European Equities: A Lack of Stats Leaves Geopolitics in Focus

The Majors

It was a day in the red for the European majors on Friday, with the EuroStoxx600 falling by 0.12% to lead the day down. The CAC40 and DAX30 saw more modest losses of 0.09% and 0.05% respectively.

Support came in the early part of the day as the de-escalation in the Middle East returned focus to trade.

The olive branch that Trump extended on Wednesday seemed to have needed a nudge to get Iran to reach out. On Friday, the administration announced fresh sanctions on Iran, leading to a reversal in the European majors late in the day.

Iran had yet to reach out following Trump’s speech on Wednesday. Fresh sanctions could lead to a rise in tensions in the week ahead…

The Stats

It was a quiet day on the Eurozone economic calendar on Friday, with no material stats to provide the European majors with direction.

While geopolitics ultimately sank the majors, economic data out of the U.S didn’t help…

From the U.S

Nonfarm payrolls rose by just 145k in December, coming up short of a forecasted rise of 164k. Of greater significance was the weakest wage growth since 2018…

In December, wage growth slowed to 2.9%, coming up short of 3.1% seen in November.

The Market Movers

For the DAX: It was a mixed day for the auto sector. Volkswagen led the way, rallying by 1.86% to buck the trend on the day. Continental and Daimler slid by 1.16% and by 1.07% respectively, whilst BMW saw a more modest 0.09% loss on the day.

It was a bearish day for the banks, however, with Commerzbank and Deutsche Bank falling by 1.67% and by 0.67% respectively.

From the CAC, it was also a bearish day for the banks. BNP Paribas fell by 0.46%, with Credit Agricole and Soc Gen sliding by 1.08% and by 1.10% respectively.

For the French auto sector, it was another bearish day. Peugeot and Renault fell by 0.10% and by 0.56% respectively.

On the VIX Index

4 consecutive days came to an end on Friday, with the VIX rising by 0.16%. Partially reversing a 6.77% slide on Thursday, the VIX ended the day at 12.6.

A continued pickup in risk appetite on Friday led the VIX to a day low 12.1 before bouncing back. Late on Friday, the U.S administration announced the rollout of fresh tariffs on Iran, weighing on risk appetite.

The dust had barely settled from Wednesday’s missile attack on Iraq military bases that had housed U.S troops.

Uncertainty over how Iran would respond ultimately led to the reversal in the S&P500 on the day and the bounce back in the VIX.

The Day Ahead

It’s a quiet day on the Eurozone economic calendar, with no material stats scheduled for release on the day.

The lack of stats will leave the focus on geopolitics on the day, with no stats out of the U.S to provide direction.

We’ve got chatter on Brexit, the Middle East and the phase 1 trade agreement to consider…

In the futures markets, at the time of writing, the DAX30 was up by 5 points, with the Dow up by 50 points.