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, and Ifo Current Conditions
- ECB Monetary Policy Meeting Minutes
The European majors managed to claw back some of Monday’s losses on Tuesday. Leading the way on the day was the DAX, which gained 0.85%.
For the CAC and EuroStoxx600, the gains were more modest. The CAC ended the day up 0.5%, with the EuroStoxx600 up by 0.54%.
Economic data was on the lighter side through the day, with the Eurozone’s May flash Consumer Confidence figures the only stats for the markets to consider.
According to the EU Commission report, the Euro area consumer confidence indicator increased by 0.8 points to -6.5. Recovering from a fall from -7.2 to -7.9 in April, the indicator continued to sit well above the long-run average of -10.7.
With economic data out of the U.S limited to housing sector figures, there was little on the economic calendar to weigh on risk sentiment.
While the consumer confidence numbers provided support, upside from the day came from easing tensions over Huawei.
Following a string of U.S firms announcing a cutting of ties with Huawei on Monday, Google reversed its decision to cut ties following a decision by the U.S government to soften trade restrictions on the Chinese Telco.
Huawei’s troubles are not over, but the latest move by the U.S government could prise the door open to resume trade talks.
The Market Movers
The DAX managed to avoid negative territory for the first time in 3-days. Wirecard and ThyssenKrupp led the way, with gains of 5.84% and 4.61% respectively.
In spite of the softer stance on Huawei and a recovery in the tech sector, Infineon Technologies AG (“IFX”) only managed to gain 1.6% on Tuesday, partially reversing a 4.74% slide on Monday.
While Googe has reversed its decision, the U.S government stance on Huawei buying new software and components remains, which is likely to maintain pressure on the broader sector near-term.
Elsewhere, it was a mixed session for bank stocks in spite of the improvement in consumer confidence. Deutsche Bank and BNP Paribas gained 1.44% and 0.83% respectively. Commerzbank and UniCredit S.p.A fell by 0.14% and by 0.31% respectively.
Across the auto sector, Continental and Daimler gained 1.25% and 0.94% respectively, supported by the latest moves in the U.S – China trade war.
BWM and Volkswagen struggled through the day, however. BMW rose by just 0.02%, while Volkswagen fell by 0.08% on the day.
The Day Ahead
It’s a particularly quiet day ahead on the economic calendar. There are no material stats due out of the Eurozone today.
While there are no stats due for release, ECB President Draghi will speak later this morning. Any policy chatter will impact the EUR, but will unlikely have a material impact on the major equities, as the focus continues to hinge on the U.S – China trade war.
We can expect the majors to be sensitive to the news wires through the session, especially with a lack of stats to provide a distraction.
As U.S President Trump looks to offset the negative effects of the ongoing trade war, China’s more aggressive stance may require more restraint from the U.S President, which would be market positive.
At the time of writing, the DAX30 was up by 10.0 points. The U.S futures were also positive, with the Dow Mini was up by 5 points.