The high growth companies that could re-rate in a recession

STOXX 600 up 0.6%, techs among big gainers

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British SME software maker Sage hits 23-year high

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Europe stocks head for solid gains in June

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THE HIGH GROWTH COMPANIES THAT COULD RE-RATE IN A RECESSION (0947 GMT)

The re-rating of high quality and high growth names could be on the horizon in Europe, according to BofA quant strategist Paulina Strzelinska.

While BofA prefers value over growth during the recession phase - given an increased focus on dividend returns - the expected decline in the bond yield nevertheless means high quality names could be positively impacted.

And a lot of those high quality names are also high growth, writes Strzelinska.

BofA provides a list of such names. The list spans companies that are part of the STOXX 600 and have a market cap of at least 500 million euros, and score above 60 on BofA's quality, growth and 'recession' rankings.

The likes of Danish healthcare company Novo Nordisk , French luxury giant Hermes and UK defence company BAE Systems are at the top of the list.

They are followed by France's L'Oreal, Dutch IT company Wolters Kluwer and Italy's Ferrari.

(Lucy Raitano)

TECH TAKES CHARGE IN EUROPE AS NVIDIA RETREATS (0832 GMT)

The STOXX 600 is off to a perky start today, up around 0.6% as it heads for a 0.8% gain this month. Tech stocks, led by Dutch chipmaker ASML and Germany's SAP are among the top weighted gainers on the broader index.

2023's trillion-dollar tech darling Nvidia is down nearly 4% in the premarket after a report in the Wall Street Journal on Tuesday that the U.S. is considering new restrictions on exports of AI chips to China. Nvidia, along with rivals Micron and AMD, are caught in the crossfire between China and Joe Biden's administration right now. Might this mean an edge for their competitors on the other side of the pond?

Amsterdam's AEX is outperforming the broader market, with a gain of nearly 0.7%, as is Frankfurt's DAX, with a gain of 0.8%, thanks to SAP. London's FTSE is around the middle of the pack, with a 0.4% rise on the day, thanks to Astrazeneca, up 0.6% and Sage Group, up 4.1% at a 23-year high after JPMorgan upgraded the software maker, which supplies small and medium-sized companies.

Here's your opening snapshot:

(Amanda Cooper)

EUROPEAN FUTURES RISE (0644 GMT)

European shares were set to open higher on Wednesday taking strength from a positive close on Wall Street following surprisingly upbeat data that showed the U.S. economy is weathering rising rates better than initially thought.

EuroSTOXX50 and FTSE futures were up 0.5% and 0.3% respectively, while in Asia, shares stalled amid lingering concerns over rising interest rates.

Policy makers from Fed Chair Jerome Powell to ECB's Christine Lagarde will have their chance to speak again later in the day at a central banking forum in Portugal.

With little corporate newsflow out there, chipmakers are likely to grab the attention after a WSJ report said Washington was considering new curbs on exports of artificial intelligence chips to China. China's CSI AI index was down over 3% and so Nvidia shares fell by the same magnitude in Frankfurt.

Still on AI, the CEO of business software maker SAP said he saw huge growth potential in generative AI technology.

In M&A, chemicals group Arkema announced a proposed acquisition of a majority stake in South Korean company PI Advanced Materials for 728 million euros ($796.50 million).

BEIJING LEAVES MARKET GUESSING ON YUAN (0558 GMT)

The People's Bank of China seems to like being enigmatic, throwing the market a curve ball as it fixed the yuan weaker against the dollar than many expected. Dealers had thought the firmer fix on Tuesday meant Beijing was signalling it wanted the yuan's fall to slow, or even stop. Now, not so much.

The result has been a drop in the offshore yuan back toward Monday's trough, while the market waits for some clarity on Beijing's intentions.

Sentiment was also not helped by a Wall Street Journal report that Washington is considering new restrictions on exports of artificial intelligence chips to China, which shaved 3% off Nvidia's share price.

The rest of Asia would certainly appreciate a steadier yuan since its fall puts pressure on their currencies to depreciate, to keep their exports competitive with China. Malaysia is set to be the latest to intervene to support its currency, and Japan sounds closer to pulling the trigger every day.

"We are closely watching currency moves with a strong sense of urgency," Japan's top currency diplomat warned, which is about as close as the Ministry of Finance gets to an outright ultimatum.

The last time the MOF intervened, in 2022, they sold a thumping $43 billion of dollars in just two days, so the threat is not to be sniffed at. It was enough to stall the dollar at 144.0 yen, while the euro eased off a 15-year high on the yen.

Still, the market is clearly betting the yen will keep falling unless, and until, the Bank of Japan backs away from its yield curve policy. Bank of Japan chief Ueda speaks later today at the European Central Bank's Sintra jamboree, and will have to justify his super-easy policy while every other central bank on the panel is busy tightening.

It will also be interesting to see if ECB chief Lagarde expands on the idea that firms should stop padding their margins by raising prices - a variation of the argument that this is a profit-price spiral rather than a wage-price spiral.

Once this would have been scorned as a radical view of the far-left fringe, but it's increasingly gaining mainstream acceptance. An OECD study earlier this month argued that profits were a major driver of inflation, especially in the energy and agriculture sectors.

It's tempting to think that, if wages are not the culprit, then central banks might not have to push unemployment up as much as in the past to curb inflation. Yet, Lagarde's conclusion was that policy would need to be tighter for longer so as to hurt demand enough that firms restrained their hunger for profits. That's still a recipe for higher unemployment.

On the bright side, Australian data out Wednesday did show CPI inflation slowing by more than expected to a 13-month low, and that followed a sharp slowdown in Canadian inflation. So maybe there's hope yet.

Key developments that could influence markets on Wednesday:

- ECB President Christine Lagarde, Fed's Jerome Powell, BOJ Governor Kazuo Ueda and Bank of England Governor Andrew Bailey take part in ECB panel in Sintra, Portugal, 1230 GMT

- U.S. data on wholesale and retail inventories, advance goods trade balance

(Wayne Cole)