European Equities: A Busy Economic Calendar, Powell and Trade in FocusA busy economic calendar will provide direction, with FED Chair Powell testimony and geopolitics also in the mix.
Thursday, 14th November
- German GDP (QoQ) (Q3) 1st Estimate
- German GDP (YoY) (Q3) 1st Estimate
- French CPI (MoM) (Oct) Final
- French HICP (MoM) (Oct) Final
- Spanish CPI (YoY) (Oct) Final
- Spanish HICP (YoY) (Oct) Final
- Eurozone GDP (QoQ) (Q3) 2nd Estimate
- Eurozone GDP (YoY) (Q3) 2nd Estimate
Friday, 15th November
- Italian CPI (MoM) (Oct) Final
- Eurozone Core CPI (YoY) (Oct) Final
- Eurozone CPI (MoM) (Oct)
- Eurozone CPI (YoY) (Oct) Final
- Eurozone Trade Balance (Sep)
It was back into the red for the European majors on Wednesday. The DAX30 fell by 0.4%, with the EuroStoxx600 and CAC40 declining by 0.26% and by 0.21% respectively.
Negative sentiment towards trade weighed on the European majors. The markets responded to Trump’s speech at the Economic Club in New York.
Late in the day on Tuesday, Trump told business leaders that phase 1 of a trade agreement would be completed soon. Trump did also state, however, that there would be a ramp-up in tariffs if China did not agree to the demands of the U.S
A lack of details on what the phase 1 agreement would entail and Trump’s calling China cheaters certainly didn’t help.
It was another relatively quiet day on the Eurozone economic calendar on Wednesday. Finalized October inflation figures out of Germany and September industrial production numbers from the Eurozone were in focus.
According to Destatis,
- Consumer prices rose by 0.1% month-on-month, which was in line with prelim and forecasts. In September, consumer prices were flat.
- Prices for footwear (+2.3%) and clothing (+0.9%) provided support, while a 0.1% fall in prices for energy weighed.
- Germany’s annual rate of inflation came in at 1.1%, which was also in line with prelim figures.
- Year-on-year, energy product prices slid by 2.1%, while prices for food were up by 1.1%.
- Prices were also up for newspapers and periodicals (+5.1%) and tobacco products (+4.1%).
- There were declines in prices for mineral oil products (-9.1%), information processing equipment (-7.1%), consumer electronics (-5.4%), and telephones (-5.1%).
- Prices for goods rose by just 0.4%, while service prices jumped by 1.7%.
According to Eurostat,
- Industrial production rose by 0.1% in September, following a 0.4% rise in August. Economists had forecast a 0.3% decline.
- Support came from a 1.0% rise in the production of non-durable consumer goods and a 0.6% rise in the production of capital goods.
- A fall in the production of durable consumer goods (-0.7%), energy (-0.4%), and intermediate goods (-0.7%) limited the upside.
- By member state, Ireland led the way, with production surging by 8.8%. Malta (-3.7%), Portugal (-2.3%), and Estonia (-1.5%) saw the largest declines.
- Year-on-year, industrial production slid by 1.7%, with Germany seeing the largest fall in production, down by 5.3%.
From the U.S, a mixed set of inflation numbers had no impact on the majors. Geopolitics overshadowed the stats once more on Wednesday.
There was also some caution ahead of FED Chair Powell’s testimony that was delivered after the European close.
The Market Movers
For the DAX: It was a bearish day for the auto sector, as the markets responded to Trump’s comments on trade. Continental led the way down, sliding by a further 2.23%, with BMW (-1.29%) and Volkswagen (-0.86%) also seeing heavy losses. Daimler saw a more modest 0.67% loss to avoid the bottom 10.
It was no better for the banks on the day. Deutsche Bank slid by 4.14%, while Commerzbank tumbled by 6.14%.
From the CAC, bank stocks also saw red. Soc Gen led the way, sliding by 2.10%. Credit Agricole and BNP Paribas fell by 1.92% and 1.42% respectively.
It was also a bad day for the autos. Peugeot fell by 2.10%, with Renault down by 1.78%.
On the VIX Index
The upward trend in the week continued on Wednesday, with the VIX rising by 2.52%. Following a 0.08% decline on Tuesday, the VIX ended the day at 13.0.
While the S&P500 managed to eke out a 0.07% gain on the day, negative sentiment towards trade provided support on the day.
FED Chair Powell’s first day of testimony also limited any upside for the U.S majors, with Powell suggesting that rates were likely to hold steady.
The Day Ahead
It’s a busy day ahead on the Eurozone economic calendar. Key stats include Germany’s 1st estimate GDP numbers for the 3rd quarter and the Eurozone’s 2nd estimate figures.
Finalized October inflation numbers are also due out of France and Spain but will likely have a muted impact on the majors.
Expect the DAX40 to be particularly sensitive to the quarter-on-quarter GDP number.
From the U.S, October wholesale inflation figures will unlikely influence ahead of FED Chair Powell’s 2nd day of Testimony.
Ahead of the European open, industrial production figures out of China will set the tone, as the markets also respond to FED Chair Powell’s 1st day of testimony late on Wednesday.
On the geopolitical risk front, we can expect any chatter on trade to also provide direction throughout the day.
In the futures market, at the time of writing, the DAX30 was up by 6.5 points, while the Dow down by 33 points.