EUROPEAN EQUITY UPDATE: Stocks struggle for direction, Autos boosted by Renault guidance hike

Analysis details (09:35)

• European equities trade (Eurostoxx 50 flat) with little in the way of firm direction following a similarly indecisive close on Wall Street yesterday. Macro focus for the region today has largely been on inflation metrics from across the Eurozone which has seen Spain Y/Y CPI move back below the 2% mark to 1.9% for the first time since March 2021. Meanwhile, state-level German CPIs have so far leaned towards increases for both the Y/Y and M/M prints which would be in-fitting with expectations for the mainland figure at 13:00BST. Note, the upside has been attributed by the local statistics office to “base effects resulting from the federal government’s temporary transport and fuel subsidies last year” as per Capital Economics.


• Asia-Pac stocks traded mixed amid some indecision heading closer towards quarter-end and after the choppy performance stateside. ASX 200 (Flat) was just about kept afloat, with some encouragement from better-than-expected Australian Retail Sales. Nikkei 225 (+0.1%) extended on gains and briefly climbed back above 33,500 as it coat-tailed on the recent advances in USD/JPY and after Japanese Retail Sales topped forecasts. Hang Seng (-1.3%) and Shanghai Comp. (-0.2%) were subdued amid ongoing frictions and the potential for additional US tech export restrictions on China but with losses in the mainland cushioned by the PBoC’s continued liquidity efforts.


• US equity futures are around flat with the ES holding above the 4400 mark. In terms of newsflow, markets were treated to another set of remarks from Fed Chair Powell, where he revealed his expectations for Friday’s PCE data (Core PCE likely rose 4.7% Y/Y in May, overall PCE estimated to have risen 3.9%) and remarked that a strong majority of Fed policymakers see two or more rate rises by the end of this year. In terms of US equity-specific themes, financials are performing well in premarket trade as all banks passed the Fed’s stress tests; bank capital plans are due by the end of the month and will tell us how banks will distribute capital. Semiconductor names are also performing well after earnings from Micron were published after the close on Wednesday. In the US, final GDP stats for Q1 could see small upward revisions to Final Sales and the Deflator, though PCE and core PCE are expected to be confirmed at 5.0% and 4.2% respectively. Weekly initial jobless claims and continuing claims (the latter coinciding with the BLS survey window for the jobs report) are seen little changed. Pending Home Sales data for May will be eyed in the context of firm housing metrics seen of late, which shows resilience despite aggressive Fed rate hikes.


• Equity sectors in Europe are mixed with Autos top of the leaderboard, supported by Renault (+6.5%) after the Co. raised its FY 23 outlook for group operating margins and automotive operational FCF. Retail is another leading sector amid gains in H&M (+9.5%) after Q2 profits exceeded estimates and noted that Q3 has seen a “good start”. To the downside, Travel & Leisure, Chemicals and Industrials lag peers. In terms of stock specifics, Ipsen (+3.6%) shares have been boosted by an positive outcome from an FDA Advisory Committee, whilst SES Imagotag (+14.1%) shares are continuing to attempting clawing back lost ground after asking auditing firms to issue a certificate of recognition which invalidates the "central argument" on which Gotham City's report based its accusations. Siemens Energy (-3.1%) shares are on the backfoot after Siemens transferred its 6.8% stake in the Co. to the Siemens Pension Fund; the move reduces Siemens' consolidated investment in Siemens Energy from 31.9% to 25.1%. Finally, Casino (-30%) shares are getting hit hard after proposing a restructuring deal which will leave Rallye without control of the firm

29 Jun 2023 - 09:35- Research Sheet- Source: Newsquawk