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[MARKET ANALYSIS] European equities are broadly firmer; Basic Resource names lag on the back of tumbling metal prices

European equities showed resilience amid gains in key sectors, particularly banks and technology, largely spurred by favorable news regarding Kevin Warsh as the likely next Fed Chair, which supports global yields.

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[MARKET ANALYSIS] European equities are broadly firmer; Basic Resource names lag on the back of tumbling metal prices

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  • European equities have opened mostly on a firmer footing. Strength comes amid a rebound in the DAX 40 (+0.7%) after yesterday's SAP-induced pressure, a narrative added to by strong Adidas (+5.2%) earnings.
  • European sectors are mostly in the green, leading are Banks (+1.3%), Travel & Leisure (+1.0%) and Technology (+0.8%). Banks have been underpinned by news that Kevin Warsh is likely to be the next Fed Chair, which has bolstered global yields. Furthermore, the sector benefits from gains in Caixabank (+4.0%) after the Co. announced that it expects NII to grow in 2026. For Tech, gains in Hexagon (+4.5%) after the Co. reported strong Q4 earnings. Though it is also worth highlighting that Tech is likely benefiting from a pairing of Thursday's pressure in the sector. At the bottom of sectors are Basic Resource (-3.4%), Energy (-0.6%) and Real Estate (-0.1%). Basic Resources has been weighed down by pressure in metal prices, whilst energy has been pinned down by crude as the complex gives back gains.
  • Movers this morning include Lloyds (+2.0%), with the UK bank announcing a share buyback program of up to GBP 1.5bln, further underpinning the banking sector. On the downside, a broker downgrade for Antofagasta (-6.9%) adds to the bias from base metals.
  • In stark contrast to their European counterparts, US equity futures are lower across the board; ES -0.9%, NQ -1.1%. Unlike the strength seen in the USD and yields after the Warsh news, equities have taken a dive. ING noted that Warsh has historically hawkish views, especially when compared to other top picks; see Fixed/FX for more details.
  • Looking ahead in the US, speakers include Miran, Musalem, Bowman and Waller. M/M PPI data is also set to be released. On an equity-specific level, we expect earnings from SoFi, American Express, Verizon, Chevron, Exxon and Colgate. 
Context

However, basic resource stocks lagged significantly due to declining metal prices, indicating a sector-specific weakness that could influence broader market sentiment, especially if it persists or worsens.

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