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Bob Mason
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Economic Calendar:

Monday, 30th September

  • German Retail Sales (MoM) (Aug)
  • Spanish GDP (QoQ) (Q2)
  • Spanish CPI (YoY) (Sep) Prelim
  • Spanish HICP (YoY) (Sep) Prelim
  • German Unemployment Change (Sep)
  • German Unemployment Rate (Sep)
  • Eurozone Unemployment Rate (Aug)
  • Italy CPI m/m (Sep) Prelim
  • German CPI (MoM) (Sep) Prelim

Tuesday, 1st October

  • Spanish Manufacturing PMI (Sep)
  • Italian Manufacturing PMI (Sep)
  • French Manufacturing PMI (Sep) Final
  • German Manufacturing PMI (Sep) Final
  • Eurozone Manufacturing PMI (Sep) Final
  • Eurozone Core CPI (YoY) (Sep) Prelim
  • Eurozone CPI (YoY) (Sep) Prelim

Wednesday, 2nd October

  • Spanish Unemployment Change

Thursday, 3rd October

  • Spanish Services PMI (Sep)
  • Italian Services PMI (Sep)
  • French Services PMI (Sep) Final
  • German Services PMI (Sep) Final
  • Eurozone Markit Composite PMI (Sep) Final
  • Eurozone Services PMI (Sep) Final
  • Eurozone Retail Sales (MoM) (Aug)

The Majors

The European majors rounded the week off on a high on Friday. Leading the day was the DAX30, which rose by 0.75%, with the CAC40 and EuroStoxx600 gaining 0.36% and 0.47% respectively.

A 2nd consecutive day in the green wasn’t enough to reverse losses from earlier in the week, however. The CAC40 ended the week down by 0.88%, with the DAX30 and EuroStoxx600 falling by 0.70% and 0.71% respectively.

Gains at the end of the week came in spite of impeachment talk in the U.S and political chaos in the UK.

Support came from hopes of progress in U.S – China trade talks that are set to resume in Washington on 10th October.

Even disappointing economic data failed to pull the majors into the red on the day.

The Stats

It was a relatively quiet day on the Eurozone economic calendar on Friday. Economic data was limited to French consumer spending and prelim September inflation figures.

According to Insee, consumer spending stalled in August, month-on-month, following a 0.4% rise in July. Economist had forecasted a 0.3% increase.

Inflation figures also failed to impress. Consumer prices fell by 0.3%, month-on-month, in September, following a 0.5% rise in August. The harmonized index for consumer prices fell by 0.4% in September, following a 0.5% rise in August.

From the U.S, economic data was on the heavier side but had a muted impact on the majors. A pickup in core durable goods orders and consumer sentiment figures were positive on the day. Weaker than expected personal spending figures offset the positives for the majors on the day.

The Market Movers

From the DAX, autos were mixed once more on Friday. Volkswagen and Continental fell by 0.01% and 1.29% respectively, while Daimler and BMW rose by 0.34% and by 0.74% respectively.

It was a bullish day for the banks, however, with Deutsche Bank rallying by 1.89%. Commerzbank saw a more modest 0.64% rise.

Leading the way on the DAX were Lufthansa and Adidas, which rallied by 1.98%and 1.90% respectively. Lufthansa found further support following Thomas Cook’s collapse, while trade hopes drove Adidas. Negative sentiment towards tech stocks weighed on Infineon Technologies, however, which tumbled by 4.32%.

From the CAC, it was another positive day for the banks. BNP Paribas led the way, rising by 0.79%. Credit Agricole and Soc Gen gained 0.41% and 0.04% respectively. For the autos, Renault rose by 0.21%, whilst Peugeot rallied by 1.28%.

On the VIX Index

The VIX Index rose by 7.16% to end the day at 17.12.

News of the U.S planning to cap investments into China sent U.S stocks into the red on Friday, which supported the VIX on the day.

VIX 30/09/19 Daily Chart

The Day Ahead

It’s a busy day ahead on the Eurozone economic calendar. Key stats include German retail sales and unemployment figures. The Eurozone’s unemployment rate, prelim inflation figures out of Spain, Italy, and Germany and Spanish GDP numbers are also due out.

Barring a marked pickup in inflationary pressures, Germany’s retail sales and unemployment figures will have the greatest influence on the day.

From the U.S, stats are limited to Chicago’s PMI which will unlikely have a material influence, with U.S politics in focus.

Impeachment talk and trade war chatter will likely keep the news wires busy on the day.

While economic data is on the heavier side, we would expect geopolitics to remain the markets’ main area of focus on the day.

Earlier in the day, the private sector PMI numbers out of China delivered mixed results. Renewed jitters over the U.S – China trade war added to the negative sentiment in Asia. News late on Friday of the U.S planning to cap investments into China suggests that talks may not go as smoothly as had been anticipated…

In the futures markets, at the time of writing, the DAX was up by 21 points, while the Dow Mini was down by 40 points.

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