List of stock market indices

European Equities: Geopolitical Risk to Influence the Majors

Economic Calendar:

Wednesday, 24th July

  • German PPI m/m(Jun)
  • French Manufacturing PMI (Jul) Prelim
  • French Services PMI (Jul) Prelim
  • German Manufacturing PMI (Jul) Prelim
  • German Services PMI (Jul) Prelim
  • Eurozone Manufacturing PMI (Jul) Prelim
  • Eurozone Markit Composite PMI (Jul) Prelim
  • Eurozone Services PMI (Jul) Prelim

Thursday, 25th July

  • German IFO Business Expectations, Current Assessment, and Climate
  • IndexesFrench Jobseekers Total
  • ECB Monetary Policy Statement (Jul) and Monetary Policy Decision
  • ECB Press Conference

The Majors

The European majors ended the week on a high note, with the DAX leading the way on the day, rising by 0.26%. For the EuroStoxx600 and CAC40, the gains were more modest. The pair rose by 0.12% and by 0.03% respectively.

In spite of Friday’s gains, the DAX and CAC40 ended the week in the red. The DAX ended the week down by 0.51%, while the CAC40 fell by 0.37%. Bucking the trend on the week was the EuroStoxx600, which rose by 0.06%.

The European markets closed ahead of news of Iran seizing a UK tanker in the Gulf, which pinned back the U.S majors on the day. Support on the day came from expectations of a FED rate cut at the end of the month.

Sentiment towards FED monetary policy was mixed, however. Late on Thursday, FOMC member Williams said that the FED should act quickly as the economy slows. A member of the NY FED, however, stated that Williams’ comments were unrelated to FED monetary policy, reversing the impact of Williams’ comments.

The Stats

It was a quieter day on the economic calendar on Friday, with no material stats out of the Eurozone on Friday.

The lack of stats left the European majors exposed to economic data and corporate earnings out of the U.S on the day.

On the data front, the Michigan Consumer Expectations Index rose from 89.3 to 90.1, coming in ahead of a forecasted 89.8. The Michigan Consumer Sentiment Index also improved, rising from 98.2 to 98.4, according to July prelim figures.

The Market Movers

From the DAX, the auto sector was mixed at the end of the week. Continental led the way, rallying by 2.46%, with BMW rising by 0.27%. Daimler and Volkswagen saw red on the day, however, with falls of 0.10% and 0.22% respectively.

It was a bearish end to the week for the banks, however. Deutsche Bank fell by 1.74%, with Commerzbank ending the day down by 2.34%.

From the CAC, BNP Paribas fell by 0.89%, with Soc Gen sliding by 1.52%. Credit Agricole ended the day flat following a 1.6% slide on Thursday. Renault also struggled, falling by 0.62% on Friday.

The Day Ahead

There are no material stats due out of the Eurozone to provide direction at the start of the week. A lack of stats will leave the majors exposed to geopolitical risk throughout the day.

The markets will need to consider Brexit, rising tensions in the Middle East and any updates on trade talks.

At the time of writing, the DAX futures was up by 8.5 points, while the Dow Mini was up by 13 points.