[MARKET ANALYSIS] European bourses tilt lower as geopols persist, while ASML and Richemont report stellar earnings

European bourses (STOXX 600 U/C) are softer across the board, with the exception to the AEX following ASML (+0.8%) earnings (see more below). Despite the lack of clear drivers for the underperformance, geopolitics persist, with US President Trump announcing that the US will conduct strikes again on Wednesday and threatened to hit power plants and bridges unless Iran starts to negotiate. Analysts highlight the negative 5-day rolling correlation between the STOXX 600 and Brent, suggesting that the renewed tensions will weigh on European equities.
Sectors are broadly negative. Consumer Products & Services (+1.9%) top the sector pile, as positive Richemont earnings lift other luxury names, while Tech (+1.1%) also gains. To the downside lie Optimised Personal Care (-0.9%), Chemicals (-1.0%) and Telecoms (-0.9%).
The highly anticipated ASML earnings did not disappoint. Top and bottom line figures beat estimates while raising its FY revenue guidance to EUR 43-45bln (exp. 39.4bln, prev. guided 36-40bln). Looking ahead to Q3, ASML projects sales of between EUR 11-12bln, above Jefferies' estimates of EUR 10.34bln. ASML stated that they are considering a 30% boost to EUV output for 2027 and again in 2028. Both Citi and JPMorgan highlighted this as a positive, with JPMorgan projecting it to add over EUR 65 in EPS in 2028. However, Citi points out that the 2027 production figure would amount to around 85 machines, which is below its forecast of between 90-100. Gains were seen as much as 7.4% at the start of trade, but has since pulled back to around 3%.
Richemont (+5.7%) also reported earnings this morning. Its Q1 sales printed at EUR 6.33bln (exp. 5.81bln), while organic growth also beat expectations (+20% vs +11%). Focus was on its jewellery business, in which it recorded growth of 24%. Strength was seen across all regions, led by local demand, with double-digit increases in the Americas, Asia Pacific, Japan and Europe while there was a return to growth in Middle East & Africa. Bernstein analysts say this update should prompt significant upward revisions to FY27 estimates, while Deutsche Bank suggests it should have a positive read-across for the broader luxury sector.
US equity futures are firmer across the board. NQ (+0.5%) is the clear outperformer, helped by the ASML earnings and gains in SK Hynix overnight; however have come off in recent trade (in line with ASML). Banking earnings continue in the US, with Morgan Stanley on the docket. To recap Tuesday's earnings, all banks reported positive top-line metrics, however JPM's FICC revenue missed estimates while WFC's NII fell marginally short.