Wednesday, 15th May
- German GDP (QoQ) (Q1)
- German GDP (YoY) (Q1)
- French CPI (MoM) (Apr) Final
- French HICP (MoM) (Apr) Final
- Eurozone GDP (YoY) (Q1) 2nd Estimate
- Eurozone GDP (QoQ) (Q1) 2nd Estimate
Thursday, 16th May
- Italian CPI (MoM) (Apr) Final
- Eurozone Trade Balance (Mar)
Friday, 17th May
- Eurozone Core CPI (YoY) (Apr) Final
- Eurozone CPI (YoY) (Apr) Final
- Eurozone CPI (MoM) (Apr) Final
The majors were on the rebound on Tuesday. Leading the way on the day was the CAC40, which rallied by 1.5% to move into the green for the week.
Both the EuroStoxx600 and DAX saw more modest gains of 1.01% and 0.97% respectively, the pair unable to wipe out Monday’s losses.
Following a particularly dire day on Monday, where the markets balked at the prospect of an extended trade war, it was optimism all over again on Tuesday.
Trump’s love for the U.S equity markets was evidenced with his assurances that a U.S – China trade deal would be reached once the time is right. There was also a confirmation that Trump would be meeting with China Premier Xi at the next Summit.
It was almost a U-turn by a U.S President who had, just a day prior, warned Beijing not to retaliate to the latest tariff hike.
On the data front, things were a little more gloomy.
Economic sentiment in both the Eurozone and Germany disappointed. Germany’s ZEW Economic Sentiment Index fell from +3.1 to -2.1 in May. Forecasts were for an increase from +3.1 to +5.1. The slide came in spite of improved sentiment towards the current environment. The ZEW Current Conditions Index rose from +5.5 to +8.2.
Things were not much better for the Eurozone. The Eurozone’s ZEW Economic Sentiment Index fell from +4.5 to -1.6, which was worse than a forecasted rise to +5.0.
Adding towards the negative bias was a 0.3% fall in industrial production in March. While in line with forecasts, an unexpected pickup in German industrial production had raised hopes of better numbers.
According to figures released by Eurostat, production of non-durable consumer goods (-1%) and energy (-0.3%) weighed on the headline number. By member state, Malta (-3.7%) and Greece (-2.7%) saw the largest declines in production. Lithuania (+3.5%) and Slovakia (+1.2%) reported the largest increases in production.
Other notable contributions to the decline came from a 0.9% fall in French production and a 0.9% fall in Italy.
The Market Moves
On the DAX, Wirecard AG (“WDI”) was the best performer, rallying by 4.22%. Adidas found support from the shift in sentiment towards U.S – China trade talks, rising by 1.98%.
Hopes of an eventual agreement eased concerns over an economic meltdown, supporting bank stocks. Commerzbank and Deutsche Bank gained 4.34% and 1.08% respectively. BNP Paribas ended the day with a 1.56% gain, while Credit Agricole (“ACA”) gained 0.93% ahead of its quarterly earnings announcement later today.
The auto sector also found support. BMW (0.28%), Continental (0.50%), Daimler (1.68%) and Volkswagen (0.73%) made gains on the DAX.
On the earnings front, Allianz delivered strong results leading to a 1.91% gain on the day.
The Day Ahead
After a busier day on the economic calendar on Tuesday, we can expect the majors to find more direction from today’s stats.
Germany and the Eurozone’s 1st quarter GDP numbers are due out this morning. The focus will be on Germany’s 1st estimate numbers. Anything weaker than a forecasted 0.4% quarter-on-quarter rise will likely weigh early in the session.
While the Eurozone GDP numbers are 2nd estimates, any downward revision will also be negative.
Off less influence on the day will be French finalized April inflation figures.
From elsewhere, China’s April industrial production and retail sales figures were released earlier in the day, setting the tone…
Industrial production rose by just 5.4% year-on-year, with retail sales rising by 7.2%. The figures fell well short of forecasts, weighing on risk appetite early on in the day.
Looking ahead to the U.S session, U.S retail sales and industrial production figures will also likely have an influence on the day.
Outside of the stats, expect the U.S – China trade war chatter to continue to provide direction. While the markets have been focused on whether a deal will materialize, some attention may need to be given to the effects of the ongoing trade war. It’s been more than a few months and, if China’s stats are anything to go by, there could be more pain to come…
At the time of writing, the DAX30 was up by 11 points. The U.S futures were also pointing towards a positive open. The Dow Mini was up by 13 points.