[MARKET ANALYSIS] European equities subdued, PUIG SM surges on EL merger; US equity futures pull back from Monday's highs

European bourses trade mixed, with the AEX outperforming its peers while the FTSE MIB lags. The market reaction to the Flash PMIs were muted. However, the commentary within the PMIs gave the first glimpse at the effects of the Iranian war on businesses sentiment and the economy. The EZ release suggested the "eurozone GDP growth slowing to a quarterly rate of just below 0.1% in March with the forward-looking indicators pointing to a heightened risk of a downturn the coming months." On the inflation front, "The survey’s price gauge is meanwhile indicative of consumer price inflation accelerating close to 3%, with cost pressure likely to add still further to selling price inflation in the coming months." The data overall underscored a stagflation environment emanating from the war.
Sectors hint to a positive bias. Energy tops the sector pile, closely followed by Chemicals following broker upgrades for BASF and Brenntag. At the bottom of the pile lies Banks and Basic Resources.
Other key movers include Puig, SAP and Kingfisher. For Puig, Estee Lauder confirmed that they are in merger talks that would create a USD 40bln beauty giant. For the UK retail company, Kingfisher reported FY revenue that slightly beat estimates and commenced its new GBP 300mln share buyback programme. Finally, for SAP, the Co. was downgraded to neutral from outperform at JPMorgan.
US equity futures are muted after a volatile start of the week. Despite the positive announcement of US-Iran talks by President Trump, the VIX still remains at elevated levels above its longer-term average, while the 20-, 200-SMA bearish cross for the NQ has been formed and the ES failed to convincingly close above 6,635 on Monday.