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European Equities: Economic Data, COVID-19, and Brexit in Focus

Economic Calendar:

Monday, 16th November

Italian CPI (MoM) (Oct) Final

ECB President Lagarde Speaks

Tuesday, 17th November

ECB President Lagarde Speaks

Wednesday, 18th November

Eurozone Core CPI (YoY) (Oct) Final

Eurozone CPI (YoY) (Oct) Final

Eurozone CPI (MoM) (Oct) Final

Thursday, 19th November

ECB President Lagarde Speaks

Friday, 20th November

German PPI (MoM) (Oct)

Eurozone Consumer Confidence Flash

The Majors

It was a relatively bullish end to a bullish week for the European majors on Friday. The CAC40 rose by 0.33% to lead the way, with the DAX30 and EuroStoxx600 seeing modest gains of 0.18% and 0.01% respectively.

Concerns over the economic outlook amidst the 2nd wave of the COVID-19 pandemic pegged back the majors.

The minor gains came off the back of a bearish Thursday as the number of new COVID-19 cases continued to surge.

While the good news from the week was of solid progress towards an effective vaccine, there’s likely to be a long way to go before it’s widely available.

With Europe and the U.S entering the winter months, the damage to the economy will likely be more significant than in the 2nd quarter. Progress towards an effective vaccine won’t be enough to prevent another meltdown.

The Stats

It was a relatively busy day on the Eurozone economic calendar. Key stats included the Eurozone’s 2nd estimate GDP numbers for the 3rd quarter and September trade figures. Finalized October inflation figures for France and Spain were also in focus.

3rd quarter GDP numbers were the disappointment of the day, with downward revisions to both the annual and quarterly numbers.

In the 3rd quarter, the economy expanded by 12.6%, revised down from a 1st estimate 12.7%. Year-on-year, the economy contracted by 4.4%, revised from down a 1st estimate 4.3%.

Upward revisions to inflation figures and a sharp rebound in the Eurozone’s trade surplus had a muted impact on the day.

In September, the Eurozone’s trade surplus widened from €14.7bn to €24.8bn, which was largely expected following member state figures.

From the U.S

Economic data included October wholesale inflation and consumer sentiment figures.

The stats were skewed to the negative, with wholesale inflationary pressures easing and consumer sentiment sliding.

In November, the Michigan Consumer Expectations index fell from 81.8 to 77.0, with concerns over COVID-19 and the economic outlook weighing.

The disappointing numbers were not enough to send the European majors into the red, however.

The Market Movers

For the DAX: It was a bullish day for the auto sector on Friday. Daimler rallied by 2.46% to lead the way, with BMW and Volkswagen rising by 0.91% and by 1.28% respectively. Continental saw a more modest 0.76% gain on the day.

It was also a bullish day for the banks. Deutsche Bank rose by 2.63%, with Commerzbank rallying by 3.44%.

From the CAC, it was a relatively bullish day for the banks, with BNP Paribas and Credit Agricole rose by 0.94% and by 1.01% respectively. Soc Gen rallied by 2.30%, however, to lead the way.

It was a bullish day for the French auto sector. Peugeot rose by 1.41%, with Renault rallying by 5.74%.

Air France-KLM fell by 1.12%, while Airbus SE rose by 1.12%.

On the VIX Index

It was back into the red for the VIX on Friday, marking a 9th day in the red from twelve. Reversing an 8.10% gain from Thursday, the VIX fell by 8.88% to end the day at 23.10.

On Friday, the Dow and the S&P500 rallied by 1.37% and by 1.36% respectively, with the NASDAQ gaining 1.02%.

VIX 16/11/20 Daily Chart

The Day Ahead

It’s another relatively quiet day ahead on the Eurozone economic calendar. Key stats include finalized October inflation figures from Italy.

The numbers are unlikely to have an impact on the majors, however, with the ECB expected to ease policy further next month.

On the monetary policy front, ECB President Lagarde is due to speak later in the day. Lagarde could provide further details on what lies ahead following last week’s assurances.

From the U.S, NY Empire State Manufacturing figures for November will likely be brushed aside barring particularly dire numbers.

Earlier in the day, however, economic data from China will set the tone. October industrial production, fixed-asset investment, retail sales, and unemployment figures are due out.

Away from the economic calendar, expect COVID-19 and Brexit news updates to influence in the early part of the day. From Capitol Hill, any progress towards a stimulus package would deliver support.

The Futures

In the futures markets, at the time of writing, the Dow was up by 185 points.

For a look at all of today’s economic events, check out our economic calendar.