EUROPEAN EQUITY UPDATE: Sideways trade with eyes on big tech following the sector's rout yesterday

STOXX 600: +0.5%

• European bourses opened the session on a modestly firmer footing, and have generally traded sideways throughout the morning thus far.


• Sentiment has stabilised vs the considerable tech-induced losses seen in the prior session. NVIDIA (+4.5%) is higher in the pre-market, after sinking as much as 17% on Monday. In Europe, the Tech sector is found towards the middle of the pack; ASML (+0.8%), BE Semi (+0.3%) are both slightly higher, but were choppy throughout the morning.


• The European docket has little of note given the ECB's quiet period ahead of Thursday's confab. Appearances today include the likes of ECB’s Cipollone (No Text) and President Lagarde (No Text). The ECB released its Bank Lending Survey, which noted that “Credit standards tightened for firms in the fourth quarter of 2024, driven by higher perceived risks and lower risk tolerance”.

Sectors: Positive

• European sectors hold a strong positive bias, albeit with the breadth of the market fairly narrow at the open.


• Retail takes the top spot, joined by Utilities and Consumer Products to form the top three sectors.


• Basic Resources is the marginal underperformer, with pressure stemming from concerns surrounding potential tariffs on copper/aluminium. Further to this, Anglo American (-0.8%) received a downgrade at SocGen.

Majors: FTSE 100 +0.5%, DAX 40 +0.4%

• The FTSE 100 is firmer and generally performing a little better vs peers. There have been a few trading updates from companies within the index; Rentokil (+3.1%) tops the index after it reported +3% Y/Y rev. growth; S4 Capital (+11%) shot higher at the open after providing positive guidance. Smiths (-1.5%) sits at the bottom of the index after it reported a cyber security incident.


• The DAX 40 is a little firmer today, but has pared most of its early-morning outperformance. In terms of stock specifics, the largest weighted stock, SAP (U/C) opened with gains of 2.5% but is now flat on the session. The Co. reported strong headline figures, with its Cloud Revenue also topping expectations; its FY25 outlook was also raised. Elsewhere, Sartorius (+11.5%) is by far the top performer today, after posting strong results. Finally, Mercedes-Benz (+1.7%) gains after analysts at Jefferies said that Mercedes Benz, in a call, said that the expected adj. margin will be above current forecasts for Q4’24.

US Equity Futures: ES +0.1%, NQ +0.6%, RTY -0.1%

• Futures are mixed, but with very clear outperformance in the tech-heavy NQ as AI-names jump higher in the pre-market following the tech-rout seen in the prior session.


• In the pre-market; NVIDIA (+4.5%), Broadcom (+3.7%), Vistra (+5.8%) all gain, after posting significant losses on Monday.


• The US Day features Durable Goods data for December, where the headline is expected to rise +0.6% M/M (prev. -1.2%), while the ex-transport measure is seen rising +0.4% M/M (prev. -0.2%). US Consumer Confidence is seen ticking up to 106.0 in January from 104.7 prior. On the speakers front, the Senate Commerce Committee will hold a hearing on the Panama Canal and its impact on National Security and Trade.


• Earnings coming up include: LVMH, Boeing, General Motors, Lockheed Martin, Royal Caribbean, RTX Corporation, Kimberley Clark, Invesco, JetBlue & Starbucks.

28 Jan 2025 - 09:55- EquitiesResearch Sheet- Source: Newsquawk