[MARKET ANALYSIS] European bourses mixed; KOSPI rebounded following announcements of increased shareholder returns
- European bourses trade mixed, with underperformance in Germany's DAX 40 (-0.8%) while the majority of other indices are flat/slightly firmer. A quiet start of the day for equities with only a handful of earnings and stories (see more below). On geopolitics, US President Trump announced that the US will start economic warfare with Iran. This has caused some retaliatory comments by Iranian officals, with the Iranian Supreme Leader adviser Rezaei saying that the best response to Trump's escalation of economic warfare is to withdraw from the NPT.
- Over in Asia, South Korea's KOSPI rebounded from the prior day's losses, closing with gains just shy of 6%. As usual, the main two drivers were SK Hynix and Samsung Electronics. For the former, they announced KRW 40tln of share buybacks and will return over 50% of FCF to shareholders from its previous target of within 50%. Similarly, for the latter, South Korean press reported that they are planning to announce a shareholder return plan topping KRW 100tln. In turn, SK Hynix finished with gains of 12.7% while Samsung also printed upside just shy of 10%.
- European sectors point to a mixed picture. Autos top the sector pile, with Construction and Utilities rounding out the top 3 performers. To the downside is Basic Resources, paring back some of Wednesday's gains. Telecoms and Travel & Leisure round out the sector laggards.
- Key movers include: JD Sports (-13.5%), cuts its FY27 pretax profit guidance; Aegon (-3.5%), despite H1 metrics beat estimates and increased its current share buyback programme; Novonesis (+9.0%), Q2 revenue and Adj. EBITDA beat and announces an inaugural share buyback programme; Brenntag (-2.7%), reinitiated with underperform at BofA.
- US equity futures are softer across the board, albeit only modestly. Newsflow has been light for US equities. An update for Moderna, shares are lower by some 15% pre-market after closing with gains of 177%. Looking ahead, Walmart and Alibaba are to report earnings.
This is a session wrap rather than a single catalyst, and the strands behave differently. The KOSPI rebound driven by buyback and payout announcements fits an established pattern in that market: large shareholder-return pledges from the two index heavyweights have historically produced outsized single-session index moves, since the pair dominate benchmark weightings, and the durability of the rally has tended to depend on whether the pledges mark a structural shift in capital-return policy or a one-off concession to governance pressure. The European picture is one of thin summer-style dispersion, single-stock earnings driving idiosyncratic moves while index levels drift, a regime in which sector leadership rotates on light newsflow and breadth tells more than the headline prints. On the geopolitical strand, rhetoric around economic pressure on Iran and talk of treaty withdrawal has, in past episodes of this kind, transmitted primarily through crude via risk premia on supply and shipping rather than through equities directly, with escalation and de-escalation cycles historically fading unless accompanied by concrete measures. The follow-ons that matter are whether the Iranian rhetoric hardens into policy, confirmation and scale of the Korean payout plans, and the pending US earnings named, which set the tone for the cash open.