[MARKET ANALYSIS] European stocks are broadly in the green; Basic Resources weighed on by metals prices; US equity futures underperform as US traders return from holiday

• European bourses (STOXX 600 +0.2%) initially started on the backfoot but have reversed earlier losses and are now trading mostly in the green. The SMI (+0.7%) leads, while the AEX (+0.2%) lags, weighted on by losses in ASML (-1.3%). FTSE 100 (+0.5%) sits near the top of the pile, aided by softer-than-expected jobs and wages data, increasing the likelihood of BoE rate cuts.
• Sectors are mostly firmer. Utilities (+1.3%) and Insurance (+1.2%) reside near the top, with insurance names helped by a broker upgrade for AXA (+1.8%, initiated with outperform at RBC) and a sector perform rating for Allianz. Basic Resources (-1.4%) is the clear underperformer, weighed on by metal prices (XAU -1.4%, XAG -2.4%).
• As mentioned, miners have been heavily affected this morning by the drop in metal prices. Despite a positive earnings report, highlighted by the beat in sales estimates, Antofagasta (-3.8%) sits bottom of the mining pile. In contrast, BHP (+1.5%) are higher following their earnings report, which featured metrics at the upper end of analyst expectations, aided by stronger copper production and a record metals rally serving to offset weaker iron ore performance. Elsewhere, InterContinental Hotels (+0.2%) released earnings, which were broadly positive despite a tough US market, and announced a USD 100mln buyback programme; note, IHG has trimmed initial gains, but does remain firmer on the day.
• US equity futures (ES/RTY -0.2%, NQ -0.5%) are entirely in the red as US traders get set to re-enter from their holiday break

European equities have rebounded from initial losses, buoyed by a strong performance in utilities and insurance, while the basic resources sector struggles due to declining metal prices. Although US futures are underperforming as traders return from the holiday, positive earnings from companies like BHP suggest a mixed sentiment as markets recalibrate post-holiday market dynamics. This divergence may indicate caution ahead for US markets, especially with potential implications on risk appetite and sector rotation.