EUROPEN EQUITY UPDATE: Mood turns cautious as equities come off best levels and sectors turn defensive

Analysis details (09:40)

Major bourses in Europe kicked off the session with modest broad-based gains of around 0.5%, but have since come off best levels, with relatively mixed trade experienced at the time of writing. The cautious sentiment comes after the APAC mood was dented by sub-par Chinese activity data in which both Industrial Production and Retail Sales fell short of market expectations, with the data overshadowing the PBoC’s surprise 10bps cuts to the 1yr MLF and the 7-day Reverse Repo rate. US equity futures have been subdued since the resumption of trade following the gains on Wall Street on Friday, and with retailers such as Walmart set to round off the Q2 earnings season whilst FOMC minutes are due on Wednesday. Back in Europe, bourses are varied in performance (Euro Stoxx 50 +0.1%; Stoxx 600 +0.3%) with the mood cautious and the session somewhat slow with large parts of Europe observing the “Assumption of Mary” holiday, although most markets remain open, the Borsa Italiana is closed. In terms of the breakdown, the DAX 40 is the regional laggard amid losses in Autos and Parts, possibly on Chinese slowdown fears. In terms of sectors more broadly, regional sectors are now mixed (vs mostly positive at the open), with the theme more of a defensive one as Healthcare, Personal Goods, Food & Beverages, and Utilities among the top performers, whilst Travel & Leisure, Energy, Basic Resources and Autos & Parts reside on the other end of the spectrum. In terms of movers, heavyweight AstraZeneca (+2.6%) is lifting the broader sector after announcing its Enhertu significantly delayed disease progression in the DESTINY-Breast02 Phase III trial vs. physician’s choice of treatment in patients with HER2-positive metastatic breast cancer. Elsewhere, Uniper (+9.5%) is firmer as the German gas market operator is set to announce on August 15th the size of the levy, which will be imposed on all gas consumers in order to spread the additional cost of imports. Thus far, the German gov't expects a levy of 1.5-5 cents/kWh on consumers alongside a levy on gas storage.

15 Aug 2022 - 09:40- Research Sheet- Source: Newsquawk