European Equities: A Lack of Economic Data Leaves Geopolitics and the ECB in Focus

With no material economic data due out of the Eurozone, sentiment towards monetary policy and Brexit will continue to test the majors on the day.
Bob Mason
Light Board

Economic Calendar:

Thursday, 12th September

  • German CPI m/m (Aug) Final
  • French CPI m/m (Aug) Final
  • French HICP m/m (Aug) Final
  • Eurozone Industrial Production m/m (Jul)
  • Deposit Facility Rate (Sep)
  • ECB Interest Rate Decision (Sep)

Friday, 13th September

  • Spanish CPI y/y (Aug) Final
  • Spanish HICP y/y (Aug) Final
  • Wages in eurozone y/y (Q2)
  • Eurozone Trade Balance (Jul)

The Majors

It was back in the green for the CAC40 and EuroStoxx600 on Tuesday, with the pair rising by 0.08% and 0.10% respectively.

The DAX30 continued to lead the way, however, with a 5th consecutive day in the green. On the day, the DAX30 rose by 0.35%, after having recovered from losses in the early part of the session.

There were no material stats out of Germany to rock the boat on the day, while stats at of France and Italy pinned back the CAC40 and EuroStoxx600. The pair found late support to close out the day in positive territory.

On the geopolitical front, Brexit woes weighed on the majors in the early part of the day, as the British PM continued to state his unwillingness to request for an extension if no agreement was in place by 19th October.

Also pinning back the majors on the day was continued uncertainty over the ECB’s monetary policy decision tomorrow afternoon.

The Stats

It was a relatively quiet day on the Eurozone economic calendar on Tuesday. French 2nd quarter nonfarm payroll and July industrial production figures out of France and Italy provide direction in the early part of the day.

The stats were skewed to the negative.

In France, nonfarm payrolls rose by just 0.2% in the 2nd quarter, following a 0.4% rise in the 1st quarter, according to figures released by INSEE.

July industrial production figures also failed to impress.

According to INSEE, French industrial production rose by just 0.3% in July, month-on-month, following a 2.3% slide in June. Economists had forecasted a 0.5% increase.

Italian industrial production slid by 0.7% in July, month-on-month, following on from a 0.3% fall in June. Economists had forecast a 0.1% fall. The figures were released by Istat.

From the U.S, JOLTs job openings had a muted impact on the majors in spite of a fall from 7.248m to 7.217m in July. While there was a minor fall in openings, hires and quit rates saw minor increases reflective of positive labor market conditions.

The Market Movers

From the DAX, ThyssenKrupp led the way once more, rallying by 3.41%, with Deutsche Lufthansa gaining 3.41% off the back of the BA pilot strike. Reports of rising airfares across the European major airlines in response to the grounding of BA flights support airline stocks on the day.

For the auto sector, Continental found strong support once more, rising by 3.22%. BMW (+1.25%), Daimler (+1.23%) and Volkswagen (+0.53%) saw more modest gains on the day.

Bank stocks held also found support with Deutsche Bank and Commerzbank rising by 1.81% and 1.41% respectively.

From the CAC, it was a bullish day for the banks. Credit Agricole led the way, rising by 2.23%. BNP Paribas and Soc Gen gained 1.92% and 1.61% respectively. It was also a day in the green for the auto sector, Renault rose by 0.58%, while Peugeot rallied by 2.14%.

On the VIX Index

The VIX Index was back in the red on Tuesday, falling by 0.65% to end the day at 15.2.

Uncertainty over tomorrow’s ECB monetary policy decision and Brexit pinned back the VIX.

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 on the day.

From the U.S, stats are limited to August wholesale inflation figures that will likely be brushed aside by the majors late in the session.

A lack of stats will leave sentiment towards monetary policy and geopolitical to provide support on the day.

In the futures markets, at the time of writing, the DAX was up by 13.5 points, while the Dow Mini was down by 14 points.

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