European Equities: A Week in Review – 25/10/19

The Majors

It was a positive week for the European majors. The DAX30 rose by 2.07% to lead the way, with the EuroStoxx600 and CAC40 up by 1.57% and by 1.52% respectively.

Gains from the week saw the CAC40 and EuroStoxx600 move back into positive territory for the current month. The pair were up by 0.78% and by 1.24% respectively.

In spite of dire economic data out of Germany, the DAX30 led the way, up by 3.75% going into the final week.

Sensitivity towards trade ultimately provided support as the U.S and China make some progress.

For the week, the DAX30 and EuroStoxx600 saw 5 consecutive days in the green to support the gains. The CAC40 had a minor blip on Wednesday before bouncing back.

Geopolitics and corporate earnings provided the much-needed support in the week, with economic data continuing to be skewed to the negative.

The Stats

It was a relatively busy week on the Eurozone economic calendar.

The markets had to wait until Thursday, however, to digest any material data.

October’s private sector PMI numbers on Thursday failed to dim the mood across the broader markets.

Germany’s manufacturing sector continued to struggle, with the PMI rising from 41.7 to 41.9. Service sector activity also struggled, with the PMI easing from 51.4 to 51.2.

For the Eurozone, the manufacturing PMI held steady at 45.7, while the service sector PMI rose from 51.6 to 51.8. A slight uptick in the composite PMI from 50.1 to 50.2 came off the back of a pickup in private sector activity in France.

France’s manufacturing PMI rose from 50.1 to 50.5, with the service sector PMI rising from 51.1 to 52.9.

Things could have been worse and the fact that there was no further decline in the PMIs was positive on the day.

On Friday, German business and consumer confidence numbers pinned the DAX30 back at the end of the week.

The GfK Consumer Climate Index fell from 9.8 to 9.6, while the IFO Business Climate Index held steady at 94.6.

The Market Movers

From the DAX, it was yet another bullish week for the auto sector. Daimler led the way with an 8.8% gain, supported by positive earnings for the 3rd quarter. Continental found strong support on Friday to end the week up by 6.13%. BMW and Volkswagen saw more modest gains of 2.74% and 1.77% respectively. A trend-bucking 1.19% fall on Friday left Volkswagen trailing the pack.

It was also a positive week for the banking sector. Deutsche Bank gained 0.85%, with Commerzbank up by 3.02%.

While positive sentiment towards trade supported the autos, continued concerns over the economic outlook pegged back bank stocks.

From the CAC, the banks also found strong support. Credit Agricole led the way, rising by 3.77%. PNP Paribas and Soc Gen saw more modest gains of 1.49% and 0.69% respectively.

A pickup in private sector activity provided strong support for the banks in the week.

French auto sector also found support While Peugeot rallied by 4.99%, supported by positive earnings for the 3rd quarter. Renault gained just 0.97% following the previous week’s 9.06% slide. Renault’s slide had come off the back of a cut to its 2019 revenue outlook.

On the VIX Index

The VIX Index fell by 11.23% in the week ending 25th October. Following on from an 8.54% decline from the previous week, the VIX ended the week at 12.7.

3 consecutive days in the red, Wednesday through Friday, left the VIX in the red for the week.

While Brexit hit a speedbump in the early part of the week, U.S corporate earnings and positive chatter on trade supported the U.S majors.

On Friday, the S&P struck an all-time high in the session before seeing its 2nd highest historical close.

News hit the wires on Friday that the U.S and China had made progress towards phase 1 of a trade agreement. The positive updates suggested that the 15th December tariffs may be taken off the table.

Whether progress beyond the first phase is possible remains to be seen, however. China will certainly be looking for existing tariffs to be removed and for the U.S attack on China tech companies to cease.

VIX 26/10/19 Weekly Chart

The Week Ahead

It’s a relatively busy week on the Eurozone economic calendar. The markets will need to wait until Wednesday for key stats.

On Wednesday, French 3rd quarter GDP and September consumer spending figures are in focus alongside German unemployment numbers.

On Thursday, German retail sales and the Eurozone’s October inflation and September unemployment rate will also influence.

We would expect member state inflation numbers through the week and Spain’s 3rd quarter GDP numbers to have a muted impact, however.

From elsewhere, it’s a data deluge. Private sector PMIs out of China, consumer confidence, GDP, and nonfarm payroll numbers from the U.S are amongst key stats that will also have an impact.

On the geopolitical front, chatter from Beijing and the U.S on trade requires monitoring as will Brexit news.

There are also corporate earnings to track throughout the week.

From the U.S, Alphabet Inc. (Mon), General Motors (Tues), Apple Inc. (Wed), Facebook Inc. (Wed), Chevron Corp. (Fri), and Exxon Mobil Corp (Fri) are amongst major companies to release earnings in the week ahead.

Out of Europe, Volkswagen (Wed) and Deutsche Bank (Thur) will be in focus.

European Equities: Brexit, Earnings and Stats to Influence

Economic Calendar:

Friday, 25th October

  • GfK German Consumer Climate (Nov)
  • German Business Expectations / Current Assessment / Ifo Business Climate Index (Oct)

The Majors

It was a 4th consecutive day in the green for DAX30 and EuroStoxx600 on Thursday, with the CAC40 reversing a Wednesday pullback.

The EuroStoxx600 led the way, rising by 0.59%, with the DAX30 and CAC40 up by 0.58% and by 0.55% respectively.

Brexit uncertainty continued to pin the majors back as the markets awaited the EU’s decision on the Brexit extension request.

While geopolitics was negative on the day, corporate earnings provided the necessary support.

The Stats

It a particularly busy day on the Eurozone economic calendar on Thursday. Key stats from the Eurozone included prelim October Private sector PMIs for France, Germany and the Eurozone.

According to the Markit surveys,

The French Manufacturing PMI rose from 50.1 to 50.5 in October, according to the prelim survey. Economists had forecast a PMI of 50.0.

Service sector activity also picked up, with the October PMI rising from 51.1 to 52.9, coming in well above a forecast of 51.6.

The pickup in private sector activity led to a rise in the composite from 50.8 to 52.6.

From Germany, the Manufacturing PMI rose by 41.7 to 41.9 in October. Economists had forecast a rise to 42.0. The German Service PMI disappointed, however, with the PMI falling from 51.4 to 51.2.

Supported by a slower rate of decline in the manufacturing sector, the Composite PMI rose from 48.5 to 48.6.

For the Eurozone, the Manufacturing PMI held steady at 45.7, coming up short of a forecast of 46.1, while the Services PMI rose from 51.6 to 51.8. Economists had forecast a rise to 51.9.

The Eurozone Composite PMI rose from 50.1 to 50.2 in October, coming up short of a forecast of 50.3. According to the prelim PMI survey,

  • The flash Eurozone Composite PMI hit a 2-month high.
  • Manufacturing sector output took another hit in October, with service sector growth at its weakest since 2014.
  • Future expectations fell to its most pessimistic since 2013, with job growth at its lowest level since 2014.
  • New orders for both goods and services fell for a 2nd consecutive month.
  • Improved activity across the French private sector prevented a Eurozone contraction.

Outside of the stats, the ECB also delivered its October monetary policy decision. There were no surprises, however, in the wake of last month’s sizeable stimulus package.

From the U.S, Core Durable Goods Orders fell by 3% in September, reversing a 0.3% rise in August. Durable goods orders were also in decline, sliding by 1.1%. In August, durable goods orders had risen by 0.3%.

Private sector PMI activity was also in focus, with October’s prelim private sector PMIs providing direction late in the day.

The U.S Manufacturing PMI rose from 51.1 to 51.5 in October, with the more important Services PMI rising from 50.9 to 51.0.

On the corporate earnings front, Daimler announced an 8% rise in net profit in the 3rd quarter, with U.S tech stock results also supporting the European majors.

The Market Movers

For the DAX: It was another mixed day for the auto sector. Daimler led the way rallying by 3.44%, supported by its earnings results. Volkswagen, wasn’t far behind, with a gain of 1.66%, while BMW rose by just 0.44%. Continental bucked the trend on the day, with a 1.12% loss.

It wasn’t a mixed day for the banks, however, with Commerzbank and Deutsche Bank falling by 1.81% and by 0.85% respectively.

The top performer on the DAX30 was Infineon Tech., which rallied by 4% off the back of U.S tech earnings results on the day.

From the CAC, it was also a bearish day for the banks. BNP Paribas fell by 0.27%, with Credit Agricole down by 0.04%. Soc Gen led the way down, however, with a 1.15% loss. For the autos, it was a mixed day. While Peugeot rose by 0.89%, Renault fell by 0.06%.

Leading the way on the CAC40 was Atos, which rallied by 9.87%. The upside came off the back of news that the CEO is stepping down to become the next EU Commissioner.

On the VIX Index

The VIX saw a 2nd consecutive day in the red on Thursday, falling by 2.14%. Following on from a 3.11% decline on Wednesday, the VIX ended the day at 13.7.

U.S corporate earnings pinned the VIX back in the day, as tech stocks found much-needed support.

VIX 25/10/19 Daily Chart

The Day Ahead

It’s another busy day ahead on the Eurozone economic calendar. Consumer and business confidence figures are due out of Germany later this morning.

We can expect the majors to be particularly sensitive to the numbers on the day.

From the U.S, finalized October consumer sentiment figures will likely have a muted impact on the majors later in the day.

On the corporate earnings front, while there are no marquee names delivering results, expect some influence on the day.

Geopolitical risk will also influence throughout the day, with Brexit and chatter on trade needing consideration.

In the futures market, at the time of writing, the DAX30 down by 19 points, with the Dow down by 4 points.

European Equities: Brexit, Earnings, and PMIs in Focus

Economic Calendar:

Thursday, 24th October

  • French Manufacturing PMI (Oct) Prelim
  • French Services PMI (Oct) Prelim
  • German Manufacturing PMI (Oct) Prelim
  • German Services PMI (Oct) Prelim
  • Eurozone Manufacturing PMI (Oct) Prelim
  • Eurozone Markit Composite PMI (Oct) Prelim
  • Eurozone Services PMI (Oct) Prelim
  • ECB Deposit Facility Rate (Oct)
  • ECB Interest Rate Decision (Oct)

Friday, 25th October

  • GfK German Consumer Climate (Nov)
  • German Business Expectations (Oct) / Current Assessment (Oct) / Ifo Business Climate Index (Oct)

The Majors

It was a mixed day for the European majors on Wednesday. While the DAX30 and EuroStoxx600 rose by 0.34% and 0.11% respectively, the CAC40 slipped by 0.08%.

A lack of economic data from the Eurozone left the majors in the hands of geopolitics and U.S corporate earnings.

The UK Parliament’s vote to prevent Boris Johnson’s deal from being pushed through by 31st October tested the majors on the day. With a Brexit deal in limbo and the British PM looking for a general election to deliver Brexit, it was all eyes on the EU to approve the extension request.

The Stats

It was another quiet day on the Eurozone economic calendar on Wednesday. There were no material stats from the Eurozone to provide the majors with direction.

It was also a quiet day on the U.S economic calendar, leaving the majors exposed to geopolitical risk and U.S corporate earnings.

While it was a quiet day on the economic calendar, it was a busier day on the U.S corporate earnings calendar. Boeing, Caterpillar, Ford Motor, Microsoft and Tesla were scheduled to release earnings later in the day.

Disappointing results from Caterpillar and Boeing tested the majors late in the session, with Texas Instrument Inc. doing the majors few favors following a negative forecast announcement late on Tuesday.

While the numbers were negative, hopes of a resolution to the ongoing U.S – China trade war buffered the impact on the majors.

The Market Movers

For the DAX: It was a positive day for the auto sector. Daimler and Volkswagen led the way with gains of 2.03% and 1.04% respectively. BMW and Continental saw more modest gains of 0.75% and 0.08% respectively.

Bank stocks also found support, with Commerzbank and Deutsche Bank rising by 0.61% and 0.83% respectively.

From the CAC, it was a relatively non-eventful day for the banks. BNP Paribas and Soc Gen rose by 0.28% and 0.13% respectively, while Credit Agricole ended the day flat. For the autos, it was a mixed day. While Peugeot rallied by 3.24%, Renault fell by 0.04%, with pressure continuing to come from its negative forecast. For Peugeot, while there’s doom and gloom surrounding the auto sector, a strong 3rd quarter earnings delivered the upside.

On the VIX Index

The VIX Index saw red on Wednesday, falling by 3.11%. Reversing a 3.29% gain from Tuesday, the VIX ended the day at 14.0.

While uncertainty over Brexit was positive for the VIX, a rebound in the U.S majors pressured the VIX late in the day. In spite of U.S corporate earnings being mixed on the day, hopes of a resolution to the U.S – China trade war muted the effects of any negativity.

VIX 24/10/19 Daily Chart

The Day Ahead

It’s a busy day ahead on the Eurozone economic calendar. October prelim private sector PMIs are due out of France, Germany, and the Eurozone.

While Germany’s manufacturing sector PMI will continue to have the greatest impact, the Eurozone’s composite will also garner plenty of interest.

The markets will be looking for service sector activity to continue to provide support.

From the U.S, October private sector PMIs and September durable goods orders will also influence later this afternoon.

On the earnings front. Daimler, Amazon.com and Intel corporate earnings are in focus later that will influence risk sentiment.

Geopolitics will also provide direction. With the EU expected to approve Britain’s extension request on Brexit, it will boil down to whether Johnson gets his way and Britain goes to the polls. There is one small matter of the length of the Brexit extension to also consider.

In the futures market, at the time of writing, the DAX30 was up by 7.5 points, with the Dow up by 8 points.

European Equities: The Futures Say Red as Brexit Hits another Speedbump

Economic Calendar:

Thursday, 25th October

  • French Manufacturing PMI (Oct) Prelim
  • French Services PMI (Oct) Prelim
  • German Manufacturing PMI (Oct) Prelim
  • German Services PMI (Oct) Prelim
  • Eurozone Manufacturing PMI (Oct) Prelim
  • Eurozone Markit Composite PMI (Oct) Prelim
  • Eurozone Services PMI (Oct) Prelim
  • ECB Deposit Facility Rate (Oct)
  • ECB Interest Rate Decision (Oct)

Friday, 26th October

  • GfK German Consumer Climate (Nov)
  • German Business Expectations (Oct) / Current Assessment (Oct) / Ifo Business Climate Index (Oct)

The Majors

The European majors found further support on Tuesday, following Monday’s gains. Leading the way was the CAC40, which rose by 0.17%.  The DAX30 and EuroStoxx600 saw more modest gains of just 0.05% and 0.09% respectively.

Economic data was on the lighter side on Tuesday, leaving geopolitics in focus throughout the day.

From the UK Parliament, it was a mixed day, with the British PM managing to get the support for the latest Withdrawal Bill Agreement, while losing control of the Brexit schedule.

Parliament voted down Johnson’s plan to deliver Brexit by 31st October.

For the majors, the outcome was ultimately skewed to the positive, as Britain moved further away from the chance of a no-deal Brexit.

On the trade war front, positive comments from both, Beijing and Washington, provided support on the day.

The Stats

It a quiet day on the Eurozone economic calendar on Tuesday. There were no material stats from the Eurozone on Tuesday to provide the majors with direction.

From the U.S, September’s existing home sales figures had a muted impact on the majors.

Existing home sales fell by 2.20% in September, reversing a 1.5% rise in August.

The Market Movers

For the DAX: It was another mixed day for the auto sector. Volkswagen bucked the trend, falling by 0.42%. Continental led the way, however, rallying by 2.83%, with BMW and Daimler rising by 0.43% and by 0.33% respectively.

It wasn’t a mixed day for the banks, however, with Commerzbank and Deutsche Bank falling by 0.79% and by 1.96% respectively.

Disappointing UBS earnings results weighed on the day.

From the CAC, it was a mixed day for the banks. BNP Paribas rose by another 0.02%, while Credit Agricole eked out a 0.25% gain. Soc Gen bucked the trend, falling by 0.34%. For the autos, it was also a mixed day. While Peugeot rose by 1.26%, Renault fell by 0.16% on the day.

On the VIX Index

The VIX Index saw green on Tuesday, rising by 3.29%. Reversing a 1.75% fall from Monday, the VIX ended the day at 14.5.

Brexit uncertainty provided the VIX with support on the day.

VIX 23/10/19 Daily Chart

The Day Ahead

It’s another quiet day ahead on the Eurozone economic calendar. There are no material stats due out of the Eurozone to provide the major with direction on the day.

The lack of stats will leave the markets to continue to respond to events in the UK parliament. While a no-deal Brexit remains unlikely, talk of a general election could test risk sentiment.

On the earnings front. Boeing, Caterpillar, Microsoft, and Tesla are all due to release earnings later today that will influence risk sentiment.

In the futures market, at the time of writing, the DAX30 was down by 104 points, with the Dow down by 77 points.

European Equities: No Major Stats Leaves Geopolitics in Focus

Economic Calendar:

Thursday, 25th October

  • French Manufacturing PMI (Oct) Prelim
  • French Services PMI (Oct) Prelim
  • German Manufacturing PMI (Oct) Prelim
  • German Services PMI (Oct) Prelim
  • Eurozone Manufacturing PMI (Oct) Prelim
  • Eurozone Markit Composite PMI (Oct) Prelim
  • Eurozone Services PMI (Oct) Prelim
  • ECB Deposit Facility Rate (Oct)
  • ECB Interest Rate Decision (Oct)

Friday, 26th October

  • GfK German Consumer Climate (Nov)
  • German Ifo Business Climate Index (Oct)

The Majors

The European majors found support on Monday, to partially reverse losses from the end of last week. Leading the way was the DAX30, which rose by 0.91%.  The CAC40 and EuroStoxx600 weren’t far behind, with gains of 0.21% and 0.61% respectively.

Economic data was on the lighter side on Monday, leaving geopolitics in focus at the start of the week.

UK Parliament voted to delay a meaningful vote on Boris Johnson’s Brexit deal on Saturday, leaving the British PM with little choice but to request another extension.

While the extension is expected to be approved by the EU, there’s still talk of Britain leaving the EU by Halloween.

On Monday, Boris Johnson failed once more to push through a debate on the latest agreement, leaving the Pound in limbo. While the latest news was negative, the request for an extension supported risk appetite on the day.

As far as the European markets were concerned, a no-deal Brexit appears to be averted, which provided support on the day.

The Stats

It was a quiet day on the Eurozone economic calendar on Monday. Germany’s September wholesale inflation figures were the only stats for the markets to consider on the day.

According to Destatis,

  • Producer prices rose by 0.1% in September, month-on-month, which was better than a forecasted 0.2% decline. In August, producer prices had fallen by 0.5%.
  • Energy prices rose by 0.4%, while producer prices excl. energy fell by 0.1%.
  • Prices of intermediate goods fell by 0.3%, while prices of non-durable consumer goods rose by 0.2%.
  • There was also an increase in prices for durable consumer goods, which rose by 0.1%.
  • Prices for capital goods remained unchanged in the month.
  • Year-on-year, producer prices fell by 0.1%, following a 0.3% rise in August. Economists had forecast a 0.3% decline.

There were no material stats out of the U.S to test the majors late in the session.

The Market Movers

For the DAX: It was a bullish day for the auto sector. Continental led the day rising by 1.88%, with Daimler gaining 1.50%. Volkswagen and BMW saw more modest gains of 0.71% and 0.55% respectively.

Bank stocks were also on the move with Commerzbank and Deutsche Bank rallying by 5.32% and by 2.46% respectively.

Leading the way on the day, however, was Wirecard, which rallied by 5.59% on news of appointing KPMG to provide an independent audit. Wirecard had hit the news wires for the wrong reasons recently over its accounting practices.

From the CAC, it was also a positive day for the banks. Credit Agricole and Soc Gen rose by 2.12% and by 1.98% respectively. BNP Paribas wasn’t far behind, gaining 1.75%. For the autos, it was a less eventful day, with Peugeot and Renault rising by 0.34% and by 1.08% respectively.

On the VIX Index

It was back in the red for the VIX on Monday, bringing to an end a run of 3 consecutive days in the green. The VIX Index fell by 1.73%. Partially reversing a 3.34% rise from Friday, the VIX ended the day at 14.0.

The downside came despite Brexit woes, as British PM Boris Johnson failed for the 2nd time to get a meaningful vote on the new Brexit deal.

With no material stats to influence, corporate earnings results from the U.S, weighed on the VIX as the U.S majors also closed out the day in the green. Adding to the downside on the day was optimism on trade, as Trump talked up progress on trade talks.

VIX 22/10/19 Daily Chart

The Day Ahead

It’s another quiet day ahead on the Eurozone economic calendar. There are no material stats due out of the Eurozone to provide the majors with direction on the day.

The lack of stats will leave the markets to respond to events in the UK parliament on Monday. Positive comments from the U.S President on trade talks with China should also provide support.

Late in the session, economic data due out of the U.S is limited to September’s existing home sales figures that will likely be brushed aside by the markets.

On the earnings calendar, EU and U.S corporates are in focus this week, with a number of major U.S companies releasing earnings results.

From the DAX, Daimler is due to release its quarterly earnings results on Thursday. Amazon.com (Thurs), Boeing (Wed), Caterpillar (Wed), Ford Motor Co (Wed), Intel (Thurs), Microsoft (Wed), and Tesla Inc. (Wed) release earnings in the U.S.

In the futures market, at the time of writing, the DAX30 was up by 38 points, with the Dow up by 44 points.

European Equities: A Lack of Stats Leaves Brexit in Focus

Economic Calendar:

Monday, 21st October

  • German PPI (MoM) (Sep)

Thursday, 25th October

  • French Manufacturing PMI (Oct) Prelim
  • French Services PMI (Oct) Prelim
  • German Manufacturing PMI (Oct) Prelim
  • German Services PMI (Oct) Prelim
  • Eurozone Manufacturing PMI (Oct) Prelim
  • Eurozone Markit Composite PMI (Oct) Prelim
  • Eurozone Services PMI (Oct) Prelim
  • ECB Deposit Facility Rate (Oct)
  • ECB Interest Rate Decision (Oct)

Friday, 26th October

  • GfK German Consumer Climate (Nov)
  • German Ifo Business Climate Index (Oct)

The Majors

It was a day in the red for the European majors on Friday, with the CAC40 falling by 0.65% to lead the way. The EuroStoxx600 and DAX30 saw more modest losses of 0.26% and 0.17% respectively.

Uncertainty over the outcome of the Parliamentary vote on Boris Johnson’s Brexit agreement pinned the majors back on the day.

Economic data through the week was also skewed to the negative, weighing on risk appetite on the day.

The Stats

It a quiet day on the Eurozone economic calendar on Friday. There were no stats from the Eurozone to provide the majors with direction.

While it was also a quiet session in the U.S, on the economic data front, 3rd quarter GDP numbers out of China tested the markets.

China’s economy grew by 1.5%, quarter-on-quarter, in the 3rd quarter, easing from 1.6% in the 2nd quarter. Year-on-year, the economy grew by 6.0%, which was worse than a forecast of 6.1%. In the 2nd quarter, the economy had grown by 6.1%.

The Market Movers

For the DAX: It was a mixed day for the auto sector. Volkswagen led the way rising by 1.04%, with BMW and Daimler rising by 0.87% and by 0.59% respectively. Continental bucked the trend on the day, with a 0.58% loss.

It wasn’t a mixed day for the banks, however, with Commerzbank and Deutsche Bank falling by 1.01% and by 0.41% respectively.

From the CAC, it was a non-eventful day for the banks. BNP Paribas rose by just 0.02%, while both Credit Agricole and Soc Gen ended the day flat. For the autos, it was a bearish day. While Peugeot fell by 1.66%, Renault tumbled by 11.48%, the sell-off coming off the back of a cut in the 2019 earnings forecast.

On the VIX Index

The VIX Index saw green for a 3rd consecutive day on Friday, rising by 3.43%. Following a 0.7% gain on Thursday, the VIX ended the day at 14.3.

Uncertainty over Brexit and disappointing GDP numbers out of China provided the upside on the day.

VIX 21/10/19 Daily Chart

The Day Ahead

It’s a day ahead on the Eurozone economic calendar. Economic data from the Eurozone is limited to Germany’s September wholesale inflation figures.

While forecasts are EUR negative, the data is unlikely to have a material impact on the European majors.

We can expect some risk aversion, however, following the UK Parliament’s vote against Boris Johnson’s latest Brexit agreement with the EU.

Through the course of the day, it will ultimately boil down to what lies ahead. A British snap general election would be a negative for the majors, while talk of a 2nd referendum would be considered a marginally more positive scenario.

In the futures market, at the time of writing, the DAX30 was up by 23.5 points, with the Dow up by 56 points.

European Equities: A Week in Review – 18/10/19

The Majors

It was a mixed week for the European majors. The DAX30 rose by 0.97% to lead the way, with the EuroStoxx600 up by just 0.06%. It was a bearish end to the week for the CAC40, however, which fell by 0.65% on Friday to end the week down by 0.52%. The DAX30 and EuroStoxx600 saw more modest losses of 0.17% and 0.32% on Friday to stay in the green for the week.

It was another bearish start to the week for the European majors, with geopolitical risk weighing.

While progress had been made in the U.S – China trade talks, the lack of an actual agreement and continuation of tariffs weighed on Monday.

It was upwards from there, however, with positive progress on Brexit and U.S corporate earnings providing support mid-week.

In the latter part of the week, the majors ran out of steam, however, with concerns over Parliament voting through the deal pinning back the majors.

Economic data played second fiddle to geopolitics through the week, with the Eurozone’s economic data on the lighter side.

From outside of the Eurozone, economic data from China also tested the majors.

Economic growth in China slowed to 6.0% in the 3rd quarter, year-on-year, with the economy growing by 1.5% in the quarter. It was the slowest growth in 17-years.

The Stats

It was a relatively quiet week on the Eurozone economic calendar.

On Monday, the Eurozone’s industrial production figures were positive, with production rising by 0.4% in August, month-on-month. Production had fallen by 0.4% in July.

Tuesday was a more negative day on the data front, however. While coming in ahead of forecasts, economic sentiment waned in Germany and the Eurozone in October.

Concerns over Brexit and the U.S – China trade war weighed on consumer sentiment at the start of the 4th quarter.

On Wednesday, the Eurozone’s trade data continued to reflect the ongoing effects of the U.S – China trade war.

The trade surplus narrowed beyond expectations. In spite of the negative numbers, the majors managed to find more gains supported by Brexit chatter.

Finalized September inflation figures for France, Italy and the Eurozone had a muted impact on the majors.

The Market Movers

From the DAX, it was another bullish week for the auto sector. Volkswagen led the way once more, rallying by 4.91%. BMW and Daimler also saw solid gains, rising by 4.62% and 3.53% respectively. Continental trailed the pack, however, gaining 1.93%.

It was also bullish for the banking sector. Deutsche Bank gained 4.42%, with Commerzbank up by 2.71%.

Concerns over the economic outlook weighed on the banking sector at the end of the week. A 1.12% loss for Commerzbank on Friday limited the upside for the week.

From the CAC, the banks also found strong support. Soc Gen and Credit Agricole led the way, rising by 3.07% and by 2.90% respectively. PNP Paribas, gained 2.71% to trail the pack. It was a mixed week for the French auto sector, however. While Peugeot rose by 2.74%, Renault slid by 9.06%, weighed by an 11.48% tumble on Friday.

Renault cut its 2019 revenue outlook, which led to the slump on the day.

On the VIX Index

The VIX Index fell by 8.54% in the week ending 18th October. Following on from an 8.57% decline from the previous week, the VIX ended the week at 14.3.

Downward pressure through the 1st half of the week left the VIX in the red, with progress on Brexit and talk of a draft U.S – China trade agreement weighing.

Talk of Boris Johnson likely to face yet more opposition in Parliament over the latest Brexit agreement supported the VIX late on, however.

3 consecutive days in the green led to a recovery from Thursday’s intraweek low $13.3.

VIX 19/10/19 Weekly Chart

The Week Ahead

It’s a busy week on the Eurozone economic calendar. The markets will need to wait until Thursday, however, for key stats.

Prelim October private sector PMI numbers are due out of France, Germany, and the Eurozone on Thursday.

We can expect plenty of sensitivity to German manufacturing and Eurozone composite PMI figures. Service sector PMIs will also need to reverse September’s pullback to provide support.

Later in the day, the ECB monetary policy decision is also due. Any hint of further easing would be market positive, though the ECB would need to avoid doom and gloom chatter on the day.

At the end of the week, the market focus will then shift to consumer and business sentiment figures out of Germany.

From elsewhere, private sector PMIs and durable goods orders from the U.S will also play a hand on Thursday.

At the start of the week, the PBoC could deliver an early boost should there be further policy support.

On the geopolitical front, expect market reaction to the weekend parliamentary vote on the latest Brexit deal. Assuming Johnson fails for the 8th time, chatter through the week of general elections and 2nd referendums will play a hand.

European Equities: China Data and Brexit Angst to Set the Tone

The Majors

It was a day in the red for the majors on Thursday. The CAC40 led the way down, falling by 0.42%, while the DAX30 and EuroStoxx600 slipped by just 0.12% and by 0.10% respectively.

With no material stats from the Eurozone to provide direction, news updates on Brexit provided direction on the day.

A last-minute draft deal was delivered to and approved by the EU, which now requires ratification with a parliamentary vote.

For Boris Johnson and the Brexiteers, the loss of the Democratic Unionist Party’s support was a blow ahead of tomorrow’s parliamentary vote. As things stand, there’s no clear indication of which way the vote can go.

The Stats

It was a quiet day on the Eurozone economic calendar on Thursday. There were no stats from the Eurozone to provide the majors with direction.

From the U.S, however, stats were on the heavier side and influenced late on in the day.

Key stats from the U.S included October’s Philly FED Manufacturing Index figures and August industrial production numbers.

The Philly FED Manufacturing Index disappointed, falling from 12.0 to 5.6 in October. Economists had forecast a fall to 7.3.

In September, industrial production also disappointed, with production falling by 0.4%, which worse than a forecasted rise of 0.1%. In August, production had risen by 0.6%.

The Market Movers

For the DAX: It was a day in the red for the auto sector. Daimler led the day down, falling by 1.16%. Volkswagen and Continental weren’t far behind, with losses of 0.72% and 0.71% respectively. BMW saw a more modest loss of 0.16%.

It was a mixed day for the bank. Deutsche Bank rose by 0.38%, while Commerzbank slipped by 0.07%

From the CAC, it was also a mixed day for the banks. Soc Gen bucked the trend on the day, rising by 0.19%. Credit Agricole and BNP Paribas saw red, however, with losses of 0.82% and 0.57% respectively. For the autos, it was also mixed with Renault falling by 0.47%, while Peugeot gained 1.31%.

On the VIX Index

The VIX Index saw green for a 2nd consecutive day on Thursday, rising by 0.8%. Following on from a 1.03% gain on Wednesday, the VIX ended the day at 13.8.

Disappointing economic data from the U.S and negative sentiment towards Brexit provided support on the day. News of a U.S – China trade deal being drafted for President Trump and Premier Xi’s review limited the upside, however.

VIX 18/10/19 Daily Chart

The Day Ahead

It’s another quiet day ahead on the Eurozone economic calendar. There are no material stats due out of the Eurozone to provide direction.

A lack of stats will continue to leave the majors in the hands of Brexit updates, with no material stats due out of the U.S.

Early this morning, economic data out of China will set the tone ahead of tomorrow’s key Parliamentary vote on Brexit.

3rd quarter GDP numbers are due out of China along with September retail sales and industrial production figures.

In the futures market, at the time of writing, the DAX30 was down by 23.5 points, while the Dow was up by 9 points.

European Equities: It’s All Eyes on Brexit

The Majors

It was a mixed day for the European majors on Wednesday. The DAX30 bucked the trend, rising by 0.32%, while the EuroStoxx600 and CAC30 fell by 0.14% and by 0.09% respectively.

The majors failed to make progress on the day as Brexit negotiations continued. News of disagreements over certain areas including future trade had led to the lack of progress on the day.

The Stats

It was a relatively busy day on the Eurozone economic calendar on Wednesday. Economic data included Italy and the Eurozone’s finalized September inflation figures and the Eurozone’s August trade data.

According to Eurostat,

  • The annual rate of inflation came in at 0.8% in September, softening from 1.0% in August, according to finalized figures.
  • In September 2018, the annual rate of inflation had stood at 2.1%.
  • Cyprus (-0.5%), Portugal (-0.3%), Greece, Spain, and Italy (0.2%) reported the lowest rates of inflation.
  • Slovakia registered the highest annual rate of inflation at 3.0%.
  • The highest contribution to the annual rate of inflation came from services (0.66 pp), food, alcohol & tobacco (0.29 pp) and non-energy industrial goods (0.06 pp).
  • Month-on-month, consumer prices rose by 0.2%, following a 0.1% rise in August. Economists had forecast a rise of 0.2%.

According to Eurostat,

  • The Eurozone trade surplus narrowed from €24.8bn to €14.7bn in August. Economists had forecast a narrowing to €17.4bn.
  • Exports of goods to the rest of the world fell by 2.2%, year-on-year, to €177.4bn.
  • Imports from the rest of the world fell by 4.1% to €162.6bn.
  • In August 2018, the trade surplus with the rest of the world had stood at €11.9bn.
  • Intra-euro area trade fell by 5.6%, year-on-year,. To €133.7bn.

Inflation figures out of Italy had a muted impact on the majors on the day.

From the U.S, an unexpected fall in retail sales added further pressure on the European majors late in the session. Core retail sales fell by 0.1% in September, which was worse than a forecasted rise of 0.2%.

The Market Movers

For the DAX: Autos found strong support once more, with Volkswagen leading the way, rallying by 2.47%. Daimler was also amongst the best performers on the DAX, rallying by 1.42%. BMW and Continental weren’t far behind, both rising by 0.9%.

Bank stocks also found further support. Deutsche Bank rose by 0.7%, while Commerzbank rallied by 1.48%

From the CAC, it was also a bullish day for the banks. Credit Agricole led the way, rising by 1.97%. BNP Paribas and Soc saw more modest gains of 0.45% and 0.89% respectively. For the autos, it was also positive with Renault rising by 1.14%, while Peugeot gained 1.15%.

On the VIX Index

The VIX Index saw an end to a run of 5 consecutive days in the red on Wednesday, rising by 1.03%. Partially reversing a 7.07% fall from Tuesday, the VIX ended the day at 13.7.

Disappointing retail sales figures from the U.S pinned back the U.S majors on the day, providing support to the VIX.

VIX 17/10/19 Daily Chart

The Day Ahead

It’s a quiet day ahead on the Eurozone economic calendar. There are no material stats due out of the Eurozone to provide direction.

A lack of stats will leave the majors in the hands of Brexit updates and economic data from the U.S.

Key stats from the U.S include housing data and the more influential Philly FED manufacturing numbers for October.

Expect Brexit chatter to overshadow any stats out of the U.S, however.

In the futures market, at the time of writing, the DAX30 was down by 17 points, with the Dow down by 7 points.

European Equities: Brexit, Earnings and Economic Data in Focus

Economic Calendar:

Wednesday, 16th October

  • Italian CPI (MoM) (Sep) Final
  • Eurozone Core CPI (YoY) (Sep) Final
  • Eurozone CPI (MoM) (Sep)
  • Eurozone CPI (YoY) (Sep) Final
  • Eurozone Trade Balance (Aug)

The Majors

It was a bullish day for the European majors on Tuesday. The DAX30 led the way, rallying by 1.15%, with the EuroStoxx600 and CAC30 up by 1.11% and 1.04% respectively.

Following a bearish start to the week, the majors were able to brush aside continued uncertainty over the ongoing U.S – China trade war.

Positive updates on Brexit from the EU on the possibility of a Brexit deal this week provided strong support for the majors.

Michael Barnier, the EU’s chief negotiator, spoke on Tuesday of a deal still being possible this week.

From the U.S, corporate earnings were a boost for the global equity markets, with JPMorgan earnings impressing.

The Stats

It a relatively busy day on the Eurozone economic calendar on Tuesday. Economic data included Germany and the Eurozone’s ZEW economic sentiment figures for October.

Of less influence on the day were Germany’s ZEW current conditions and French finalized September inflation figures.

According to the latest ZEW report,

  • The German ZEW Current Conditions Index fell from -19.9 to -25.3 in October. Economists had forecast a decline to -26.0.
  • Germany’s ZEW Economic Sentiment Index fell from -22.5 to -22.8 in October, which was better than a forecast of -27.0
  • The Eurozone’s ZEW Economic Sentiment Index fell from -22.4 to -23.5 in October. Economists had forecast a decline to -33.0.

Concerns over a possible recession weighed on consumer sentiment at the start of the 4th quarter, with progress in the U.S – China trade talks having provided little comfort.

From the U.S, a modest pickup in manufacturing sector activity in New York State was enough to avoid stressing the majors. The NY Empire State Manufacturing Index rose from 2 to 4 in October.

The Market Movers

For the DAX: Autos found strong support, with BMW leading the way, rallying by 2.45%. Daimler was also amongst the best performers on the DAX, rallying by 2.26%. Continental and Volkswagen weren’t far behind, with gains of 1.8% and 2.20% respectively.

Bank stocks also found further support. Deutsche Bank rallied by 2.88% to lead the way on the DAX30, while Commerzbank rose by 0.97%

From the CAC, it was also a bullish day for the banks. BNP Paribas and Soc Gen led the way with gains of 3.64% and 2.12% respectively. Credit Agricole saw a more modest rise of 1.51%. For the autos, it was also positive with Renault rising by 1.36%, while Peugeot rallied by 2.85%.

On the VIX Index

The VIX Index saw red for a 5th consecutive day on Tuesday, declining by 7.07%. Following on from a 6.48% fall on Monday, the VIX ended the day at 13.5.

Progress on Brexit and U.S corporate earnings, with JPMorgan Chase earnings, in particular, supported risk appetite on the day.

VIX 16/10/19 Daily Chart

The Day Ahead

It’s a relatively busy day ahead on the Eurozone economic calendar. Economic data includes finalized September inflation figures for Italy and the Eurozone. Alongside the inflation figures, the Eurozone’s August trade data is also due out.

We would expect the inflation figures to have a relatively muted impact on the majors, however, with Brexit and corporate earnings in focus.

A material narrowing in the Eurozone’s trade surplus could test the majors in the early part of the session.

From the U.S, September retail sales figures will provide direction later in the day. With recession talk continuing to do the rounds, any unexpected slide in sales will impact.

On the earnings front, corporate earnings from the U.S will also have influence. Bank of America and Morgan Stanley’s 3rd quarter results are in focus.

While U.S stats and corporate earnings will be key, expect Brexit chatter to have the ultimate say on the day. With just days remaining until the EU Summit, it’s crunch time for Boris and the Brexiteers.

In the futures market, at the time of writing, the DAX30 was down by 11 points, with the Dow down by 50 points.

European Equities: Brexit, Corporate Earnings and Stats in Focus

Economic Calendar:

Tuesday, 15th October

  • French CPI (MoM) (Sep) Final
  • French HICP (MoM) (Sep) Final
  • German ZEW Current Conditions (Oct)
  • German ZEW Economic Sentiment (Oct)
  • Eurozone ZEW Economic Sentiment (Oct)

Wednesday, 16th October

  • Italian CPI (MoM) (Sep) Final
  • Eurozone Core CPI (YoY) (Sep) Final
  • Eurozone CPI (MoM) (Sep)
  • Eurozone CPI (YoY) (Sep) Final
  • Eurozone Trade Balance (Aug)

The Majors

It was a bearish start to the week for the European majors. The CAC40 led the way down, falling by 0.4% on Monday. The DAX30 and EuroStoxx600 weren’t far behind with losses of 0.20% and 0.49% respectively.

Uncertainty over the U.S – China trade war and Brexit weighed on the broader markets on the day.

While the U.S agreed to defer the rollout of further tariffs on Chinese goods tomorrow, a lack of commitment to removal existing tariffs weighed on risk sentiment.

On the Brexit front, a lack of progress from last week’s hopes of a deal added to the downside on the day.

The Stats

It was a relatively quiet day on the Eurozone economic calendar on Monday. Economic data was limited to the Eurozone’s industrial production figures for September.

According to Eurostat, industrial production rose by 0.4%, month-on-month in August, reversing a 0.4% decline in July. Economists had forecast a 0.3% rise.

  • The production of capital goods rose by 1.2% and intermediate goods by 0.3%.
  • Weighing in August, however, was a 0.3% fall in the production of consumer goods and a 0.6% fall in energy and non-durable consumer goods production.
  • Malta (+5.6%), Estonia (+3.9%) and Latvia (+3.0%) reported the highest increases in production.
  • Slovakia (-2.6%) and Lithuania (-2.4%) reported the largest declines in August.
  • Year-on-year, production fell by 2.8%.

With a lack of U.S stats on the day, geopolitical risk offset upbeat industrial production figures on the day.

The Market Movers

For the DAX: Autos found more upside on Monday, supported by the delay of additional tariffs on Chinese goods. Continental led the way, rising by 0.52%. BMW (+0.50%) and Daimler (+0.40%) saw more modest gains, whilst Volkswagen bucked the trend on the day, however, falling by 0.12%.

Bank stocks found further support, with Deutsche Bank rising by 0.75% and Commerzbank by 0.69%

From the CAC, it was a mixed day for the banks. BNP Paribas and Soc Gen fell by 0.79% and by 0.16% respectively. Credit Agricole managed to buck the trend with a 0.22% gain. For the autos, it was also mixed with Renault rising by 0.69%, while Peugeot slipped by 0.87%.

On the VIX Index

The VIX Index saw red for a 4th consecutive day on Monday, falling by 6.48%. Following on from an 11.33% slide on Friday, the VIX ended the day at 14.6.

Losses on the day came in spite of the U.S majors closing out the day in the red. While existing tariffs on Chinese goods remain, last week’s progress on trade talks was enough to pin back the VIX.

VIX 15/10/19 Daily Chart

The Day Ahead

It’s a relatively busy day ahead on the Eurozone economic calendar. Economic data includes October economic current conditions and economic sentiment figures out of Germany and the Eurozone.

Germany and the Eurozone’s economic sentiment figures will be the key drivers, which is forecasted EUR negative.

Of less influence on the day will be finalized September inflation figures due out of France.

From the U.S, New York Empire State Manufacturing Index figures for October will also provide direction late on.

Another pullback in the Index would add further pressure on the European majors.

On the earnings front, corporate earnings from the U.S will also have an impact. Citigroup, Goldman, JPMorgan, and Wells Fargo release 3rd quarter results later today.

Geopolitics will also influence on the day, as Johnson looks to wrap up a Brexit deal ahead of the EU Summit this weekend.

In the futures market, at the time of writing, the DAX30 was up by 17 points, with the Dow up by 16 points.

European Equities: China Trade Data and Geopolitics to Influence

Economic Calendar:

Monday, 14th October

  • Eurozone Industrial Production (MoM) (Aug)

Tuesday, 15th October

  • French CPI (MoM) (Sep) Final
  • French HICP (MoM) (Sep) Final
  • German ZEW Current Conditions (Oct)
  • German ZEW Economic Sentiment (Oct)
  • Eurozone ZEW Economic Sentiment (Oct)

Wednesday, 16th October

  • Italian CPI (MoM) (Sep) Final
  • Eurozone CPI (MoM) (Sep)
  • Eurozone Trade Balance (Aug)

The Majors

It was a bullish end to the week for the majors, with the DAX rallying by 2.86% to lead the way. The EuroStoxx600 and CAC40 weren’t far behind with gains of 2.31% and  1.73% respectively.

Support for the majors came off the back of news that the U.S administration delayed the rollout of fresh tariffs on Chinese goods. Tariffs were due to hit Chinese goods on 15th October.

Progress on trade talks in Washington led to the delay.

Brexit also provided support as the EU affirmed that progress was indeed being made on an alternative to the Irish backstop.

The Stats

It a relatively busy day on the Eurozone economic calendar on Friday. Economic data included German and Spanish finalized inflation figures for September.

Out of Germany, consumer prices held steady in September, which was in line with prelim figures. In August, consumer prices had fallen by 0.2%.

Inflationary pressures eased in Spain, however, with consumer prices rising by just 0.1%, month-on-month, which was in line with forecast. Consumer prices had risen by 0.3% in August.

From the U.S, a pickup in consumer expectations and sentiment for October also provided support on the data front.

Further upside in consumer sentiment can be expected as the U.S and China make progress on ironing out a trade agreement.

The Market Movers

For the DAX: Autos found further support on Friday, driven by updates from the U.S – China trade talks in Washington. Volkswagen led the way, rallying by 4.71%. Daimler (+3.13%), Continental (+2.50%), and BMW (+3.13%) weren’t far behind.

Bank stocks also found support, with Deutsche Bank rallying by 4.96% and Commerzbank by 4.09%

From the CAC, it was also a positive day for the banks. Soc Gen led the way, rallying by 5.27% off the back of a  3.32% gain on Thursday. BNP Paribas and Credit Agricole weren’t far behind, with gains of 4.72% and 4.52% respectively. For the autos, Renault jumped by 5.12%, while Peugeot up by 4.63% following a 3.48% gain on Thursday.

On the VIX Index

The VIX Index saw red for a 3rd consecutive day on Friday, sliding by 11.33%. Following on from a 5.74% fall on Wednesday, the VIX ended the day at 15.6.

Further progress on the U.S – China trade talks and Brexit supported risk appetite to pull the VIX back into the red.

VIX 14/10/19 Daily Chart

The Day Ahead

It’s a relatively quiet day ahead on the Eurozone economic calendar. Economic data out of the Eurozone is limited to August’s industrial production figures.

Better than forecasted production figures would provide support in the early part of the session.

A lack of stats due out of the U.S, however, will leave geopolitics to continue to influence in the day.

Ahead of the European open, trade data due out of China through the Asian session will set the tone. Any weak numbers and expect market jitters over the global economy to return.

In the futures market, at the time of writing, the DAX30 was down by 35 points, while the Dow was up by 38 points.

European Equities: A Week in Review – 11/10/19

The Majors

It was a bullish week for the European majors, with the DAX30 rallying by 4.15% to lead the way. The CAC30 and EuroStoxx600 weren’t far behind, with gains of 3.23% and 3.00% respectively.

After a bearish start to the week, 3 consecutive days in the green delivered, with the lion’s share of the gains coming on Friday.

Economic data through the week failed to weigh on the majors, with geopolitics delivering the upside in the week.

Progress on Brexit negotiations and positive updates from the U.S – China trade talks drove demand for the European majors.

U.S President Trump said on Friday that discussions were very good and that there were warmer feelings at the latest talks,

On Brexit, positive updates from Johnson, Irish Prime Minister Varadkar and from the EU in the 2nd half of the week also supported.

Monetary Policy

The ECB’s monetary policy meeting minutes on Thursday had little influence on the majors. While having little influence, the minutes did reveal division amongst members on what lies ahead. Recent ECB member commentary had already alerted the markets of a rift amongst members, with a number of key members against the reintroduction of bond purchases.

The Stats

It was a relatively quiet week on the Eurozone economic calendar. Through the week, Germany’s August factory orders and trade data were negative for the DAX, while an unexpected pickup in industrial production was positive.

On Monday, factory orders fell by 0.6% in August, following on from a 2.7% slide in July. A 0.3% rise in industrial production, reversing a 0.4% fall in July, had little impact on Tuesday, as market jitters ahead of trade talks pinned back the majors.

A narrowing in Germany’s trade surplus from €20.5bn to €18.1 did little to dampen demand for riskier assets on Thursday.

The positive updates from both Brexit and trade talks in Washington drove demand for the European majors on Thursday and Friday.

At the end of the week, finalized inflation figures out of Germany and Spain also had a muted impact, with further updates on Brexit and trade talks driving the majors on the day.

The Market Movers

From the DAX, it was a bullish week for the auto sector. Volkswagen led the way, rallying by 8.55%. Daimler and BMW also saw solid gains, rising by 6.25% and 3.08% respectively. Continental trailed the pack, however, rising by just 0.02%.

It was also bullish for the banking sector. Deutsche Bank gained 3.98%, with Commerzbank rallying by 4.92%, to partially reverse last week’s 8.42% tumble.

While the stats were on the weaker side, a trade agreement would ease concerns over the economic outlook.

From the CAC, the banks also found strong support. BNP Paribas and Soc Gen led the way, rallying by 8.19% and by 7.95% respectively. Credit Agricole trailed with a 6.10% gain. French autos saw green following 3 consecutive weeks in the red. Peugeot rallied by 6.52%, with Renault up by 6.10%.

On the VIX Index

The VIX Index fell by 8.57% in the week ending 11th October. Following on from a 0.7% fall from the previous week, the VIX ended the week at 15.6.

After a Tuesday 13.6% jump in the VIX, it was red through the rest of the week. Sentiment towards Brexit and U.S – China trade talks offset a negative bias on the economic data front.

VIX Weekly Chart 12/10/19

The Week Ahead

It’s a relatively busy week on the Eurozone economic calendar. Key drivers include German and, Eurozone economic sentiment figures on Tuesday. The Eurozone’s industrial production and trade data due out on Monday and Wednesday will also influence.

From elsewhere, China’s trade data and industrial production and 3rd quarter GDP numbers on Friday will also influence risk appetite.

While economic data is on the heavier side, continued progress on Brexit and the U.S – China trade talks will buffer the effect of any disappointing figures.

A delay to tariffs that were due to be introduced on 15th October, was key in the week.

Looking at the forecasts, Eurozone and China economic stats are skewed to the negative.

European Equities: A Light Economic Calendar Leaves Geopolitics in Focus

Economic Calendar:

Friday, 11th October

  • German CPI (MoM) (Sep) Final
  • French CPI (MoM) (Sep) Final
  • Spanish CPI (YoY) (Sep) Final
  • Spanish HICP (YoY) (Sep) Final

The Majors

It was a 2nd consecutive day in the green for the majors on Thursday, with the CAC40 rallying by 1.27% to lead the way. The DAX30 and EuroStoxx600 saw more modest gains of 0.58% and 0.65% respectively.

Geopolitics provided support on the day, with news of U.S – China trade talks going into a 2nd day and progress on Brexit supporting the majors.

From Washington, news of Trump planning to meet with China’s Vice Premier He was taken as a positive. On the Brexit front, Johnson and Varadkar also provided support, stating that they see a way to a Brexit deal.

The Stats

It a relatively quiet day on the Eurozone economic calendar on Thursday. Economic data was limited to German trade data for August, which pegged back the DAX30 on the day.

Germany’s trade surplus narrowed from €20.5bn to €18.1bn in August. Economists had forecast a narrowing to €19.4bn.

According to Destatis,

  • Exports fell by 1.8% from the previous month and by 3.9% from the same month a year earlier.
  • Compared with August 2018, exports to the EU fell by 3.3%.
  • Exports to the Eurozone rose by 3.7% in August.
  • Compared with August 2018, the exports of goods to non-EU countries fell by 4.8%
  • Imports rose by 0.5% from the previous month, while falling by 3.1% on the same month a year earlier.
  • Compared with the previous year, imports from the EU fell by 2.7%, while imports from the Eurozone fell by 3.8%.
  • The imports of goods from non-EU countries fell by 3.6%, compared with August 2018.

From the U.S, softer inflation figures had a muted impact on the majors as the markets responded to positive news from Washington and Britain.

The Market Movers

For the DAX: There was further support for the auto sector, with Volkswagen rallying by 2.56% to lead the way. Daimler and BMW weren’t far behind, with gains of 1.92% and 1.09% respectively. Continental trailed with a 0.34% gain. While trade data was negative for the sector, positive updates on trade talks delivered the boost.

Bank stocks also found support, with Deutsche Bank rallying by 2.41% and Commerzbank by 3.85%

From the CAC, it was also a positive day for the banks. Soc Gen led the way, rallying by 3.32%. BNP Paribas and Credit Agricole weren’t far behind, with gains of 2.82% and 2.34% respectively. For the autos, Renault rose by 0.59%, while Peugeot surged by 3.48%.

LVMH led the way on the day, with a 5.56% gain, supported by strong 3rd quarter earnings results.

On the VIX Index

The VIX Index saw red once more on Thursday, falling by 5.74%. Following on from an 8.09% fall on Wednesday, the VIX ended the day at 17.6.

Positive updates from Washington on trade talks ultimately left the VIX in the red at the day end. Hopes of progress on Brexit negotiations also eased market jitters on the day.

VIX 11/10/19 Daily Chart

The Day Ahead

It’s a relatively quiet day ahead on the Eurozone economic calendar. Finalized September inflation figures are due out of Germany, France, and Spain.

We expect the stats to have a muted impact on the majors, however, with the Brexit and U.S – China trade talks to remain the key drivers.

From the U.S, import and export price index figures will also have a muted impact, while prelim October consumer sentiment figures will have some influence.

In the futures market, at the time of writing, the DAX30 was down by 2 points, while the Dow was up by 45 points.

European Equities: German Stats, Brexit and Trade Talks in Focus

Economic Calendar:

Thursday, 10th October

  • German Trade Balance (Aug)

Friday, 11th October

  • German CPI (MoM) (Sep) Final
  • French CPI (MoM) (Sep) Final
  • Spanish CPI (YoY) (Sep) Final
  • Spanish HICP (YoY) (Sep) Final

The Majors

It was back in the green for the majors on Wednesday, with the DAX30 rallying by 1.04% to lead the way. The CAC40 and EuroStoxx600 weren’t far behind, with gains of 0.78% and 0.42% respectively.

The trade war pendulum once more swung in favor of the global equity markets. News of China being open to an agreement on the basis that no further tariffs are introduced provided support on the day.

Further tariffs on Chinese goods are due to be rolled out next week and at the end of the year.

The Stats

It was a particularly quiet day on the Eurozone economic calendar on Wednesday. There were no material stats to provide the European majors with direction on the day.

With economic data from the U.S limited to August JOLTs job openings, geopolitics remained the key driver on the day.

The Market Movers

For the DAX: There was finally some support for the auto sector, with Daimler rallying by 2.5% to lead the way. BMW (+1.09%), Continental (+0.49%), and Volkswagen (+0.97%) also found support from fresh optimism on trade talks.

Bank stocks continued to struggle, however, with Deutsche Bank rising by just 0.16% and Commerzbank falling by 0.15%

Adidas led the way on the day, rallying by 3.26%, with the shift in sentiment towards the U.S – China trade talks delivering the upside.

From the CAC, it was somewhat better for the banks. Soc Gen led the way, rising by 0.48%. BNP Paribas and Credit Agricole saw more modest gains of 0.39% and 0.05% respectively. For the autos, Renault rose by 0.20%, with Peugeot gaining 0.90%.

On the VIX Index

The VIX Index saw red on Wednesday, falling by 8.09%. Partially reversing a 13.55% fall from Tuesday, the VIX ended the day at 18.6.

Yet another shift in sentiment towards today’s resumption of trade talks provided support to the equity markets, to pin back the VIX.

There’s a lot riding on this week’s talks, which leaves the majors exposed to the prospect of heavy falls should trade talks fail to deliver an agreement.

VIX 10/10/19 Daily Chart

The Day Ahead

It’s a relatively quiet day ahead on the Eurozone economic calendar. German trade data for August is due out ahead of the European open.

Following a mixed set of stats earlier in the week, we can expect the figures to influence going into the open.

With the lingering threat of U.S tariffs on EU goods, Germany’s economy would be hard hit from such an eventuality.

From the U.S, September inflation figures are also due out but will likely have a muted impact on the majors, barring a material pickup in inflationary pressure.

Outside of the stats, expect updates from Brexit and U.S – China trade talks to also influence on the day.

We would expect market sensitivity to the U.S – China trade talks to be greatest over the course of the session.

In the futures market, at the time of writing, the DAX30 was down by 52.5 points, with the Dow down by 169 points.

European Equities: No Economic Data Leaves Trade War Chatter in Control

Economic Calendar:

Thursday, 10th October

  • German Trade Balance (Aug)

Friday, 11th October

  • German CPI (MoM) (Sep) Final
  • French CPI (MoM) (Sep) Final
  • Spanish CPI (YoY) (Sep) Final
  • Spanish HICP (YoY) (Sep) Final

The Majors

It was back in the red for the majors on Tuesday, with the CAC40 sliding by 1.18% to lead the way. Things were not much better for the EuroStoxx600 and DAX30, which fell by 1.11% and by 1.05% respectively.

The losses came in spite of better than anticipated economic data out of Germany, with sentiment towards the trade war weighing.

Expectations of progress in trade talks between the U.S and China deteriorated as the markets reacted to news of the U.S including an additional 28 Chinese firms to the blacklist…

To make matters worse, there was some controversy over the ongoing Hong Kong protests. China broadcasters and media suspended the airing of NBA preseason games on Tuesday. The move came in response to the GM of the Houston Rockets, Daryl Morey, tweeting support for the pro-democracy protests.

When considering the fact that China has ramped up the import of U.S agricultural goods, there’s unlikely to be too much give should the U.S stand firm on tariffs, blacklisted companies, and Huawei…

The Stats

It was another quiet day on the Eurozone economic calendar on Tuesday. German industrial production figures for August provided direction in the early part of the day.

According to Destatis,

  • Month-on-month, industrial production rose by 0.3%, reversing a 0.4% fall in July. Economists had forecast a decline of 0.2%.
  • In August, the production of industry excl. energy and construction rose by 0.7%.
  • Within industry, the production of intermediate goods rose by 1% and by 1.1% for the production of capital goods.
  • The production of consumer goods fell by 1.0%, however.
  • Outside of industry, energy production slid by 1.7%, with the production of construction falling 1.5%.
  • Year-on-year, industrial production was down 4%.

From the U.S, wholesale inflation figures for September had a muted impact on the majors late in the day.

The Market Movers

For the DAX: It was yet another bearish day for the auto sector, with BMW (-1.12%), Continental (-0.59%), and Daimler (-0.49%) on the slide.  Volkswagen bucked the trend with a gain of 0.12%.

Bank stocks also struggled on the day, with Deutsche Bank sliding by a further 2.25%. Commerzbank fell by a more modest 1.62%

Leading the way down on the day, however, were Wirecard and Infineon Tech, which tumbled by 4.81% and by 3.59% respectively. The losses came in response to the shift in sentiment towards trade through the day.

From the CAC, it was not much better for the banks. Soc Gen led the way down, sliding by 1.72%. Credit Agricole and BNP Paribas saw more modest losses of 1.55% and 0.68% respectively. For the autos, Renault fell by just by 0.04%, while Peugeot tumbled by 2.81%.

On the VIX Index

The VIX Index saw further upside on Tuesday, rising by 13.55%. Following a 4.81% gain on Monday, the VIX ended the day at 20.3.

Risk aversion hit the majors on Tuesday as the markets reacted to the news from the U.S on the blacklisting of Chinese firms.

Expectations of progress in trade talks had supported the majors going into this week. It’s not the first time that the U.S has made an antagonistic move ahead of trade talks…

VIX 09/10/19 Daily Chart

The Day Ahead

It’s a particularly quiet day ahead on the Eurozone economic calendar. There are no material stats due out of the Eurozone to provide the majors with direction.

From the U.S, JOLT’s job opening figures are due out that could influence should there be a sizeable fall in quit rates. Barring dire quit rates and an unexpected slide in job openings, the numbers are unlikely to impact.

With stats on the lighter side through the day, market sentiment towards the U.S – China trade talks will be key. High-level trade talks are set to resume, but with the U.S administration blacklisting more Chinese companies, China may not be as receptive to U.S demands.

Expect any updates from Washington to have a material influence on risk appetite on the day.

In the futures market, at the time of writing, the DAX30 was 4 points, with the Dow up by 44 points.

European Equities: Economic Data and Trade in Focus

Economic Calendar:

Tuesday, 8th October

  • German Industrial Production (MoM) (Aug)

Thursday, 10th October

  • German Trade Balance (Aug)

Friday, 11th October

  • German CPI (MoM) (Sep) Final
  • French CPI (MoM) (Sep) Final
  • Spanish CPI (YoY) (Sep) Final
  • Spanish HICP (YoY) (Sep) Final

The Majors

It was a bullish start to the week for the European majors. The EuroStoxx600 led the way with a 0.71% gain, with the DAX30 and CAC40 rising by 0.70% and by 0.61% respectively.

The majors found further support from Friday’s U.S labor market figures, which had reported a fall in the U.S unemployment rate to 3.5%.

Economic data out of Germany continued to disappoint, with sentiment towards Brexit and U.S – China trade talks also limiting any upside.

The Stats

It was a quiet day on the Eurozone economic calendar on Monday. German factory order figures for August delivered few surprises in the early part of the day.

According to Destatis,

  • Month-on-month, factory orders fell by 0.6%, following a 2.1% slide from the previous month. Economists had forecast a decline of 0.3%.
  • Domestic orders decreased by 2.6%, while foreign orders increased by 0.9% in August, month-on-month.
  • New orders from the euro area were up by 1.5%, with new orders from other countries rising by 0.4% compared with July-19.
  • Manufacturers of intermediate goods saw new orders increase by 1.1%, while manufacturers of capital goods saw new orders fall by 1.6%.
  • For consumer goods, new orders slipped by 0.9%.
  • Year-on-year, factory orders fell by 6.7% compared with a 5% decline in July.

There were no material stats from the U.S to influence later in the session.

The Market Movers

For the DAX: It was yet another bearish day for the auto sector, with Continental sliding by 2.65%. Daimler (-0.89%), BMW (-0.21%), and Volkswagen (-0.01%) also saw red.

Bank stocks also struggled on the day, with Deutsche Bank sliding by  1.18%. Commerzbank fell by a more modest 0.5%

From the CAC, it was a bullish day for the banks. BNP Paribas led the way, rising by 0.78%. Credit Agricole and Soc Gen saw more modest gains of 0.71% and 0.51% respectively. For the autos, Renault rose by 0.28%, with Peugeot ending the day up by 0.32%.

A divergence in sentiment between Germany and France’s respective economies continued to deliver mixed results for both sectors.

On the VIX Index

The VIX Index rose by 4.81% to end the day at 17.9.

While the European majors found support from the hope that the U.S economy will avoid a recession, Trump chatter weighed on the U.S majors later in the day.

VIX 08/10/19 Daily Chart

The Day Ahead

It’s a quiet day ahead on the Eurozone economic calendar. August German industrial production figures are due out ahead of the European open.

Following Monday’s factory order numbers and last week’s private sector PMI numbers, the numbers are unlikely to provide too much support to the DAX.

From the U.S, wholesale inflation figures will likely have a muted impact on the European majors later today, barring an unexpected pickup in inflationary pressures.

Outside of the numbers, we can expect Brexit chatter and sentiment towards the U.S – China trade talks to remain the key drivers on the day.

In the futures market, at the time of writing, the DAX30 was 15.5 points, with the Dow up by 22 points.

European Equities: German Factory Orders and Geopolitics in Focus

Economic Calendar:

Monday, 7th October

  • German Factory Orders (MoM) (Aug)

Tuesday, 8th October

  • German Industrial Production (MoM) (Aug)

Thursday, 10th October

  • German Trade Balance (Aug)

Friday, 11th October

  • German CPI (MoM) (Sep) Final
  • French CPI (MoM) (Sep) Final
  • Spanish CPI (YoY) (Sep) Final
  • Spanish HICP (YoY) (Sep) Final

The Majors

It was a bullish end to a bearish week on Friday. The CAC40 led the way with a 0.86% gain, while the EuroStoxx600 and DAX30 both rose by 0.73%.

Friday’s gains were not enough to reverse losses from the week, however, with the DAX sliding by 2.97%. The EuroStoxx600 and CAC40 weren’t far behind, with losses of 2.95% and 2.70% respectively.

On the day, the gains came in spite of geopolitical risks continuing to linger, with Brexit, trade, and impeachment talk in focus.

Labor market figures from the U.S ultimately delivered the upside on the day, with the European majors reversing losses from earlier in the day.

The Stats

It was a particularly quiet day on the Eurozone economic calendar on Friday. There were no material stats to provide the European majors with direction.

The lack of stats left the majors in the hands of a busy U.S economic calendar, coupled with any chatter on Brexit and trade

From the U.S, it was a mixed set of labor market numbers. Nonfarm payrolls fell short of a forecasted 140k increase, with just 136k payrolls added in September. Wage growth also fell short of the market expectations, with wages rising by 2.9% year-on-year, which was down from 3.2% in August. Economists had forecasted wage growth to hold steady at 3.2%.

On the positive, however, was a fall in the U.S unemployment rate from 3.7% to 3.5% in September, which delivered the upside for the majors on the day.

Strong labor market conditions are expected to continue to support economic growth near-term. At 3.5%, the FED may also need to hold back on a 2nd rate cut…

The Market Movers

For the DAX: It was another bearish day for the auto sector, with Daimler (-0.38%), BMW (-0.37%), and Volkswagen (-0.12%) amongst the worst performers. Continental bucked the trend on Friday, gaining 0.31% after seeing significantly heavier losses earlier in the week.

Negative sentiment towards the German and global economy weighed on the day, with uncertainty ahead of U.S – China trade talks also weighing. With Trump also talking of tariffs on EU goods, there was unlikely to be any upside for autos in the week.

It was also a mixed day for Bank stocks, with Deutsche Bank gaining 0.35%, while Commerzbank slid by 2.28%.

From the CAC, it was a bullish day for the banks. Credit Agricole led the way, rising by 0.48% on Friday. BNP Paribas and Soc Gen rose by 0.40% and by 0.28% respectively. For the autos, Renault fell by 0.28%, whilst Peugeot ended the day flat.

On the VIX Index

The VIX Index fell by 11% to end the day at 17.0

In spite of weaker than anticipated nonfarm payroll and wage growth figures, a slide in the U.S unemployment rate weighed on the VIX.

Geopolitics took a temporary back seat on the day, ultimately resulting in the downside.

VIX 07/10/19 Daily Chart

The Day Ahead

It’s a quiet day ahead on the Eurozone economic calendar. August German factory orders are due out ahead of the European open.

Following some dire numbers last week, we can expect the European majors to be sensitive to the figures.

While we can expect the figures to provide direction, geopolitics will continue to influence on the day. Any progress on Brexit negotiations would be a positive, though there is also trade war chatter to consider.

While the U.S – China negotiations are due to resume this week, any further threat of tariffs on EU goods would likely overshadow any positive Brexit news.

In the futures market, at the time of writing, the DAX30 was down by 2.5 points, with the Dow down by 119 points.

European Equities: A Week in Review – 04/10/19

The Majors

It was another week in the red for the European majors. The DAX30 led the way down, falling by 2.97%, with the EuroStoxx600 and CAC40 declining by 2.95% and by 2.70% respectively.

Through the week, economic data from the Eurozone and the U.S ultimately did the damage, with geopolitics taking a backseat for a change.

Geopolitics

Sentiment towards the U.S – China trade war was negative from the start of the week. News of the U.S planning to curb investments into China was the negative, though had a relatively muted impact on Monday.

With impeachment talks and Brexit also in focus in the week, there was little support for the majors.

Monetary Policy

Dire economic data from the U.S suggests the FED may need to do more in the months ahead. Economic data out of the Eurozone was not much better, however, which will give Draghi’s replacement an early test…

The Stats

It was a particularly busy week on the Eurozone economic calendar. The week kicked off on a positive note, with German retail sales and German and Eurozone unemployment numbers supporting a positive end to the quarter.

Through the rest of the week, however, it was doom and gloom. Private sector PMI numbers from both the Eurozone and the U.S did the damage.

With Germany’s private sector contracting for the first time since April 2013, the Eurozone’s composite fell to its lowest level since June 2013.

The Markit survey showed that growth in Spain and Ireland moderated, with France only seeing modest growth.

New business weighed at the end of the quarter, with new business across the bloc falling at the most accelerated pace since mid-2013.

By ranking, Spain came out on top, with a 2-month low composite PMI.

A 0.3% rise in Eurozone retail sales figures in August eased the pain, though slowing service sector activity will be a concern…

The Market Movers

From the DAX, it was another bearish week for the auto sector. Volkswagen and Daimler and led the way down with losses of 3.52% and 2.44% respectively. BMW and Continental saw more modest losses of 1.70% and 1.53% respectively.

Things were no better for the banking sector. Deutsche Bank slid by a further 5.50%, while Commerzbank tumbled by 8.42%, following on from the previous week’s 6.12% loss.

Dire manufacturing PMI numbers out of Germany and negative sentiment towards the U.S – China trade war weighed on the autos. For the banks, more global economic doom and gloom hit government bond yields and the financial sector.

From the CAC, the banks also struggled. BNP Paribas and Credit Agricole fell by 4.31% and by 4.86% respectively. Soc Gen led the way, however, sliding by 6.19%. French autos saw red for a third consecutive week. Peugeot slide by 6%, with Renault falling by 5.20%.

On the VIX Index

The VIX Index fell by 0.7% in the week. Following a 3.12% gain from the previous week, the VIX ended the week at 17.

Following a string of weak numbers out of the Eurozone and the U.S, risk-on sentiment on Friday reversed gains from earlier in the week.

U.S unemployment figures ultimately weighed on Friday, with the U.S unemployment rate falling to 3.5%.

VIX 05/10/19 Weekly Chart

The Week Ahead

It’s a quieter week on the Eurozone economic calendar. Key drivers include German factory orders, industrial production and trade data.

Finalized inflation figures out of Germany and Spain will likely have a muted impact on the majors.

From elsewhere, service sector PMI numbers from China and inflation and JOTLs job opening figures from the U.S will also influence

With the economic calendar on the lighter side, however, geopolitics will likely recapture the market’s attention.

U.S – China trade talks are set to resume and there’s also Brexit to factor in. Time is running out for Boris Johnson and the Pound…

For the U.S President, impeachment talk will be an unwanted distraction.

European Equities: Can Nonfarm Payrolls Save the Day?

The Majors

With Germany on holiday, volumes were on the lighter side in what was a mixed day for the European majors on Thursday. The CAC40 rose by 0.30% on Thursday, while the EuroStoxx600 slipped by 0.02%.

Another set of weak economic data pinned back the CAC40, while a pickup in service sector activity in Italy limited the downside for the EuroStoxx600.

On the geopolitical front, the U.S administration announced plans to hit the EU with tariffs, adding to the market angst. While the EU is embroiled in a Brexit battle with the UK, the EU is unlikely to throw in the towel. More doom and gloom to come or a rapid resolution? That is anyone’s guess…

The Stats

It was a busy day on the Eurozone economic calendar on Thursday. Service sector PMIs out of Spain and Italy kicked off the session.

Finalized French and German service sector PMIs and, the Eurozone’s finalized services and composite PMI also influenced.

The Spanish Services PMI fell from 54.3 to 53.3 in September, which was worse than a forecasted 53.8.

Italy’s Services PMI rose from 50.6 to 51.4, which was also better than a forecasted 50.4.

French Services PMI Final stood at 51.1, which was down from a prelim 51.6 and August’s 53.4.

German Services PMI Final stood at 51.4, which was down from a prelim 52.5 and August’s 54.8

Eurozone Services PMI Final stood at 51.6, down from a prelim 52.0 and August 53.5

Eurozone Markit Composite PMI Final came in at 50.1, which was down from a prelim 50.4 and August 51.9.

According to the finalized Eurozone Markit PMI survey,

  • The composite fell to the lowest level since Jun-2013, as the manufacturing sector contracted at a quicker pace and service sector activity stalled.
  • Modest growth in the services sector was the weakest this year.
  • Germany’s private sector contracted for the first time since April-2013.
  • Growth elsewhere also failed to impress, with France and German reporting only a marginal increase in activity.
  • Spain and Ireland reported slower private sector growth.
  • Incoming new work weighed on the Eurozone composite, with data showing that new business fell by the greatest degree since mid-2013.
  • Export trade remained a key source of business weakness, with new export orders falling once more in September.
  • In spite of weaker business activity, employment growth was sustained in the month, though the pace of hiring was the weakest in three-and-a-half years.
  • By country, Spain ranked #1 with a 2-month low composite PMI. Germany ranked 5th, with the composite hitting an 83-month low.

Later in the session, Eurozone retail sales rose by 0.3%, month-on-month, in August, which was in line with forecasts. In July, retail sales had fallen by 0.5%. According to Eurostat,

  • Compared with Jul-2019, sales of non-food produces and automotive fuels rose by 0.4% and 0.1% respectively to deliver the upside. Sales of food, drinks, and tobacco remained unchanged.
  • Portugal (+1.1%), Estonian (1%) and Finland (0.8%) reported the largest increases in sales.
  • Austria and Slovakia reported the largest falls in sales, with both falling by 1.3%.
  • Year-on-year, retail sales rose by 2.1%.

From the U.S, the ISM non-manufacturing PMI fell from 56.4 to 52.6, which also weighed.

The Market Movers

The DAX was closed on Thursday.

From the CAC, it was a bearish day for the banks. Soc Gen led the way, sliding by 1.27%. Credit Agricole and BNP Paribas fell by 0.91% and 0.89% respectively. For the autos, Renault slid by 0.92%, whilst Peugeot fell by 0.89%.

On the VIX Index

The VIX Index fell by 7% to end the day at 19.1.

Disappointing data and the talk of tariffs on EU goods failed to sink the majors on the day, with U.S equities closing ou the day in the green.

VIX 10/04/19 Daily Chart

The Day Ahead

It’s a particularly quiet day ahead on the Eurozone economic calendar. There are no material stats due out to provide the majors with direction.

A lack of stats will leave the majors in the hands of U.S stats and geopolitical risk.

From the U.S, its nonfarm payrolls and wage growth figures that will have an impact on the European majors this afternoon.

Expect any weak numbers to weigh heavily as concerns over the global economic outlook linger.

On the geopolitical front, it’s the week before trade talks resume and its Friday. It wouldn’t be the first time that the U.S President sent a few tweets to get the blood boiling ahead of talks…

There’s also impeachment chatter and Brexit to consider on the day.