[MARKET ANALYSIS] European bourses move higher, HSBC -5% post-earnings, weighing on the Banking sector

European bourses opened mixed, but now display a clear positive bias alongside a move lower in crude prices this morning. The Euro Stoxx 50 (+0.9%) is the top performing index, whilst the FTSE 100 (-1%) is the clear laggard, as it returns from holiday and digests the recent US-Iran escalation. The SMI (+0.5%) is trading firmer, albeit to a lesser extent vs peers – traders will digest today’s inflation report which showed the Y/Y figure double amidst the Iran conflict.
European sectors hold a positive bias this morning. Construction tops the pile, buoyed by post-earning strength in Geberit (+1.7%, robust results and sees strong demand across several markets). Chemicals and Financial Services complete the top three. To the downside reside Basic Resources and then Banks. The latter has been dragged down by losses in HSBC (-5%), after the Co. reported a Q1 profit miss and estimates higher than expected credit losses. Gains in UniCredit (+3%) are failing to lift the sector, with the Italian bank reporting strong profit and robust investment income.
Other key movers: Vodafone (+0.5%, agrees to buy CK Hutchinson’s stake in VodafoneThree for GBP 4.3bln), Fresenius Medical Care (-5%, weak rev. citing FX hit), Rheinmetall (+2%, Q1 rev. light, but reaffirmed guidance), Hugo Boss (+5%, strong headline metrics and returns to growth in China).
US equity futures are in the green this morning, and attempting to pare back some of the modest weakness seen in the prior session. On the data front today, ISM Services PMI is seen easing to 53.7 (from 54.0) and JOLTs job openings are expected at 6.87mln (prev. 6.882mln), with attention on the quits rate (prev. 1.9%). Fed speak today includes Barr and Bowman. As for key movers today, Palantir (-2%, stronger results and lifted guidance, but US commercial revenue fell short of expectations). Elsewhere, ON Semiconductor (-4.7%, strong results, though missed on lofty expectations).