European Equities: A Bullish Day or Will Trump and U.S Retail Sales Hurt?Economic data is on the lighter side going into the weekend. U.S retail sales could spoil the party, as the futures point to a positive open.
Friday, 14th June
- French CPI m/m (May) Final
- French HICP m/m (May) Final
- Italian CPI m/m (May) Final
The European majors managed to hold onto positive territory on Thursday. The DAX30 led the way, rising by 0.44% to reverse Wednesday’s 0.33% loss. The EuroStoxx600 eked out a 0.16% gain to partially reverse Wednesday’s 0.3% loss. The CAC40 ended the day with just a 0.01% gain following Wednesday’s 0.62% fall.
Support came from better sentiment towards the U.S – China trade war. In spite of the better sentiment, President Trump threatened more tariffs should no deal be reached.
News also hit the wires on Thursday of more than 600 U.S companies urging the U.S President to bring an end to the extended trade war. With pressure on the U.S President and the U.S economy mounting, next week’s G20 Summit could be last chance saloon for a resolution.
More tariffs would certainly put a greater strain on both economies, but of greater significance, would also put doubts into whether Trump could win a 2nd term.
Economic data was on the lighter side on Wednesday. Stats included Germany’s finalized inflation figures for May and the Eurozone’s April industrial production numbers.
According to Eurostat, Eurozone industrial production fell by 0.5% in April, month-on-month, which was in line with forecast.
- Member states with the largest falls in industrial production were Germany (-2.3%) and Latvia (-2.0%). Ireland (+3.6%) and Portugal (+2.9%) recorded the highest increases in production.
- By sector, durable consumer goods (-1.4%) and intermediate durable goods (-1%) weighed.
- Partially offsetting the decline was a 0.2% increase in production of non-durable consumer goods and a 1.4% increase in energy production.
- Year-on-year, industrial production fell by 0.4%.
- Germany had the largest year-on-year fall in production, falling by 3.4%, followed by the Netherlands, down by 2.7%
- Lithuania (+13.8%) and Ireland (+6.9%) recorded the largest increases in production, year-on-year.
On the inflation front, German consumer prices rose by just 0.2% in May, according to finalized figures, which was in line with forecast. Consumer prices had risen 1% in April.
Outside of the Eurozone, economic data was on the lighter side, with U.S economic data having a muted impact.
Oil prices were on the rise, however, after an attack on a tanker in the Gulf.
The Market Movers
From the DAX, Wirecard led the way, rallying by 1.89%. In spite of the upward momentum through the day, the auto sector was mixed. Continental and Daimler fell by 0.41% and by 0.17% respectively. BMW (+0.4%) and Volkswagen (+0.11%) managed to closed out the day in positive territory.
The banking sector failed to benefit from the upside on the day, with Deutsche Bank ending the day down 0.03%. Commerzbank managed to eke out a 0.1% gain, however.
From the CAC40, it was also a mixed day for the banking sector. BNP Paribas fell by 0.1%, whilst Credit Agricole gained 0.1%. From the auto sector, Renault reversed most of Wednesday’s 1.31% loss with a 1.13% gain on the day.
The Day Ahead
Economic data due out of the Eurozone is limited to French and Italian finalized inflation figures. We can expect the stats to have a muted impact on the European majors later this morning.
U.S retail sales figures due out later this afternoon will have a greater influence on the day.
Outside of the stats, chatter from the Oval Office on trade will continue to have an impact. Trump’s Twitter account tends to be quite active going into the weekends…
With the G20 now just around the corner, the U.S President may look to turn on the heat on China.
At the time of writing, the DAX was up by 15 points. The Dow Mini was up by 46 points.