[MARKET ANALYSIS] European bourses mostly lower; Nestle +7% post-earnings

European bourses opened mostly lower, and price action has been fairly tentative since the cash open. In terms of individual indices, the AEX (-1%) underperforms, whilst the SMI (+1%) outperforms. The former lags, with ASML (-3%) weighing on the index; the Swiss index has been buoyed by post-earnings strength in both Nestle (+6.9%) and Roche (+2.2%). In a bit more detail, Nestle reported strong Q1 organic sales and maintained its outlook.
Domestically, focus has been on European PMIs, which ultimately paint a deteriorating growth picture within the region. The accompanying commentary was very interesting, with the French report suggesting that it has yet to see a passthrough to prices; Germany suggested that costs rose at the fastest speed in three years, and the EZ report suggested that “if the Covid-19 pandemic is excluded, this is the biggest surge in cost pressures that we have recorded since 2000”. Unlikely to shift the dial for the ECB in the near-term, but will no doubt keep policymakers on their toes heading into the summer.
European sectors hold a negative bias this morning. Telecoms takes pole position, led higher by Nokia (+10%) and Orange (+3.5%); the former reports 4% sales growth in Q1, benefiting from the recent AI boom. Food, Beverage & Tobacco takes second spot, helped by Nestle, whilst Energy completes the top three.
Individual movers: STMicroelectronics (+9%, Q1 results topped expectations and Q2 guidance was strong), WH Smith (-14%, suspended guidance), EssilorLuxottica (-3.5%, strong rev. growth, though fell short of expectations).
US equity futures are broadly in the red, continuing the downbeat risk tone seen across Europe; the RTY (-0.7%) underperforms vs peers (NQ/EQ -0.5%). In pre-market trade, Tesla (-2.6%, revenue miss & spending rise), Texas Instruments (+10%, upbeat guidance), IBM (-7.4%, u/c guidance offsets beat). Ahead, US jobless claims, PMI and a slew of earnings.