European Equities: A Quiet Day Ahead Leaves Geopolitics and COVID-19 in Focus

The Majors

It was a bullish end to the week for the European majors on Friday.

Following on from a relatively bullish day on Thursday, the DAX30 rallied by 1.34%, to lead the way. The CAC40 and the EuroStoxx600 saw more modest gains of 0.85% and 0.90% respectively.

Positive stats from China and the U.S provided support for the European majors at the end of the week.

Corporate earnings delivered further upside for German autos and the DAX30. At the end of the week, Daimler released prelim Q12021 results. Favorable sales momentum at Mercedes driven by strong demand, from China in particular, delivered better than expected results.

The Stats

It was a relatively quiet day on the economic calendar on Friday.

Finalized inflation figures and trade data for the Eurozone were in focus.

Eurozone Inflation

In March, the annual rate of inflation accelerated from 0.9% to 1.3%. The annual rate of inflation had stood at 0.7% in March 2020.

According to Eurostat,

• The lowest annual rates of inflation were registered in Greece (-2.0%), Portugal, Malta, Ireland, and Slovenia (all 0.1%).
• Luxembourg registered the highest annual rate of inflation at 2.5%.
• The highest contribution to the annual rate of inflation came from services (+0.57 percentage points).
• There were also contributions from energy (+0.43 pp), food, alcohol, & tobacco (+0.24 pp), and non-energy industrial goods (+0.09 pp).

Trade

In February, the Eurozone’s trade surplus widened from €11.0bn to €17.7bn.

According to Eurostat,

• Exports of goods to the rest of the world fell by 5.5% to €178.6bn when compared with Feb-2020.
• Imports from the rest of the world declined by 2.7% to €161.0bn when compared with Feb-2020.
• Intra-euro area trade rose by 1.7% to €164.8bn when compared with Feb-2020.

From the U.S

It was another busy day, with key stats including consumer sentiment figures. Housing sector data was also in focus but had a muted impact on the majors.

According to April prelim figures, the Michigan Consumer Sentiment Index rose from 84.9 to 86.5.

While up by just 1.9% month-on-month, the index was up 20.5% year-on-year.

Supporting the increase was a 4.5% rise in the Current Economic Conditions Index from 93.0 to 97.2. Year-on-year, the index was up 30.8%.

Holding steady in April, was the Index of Consumer Expectations that remained unchanged at 79.7. Year-on-year, the index was up 13.7%.

The Market Movers

For the DAX: It was a bullish day for the auto sector on Friday. Daimler and Volkswagen rallied 2.79% and by 2.65% respectively, with Continental gaining 2.33%. BMW saw a more modest 0.12% gain on the day.

It was also a bullish day for the banks. Deutsche Bank rose by 1.83%, with Commerzbank ending the day up by 1.23%.

From the CAC, it was a bullish day for the banks. BNP Paribas rallied by 2.20%, with Soc Gen gaining 1.27%. Credit Agricole saw a more modest 0.11% rise on the day.

It was also a bullish day for the French auto sector. Stellantis NV rose by 1.46%, with Renault rallying by 2.29%.

Air France-KLM found much-needed support, rising by 2.24%, with Airbus SE gaining 0.82%.

On the VIX Index

It was a 2^nd consecutive week in the red the VIX on Friday, marking a 6^th daily fall in 8-sessions.

Following on from a 2.47% fall on Thursday, the VIX fell by 1.93% to end the day at 16.25.

The Dow and the S&P500 rose by 0.48% and by 0.36% respectively, with the NASDAQ gaining 0.10%.