European equities have witnessed a sell-off today, with the Euro Stoxx 50 down 40 basis points. Within themes, Cyclicals are outperforming Defensives by around 50 basis points, and Momentum is up 50 basis points on the back of increased defense spending, with the UBS European Defence spend basket [UBXESPND] gaining 2.8%. However, there are several factors at play that suggest an agreement in the Russia/Ukraine conflict is still far away, including reports of strikes near the Poland/Hungary border and comments from Russian Minister of Foreign Affairs Sergey Lavrov regarding Russia’s demand for veto power in any security guarantees. Additionally, the Ukraine Ceasefire basket is trading 60 basis points lower. Luxury stocks are underperforming, with the UBS European Luxury basket [UBXELUX] down 1.1% after Wednesday’s strength, but still up 1.8% this week. Miners are performing well overall, although steel names are underperforming (ArcelorMittal down 1.8%, SSAB down 1.3%) following a less severe than expected production cut ahead of China’s military parade. Single stocks such as CTS Eventim shares are down 17.5% and weighing on the Media sector (SXMP down 1.9%) after reporting a significant EBITDA miss for 2Q, while WH Smith is now 40% down after cutting its trading profit outlook due to an accounting error in its North American business. The Desk is observing balanced flow overall, with long only investors slightly better to buy and hedge funds slightly better to sell. The busiest sector is Industrials, followed by Financials, where the Desk is two-way better to buy. The Desk is also better to buy in Health Care and Consumer Staples, and better for sale in Energy and Consumer Discretionary.