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European Equities: A Week in Review – 20/11/20

The Majors

It was another bullish week for the European majors in the week ending 20th November.

The CAC40 rallied by 2.15% to lead the way, with the DAX30 and EuroStoxx 600 gaining 0.46% and 1.15% respectively.

COVID-19 vaccine updates drove demand for riskier assets in the week. Both Moderna Inc. and Pfizer Inc. delivered phase 3 clinical trial results that impressed the markets. At the end of the week, Pfizer Inc. and BioNTech submitted a EUA to the FDA, which was also positive for the majors.

The numbers came off the back of Pfizer Inc.’s first set of results from the week prior.

From the U.S, there was also news that stimulus talks are set to resume that provided further support at the end of the week.

For the week, the upside was tempered, however, with a continued spike in new COVID-19 cases weighing.

Concerns over the possibility of further lockdown measures to curb the spread pinned the majors back late in the week.

The Stats

Finalized October inflation figures for Italy and the Eurozone provided little direction in the week.

The markets are expecting an ECB move next month, which muted the impact of the numbers.

At the end of the week, wholesale inflation figures from Germany also had a muted impact.

With the COVID-19 2nd wave hitting the Eurozone, the Eurozone’s consumer confidence figure did draw some attention, however.

The Flash Consumer Confidence Indicator fell from -15.5 to -17.6, which marginally better than a forecasted -17.7.

Impact on the majors was limited, with the markets expecting consumer confidence to be on the slide.

From the U.S

In the 1st half of the week, October retail sales and industrial production figures were in focus.

The stats were skewed to the negative, with retail sales disappointing at the turn of the quarter.

While industrial production figures were positive, consumer spending remains the key driver for the U.S economy. Continued failure to deliver on a COVID-19 stimulus package is likely to deliver weaker numbers ahead on the spending front.

In the 2nd half of the week, the Philly FED Manufacturing and weekly jobless claims figures also disappointed.

Initial jobless claims rose from 711k to 742k in the week ending 13th November. The Philly FED Manufacturing Index fell from 32.3 to 26.3.

Other stats in the week had a muted impact on the Dollar and broader market risk sentiment, however.

The Market Movers

From the DAX, it was another bullish week for the auto sector. Daimler rallied by 5.67%, with BMW and Continental gaining 4.43% and 3.28% respectively. Volkswagen saw a more modest 0.77% rise.

It was a mixed week for the banking sector, however. Commerzbank rose by 0.75%, while Deutsche Bank ending the week down by 0.44%.

From the CAC, it was another bullish week for the banks. BNP Paribas rose by 2.58%, with Credit Agricole and Soc Gen rallying by 3.71% and by 3.39% respectively.

The French auto sector found yet more support, with Peugeot and Renault ending the week up by 5.96% and by 6.31% respectively.

Air France-KLM followed last week’s 26.67% surge with an 8.5% rally, while Airbus rose by a more modest 3.60%.

On the VIX Index

It was back into the green for the VIX, ending a run of 2consecutive weekly declines. In the week ending 20th November, the VIX rose by 2.60%. Partially reversing a 7.08% fall from the previous week, the VIX ended the week at 23.70.

A pullback in the S&P500 and the Dow came in the week as the markets continued to respond to the surge in new COVID-19 cases.

The downside was relatively muted, however, with support coming from progress towards a COVID-19 vaccine. There was also news of lawmakers planning on resuming talks to deliver a COVID-19 stimulus package, which also cushioned the fall.

Adding to the downside late in the week was a dispute between the U.S Treasury and the FED over emergency funding.

For the week, the NASDAQ rose by 0.22%, while the Dow and S&P500 saw losses of 0.73% and 0.77% respectively.

VIX 211120 Weekly Chart

The Week Ahead

It’s a busy week ahead on the Eurozone economic calendar.

November prelim private sector PMIs for France, Germany, and the Eurozone gets things going at the start of the week.

Expect plenty of sensitivity to the service sector figures in particular.

On Tuesday, finalized 3rd quarter GDP and November Ifo business climate figures are out from Germany. Expect the headline IFO Business Climate Index figure to be the key driver.

On Thursday, German consumer sentiment figures for December are due out ahead of a relatively busy end to the week.

October consumer spending and finalized 3rd quarter GDP numbers from France wrap things up.

From elsewhere, private sector PMIs, consumer confidence, durable goods, and weekly jobless claims figures from the U.S will also influence.

On the monetary policy front, the ECB and FOMC meeting minutes will also provide direction late in the week.

Away from the economic calendar, COVID-19 news updates and any updates from Capitol Hill on a stimulus package will also influence.