European Equities: A Quiet Economic Calendar Leaves COVID-19 in Focus, a Market Negative

The Majors

It was bearish end to the week for the majors on Friday.

The EuroStoxx600 fell by 0.32%, with the DAX30 and the CAC40 ending the day down by 0.57 and by 0.51% respectively.

Following disappointing economic data from China on Thursday, the stats were no better on Friday.

Data for the Eurozone disappointed, with economic data from the U.S sending mixed results.

Rising delta variant cases globally and the need to reintroduce restrictions in some geographies weighed on demand for riskier assets.

The Stats

Finalized inflation figures and trade data for the Eurozone were in focus through the early part of the European session.

Trade

In June, the Eurozone’s trade surplus narrowed from €10.9bn to €7.5bn. Economists had forecast a widening to €16.4bn.

According to Eurostat,

• Exports to the rest of the world increased by 31.9% to €188.2bn year-on-year.
• Imports from the rest of the world jumped by 35.2% to €180.7bn, year-on-year.
• Intra-euro areas trade rose by 45.4% to €181.5bn when compared with May 2020.
• When compared with January-May 2020, euro area exports climbed by 13.3% to €957.9bn in the period January-May 2021.
• Imports rose by 12.7% to €878.2bn in January-May 2021, when compared with the same period in 2020.
• As a result, the trade surplus widened from €66.1bn to €79.7bn in the period January to May 2021, when compared with the same period in 2020.
• Intra-euro area trade increased by 20.5% to €867.6bn in January-May 2021 compared with the same period in 2020.

Inflation

In June, the Eurozone’s annual rate of inflation softened from 2.0% to 1.9%, falling below the ECB’s new 2% target rate.

The core annual rate of inflation softened from 1.0% to 0.9%.

According to Eurostat,

• A year earlier, the annual rate of inflation had stood at just 0.3%.
• Portugal (-0.6%), Malta (+0.2%), and Greece (+0.6%) registered the lowest annual rates of inflation.
• By contrast, Estonia (+3.7%) recorded the highest annual rate of inflation.
• In June, the highest contribution to inflation came from energy prices (+1.16 percentage points).
• Non-energy industrial goods (+0.31 pp), services (+0.28 pp), and food, alcohol, & tobacco (+0.15 pp) also contributed.

From the U.S

Retail sales and consumer sentiment figures were the main areas of focus.

Retail sales beat forecasts, with sales up 0.6% month-on-month. Economists had forecast a 0.5% decline following a 1.7% slide in May. Year-on-year, sales was up 18%, coming in ahead of a forecasted 14.0% increase. In May, retail sales had risen by 27.6% year-on-year.

According to prelim figures, the Michigan Consumer Sentiment Index fell from 85.5 to 80.8, however. Economists had forecast an increase to 86.0.

The Market Movers

For the DAX: It was a bearish day for the auto sector on Friday. Volkswagen and Continental fell by 1.47% and by 1.03% respectively. BMW and Daimler saw heavier losses, however, sliding by 2.69% and by 2.14% respectively.

It was also a bearish day for the banks. Deutsche Bank and Commerzbank ended the day down by 2.32% and by 2.21% respectively.

From the CAC, it was a bearish day for the banks. Soc Gen slid by 2.46%, with BNP Paribas and Credit Agricole falling 1.66% and by 0.97% respectively.

It was also a bearish day for the French auto sector. Stellantis NV and Renault ended the day down by 2.01% and by 1.18% respectively.

Air France-KLM and Airbus SE bucked the broader trend, however, rising by 2.82% and by 0.22% respectively.

On the VIX Index

It was a 2^nd consecutive day in the green for the VIX on Friday, marking a 3^rd gain in 6-sessions.

Following a 4.16% increase from Thursday, the VIX rose by 8.47% to end the day at 18.45.

The S&P500 fell by 0.75%, with the NASDAQ and the Dow ended the day down by 0.80% and by 0.86% respectively.