear talks as tensions rise following a US military strike on Iran last month. The talks aim to ease the standoff over Tehran’s atomic programme amid growing Western concerns. Stateside, earnings reports are due today from AON, CNC, BAH, CHTR, PSX, HCA.

25 Jul 2025 - 08:10- Research Sheet- Source: Newsquawk