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European Equities: Futures Point to a Rebound. Holding on is a Different Story…

Economic Calendar:

Tuesday, 21st May

  • Eurozone Consumer Confidence Flash

Wednesday, 22nd May

  • ECB President Draghi Speaks

Friday, 24th May

  • German GDP q/q (Q1) Final
  • German GDP y/y (Q1) Final
  • French Manufacturing PMI (May) Prelim
  • French Services PMI (May) Prelim
  • German Manufacturing PMI (May) Prelim
  • German Services PMI (May) Prelim
  • Eurozone Manufacturing PMI (May) Prelim
  • Eurozone Markit Composite PMI (May) Prelim
  • Eurozone Services PMI (May) Prelim
  • German Ifo Business Climate
  • Ifo Expectations (German IFO)
  • Current Conditions (German IFO)
  • ECB Monetary Policy Meeting Minutes

The Majors

The European majors kicked off the week on the back foot. Leading the way down was the DAX30, which slid by 1.61%, reversing last week’s 1.49% gain with interest.

Close behind were the CAC40 and EuroStoxx600, which fell by 1.46% and by 1.06% respectively on the day.

The Stats

Economic data was on the lighter side through the day, with German wholesale inflation figures the only stats for the markets to consider.

According to Destatis, the producer price index increased by 0.5% in April, coming in well ahead of a forecasted 0.3% rise. Producer prices had fallen by 0.1% in March. Year-on-year, the index of producer prices rose by 2.5%, up from 2.4% in March.

The figures failed to influence, with the focus remaining on the U.S – China trade war and recent escalation following Trump’s blacklisting of Huawei.

The Market Movers

The DAX failed to touch green intraday for a 2nd consecutive day, with autos and bank stocks seeing heavy losses on the day.

Daimler slid by 2.41%, with BMW and Continental down by 1.64% and 1.62% respectively. Volkswagen fared slightly better, with a 1.15% loss. Negative sentiment towards the ongoing U.S – China trade war weighing.

From the banking sector, Deutsche Bank and Commerzbank slid by 2.25% and 4.24% respectively.

Elsewhere, BNP Paribas fell by 1.65%, with UniCredit S.p.A losing 2.15% on the day.

While banks and auto stocks struggled, tech stocks saw the heaviest losses as the markets continued to respond to Trump’s moves against Huawei.

On the DAX, Infineon Technologies AG (“IFX”) was the worse performer on the day, sliding by 4.74%, following news that the company had suspended shipments to Huawei.

The Day Ahead

It’s another quiet day ahead on the economic data front. The Eurozone’s consumer confidence figures are due out later this afternoon.

The majors and the EUR will likely respond to any further deterioration in consumer confidence later today. With the ongoing U.S – China trade war impacting the global economy and demand from the Eurozone, domestic consumption will remain a key contributor to the bloc’s economy. Weak consumer confidence figures will temper any hopes of support from consumption.

While we will expect consumer confidence figures to influence, trade war chatter will remain the key driver through the day.

At the time of writing, the DAX30 was up by 71.5 points. The U.S futures were also positive, with the Dow Mini was up by 110 points.