European Equities: A Fall in China Imports Will Test Sentiment ahead of Earnings

A larger than expected slide in China imports raised a red flag for the European majors. Earnings will need to impress through the day…
Bob Mason
Weltweiter Handel

Economic Calendar:

Friday, 12th April 2019

  • Spanish CPI (YoY) (Mar) Final
  • Spanish HICP (YoY) (Mar) Final
  • Eurozone Industrial Production m/m (Feb)

The Majors

It was a 2nd consecutive day in the green for the European majors on Thursday. Leading the way on the day was the CAC40, which rose by 0.66%. The DAX and EuroStoxx600 saw more modest gains, rising by 0.25% and by 0.06% respectively.

While both the DAX and EuroStoxx600 remained in negative territory for the current week, Thursday’s gains led to the CAC moving into positive territory, up by 0.17%.

Through to Thursday’s close, only the ASX200 and NASDAQ were in positive territory for the current week, across the major bourses.

Economic data released through the European session on Thursday was on the lighter side. Key stats included finalized inflation figures out of France and Germany. Released ahead of the European open, the in-line with prelim figures had a muted impact on sentiment towards monetary policy and the EUR.

Support through the day came from Wednesday’s dovish ECB press conference, any monetary policy tightening now off the table for the foreseeable future.

On the DAX, Deutsche Bank and Volkswagen were amongst the leading stocks, up by 2.49% and by 1.95% respectively. Commerzbank also found strong support, rallying by 3.06%.

Elsewhere, while BNP Paribas gained 1.37%, the headline story from the CAC40 was better than expected earnings results for LVMH. LVMH ended the day up 4.61%

A 0.19% fall in the EUR against the greenback on the day provided further support ahead of a key earnings season for the markets.

The Day Ahead

Economic data due out of the Eurozone includes finalized inflation figures out of Spain and February industrial production figures for the Eurozone.

While forecasts are for industrial production to fall by 0.5% in February, better than expected production figures out of France, Germany, and Italy suggest that the numbers could be better than forecasts.

Direction through the day will ultimately boil down to this morning’s trade figures out of China and earnings later in the day.

China’s trade figures were mixed for the European majors. A 14.2% jump in exports reversed most of February’s 20.8% decline. Imports did slide by 7.6%, however, which will be of some concern. Weak demand is considered negative for European multinationals.

On the earnings front, JPMorgan Chase and Wells Fargo release their earnings later today, which will influence financial stocks.

The good news for the European equity markets was luxury brand LVMH’s earnings results on Thursday. There’s been plenty of concern over weaker demand from China and a slowdown in the global economy.

Strong earnings from LVMH will deliver some relief, though there’s a long way to go. The IMF revised down growth forecasts for this year, the ECB has reverted back to a dovish stance and the FED has hit pause.

While accommodative monetary policy is positive for riskier assets, the earnings outlook would need to remain upbeat to support current levels.

At the time of writing, the futures pointed to a mixed open. The DAX30 was down 17points, with the CAC40 pointing to a 2 point loss at the open.

Don't miss a thing!
Discover what's moving the markets. Sign up for a daily update delivered to your inbox

Latest Articles

See All

Expand Your Knowledge

See All
The content provided on the website includes general news and publications, our personal analysis and opinions, and contents provided by third parties, which are intended for educational and research purposes only. It does not constitute, and should not be read as, any recommendation or advice to take any action whatsoever, including to make any investment or buy any product. When making any financial decision, you should perform your own due diligence checks, apply your own discretion and consult your competent advisors. The content of the website is not personally directed to you, and we does not take into account your financial situation or needs.The information contained in this website is not necessarily provided in real-time nor is it necessarily accurate. Prices provided herein may be provided by market makers and not by exchanges.Any trading or other financial decision you make shall be at your full responsibility, and you must not rely on any information provided through the website. FX Empire does not provide any warranty regarding any of the information contained in the website, and shall bear no responsibility for any trading losses you might incur as a result of using any information contained in the website.The website may include advertisements and other promotional contents, and FX Empire may receive compensation from third parties in connection with the content. FX Empire does not endorse any third party or recommends using any third party's services, and does not assume responsibility for your use of any such third party's website or services.FX Empire and its employees, officers, subsidiaries and associates, are not liable nor shall they be held liable for any loss or damage resulting from your use of the website or reliance on the information provided on this website.
This website includes information about cryptocurrencies, contracts for difference (CFDs) and other financial instruments, and about brokers, exchanges and other entities trading in such instruments. Both cryptocurrencies and CFDs are complex instruments and come with a high risk of losing money. You should carefully consider whether you understand how these instruments work and whether you can afford to take the high risk of losing your money.FX Empire encourages you to perform your own research before making any investment decision, and to avoid investing in any financial instrument which you do not fully understand how it works and what are the risks involved.