European Equities: A Week in Review – 08/11/19

The European majors found strong support as sentiment towards trade improved over the week. A late pullback limited the upside, however…
Bob Mason
Smart city and global network concept. IoT(Internet of Things). ICT(Information Communication Technology).

The Majors

It was yet another positive week for the European majors, with the CAC40 up by 2.20% to lead the way. The DAX30 wasn’t far behind, rising by 2.06%, while Eurostoxx600 saw a more modest gain of 1.50%.

For the DAX30 and EuroStoxx600, 0.46% and 0.28% losses respectively on Friday pulled back the pair, while the CAC40 ended the day flat.

Corporate earnings and economic data were in focus in the week as was chatter from the U.S and China on trade.

On the trade front, the majors found strong support from news of Beijing and Washington agreeing to rollback some tariffs.

This came off the back of news that Washington was preparing to issue licenses to U.S firms to do business with Huawei Technologies.

Four days in the green out of five delivered the solid gains for the week.

A pullback on Friday came as a result of the news of disagreements within Washington over the removal of tariffs on Chinese goods.

The Stats

It was another busy week on the Eurozone economic calendar.

In a busy first half of the week, October private sector PMIs, Eurozone retail sales figures, and German factory orders were in focus.

On the PMI front, Spain’s manufacturing sector deteriorated further, with the PMI falling from 47.7 to 46.8. The numbers were more upbeat elsewhere, with the French manufacturing PMI rising from 50.5 to 50.7.

In spite of the positive numbers, Italy, Germany, and the Eurozone’s manufacturing PMIs continued to sit at sub-50 levels.

On Wednesday, service sector PMIs were also skewed to the positive. While Spain’s services PMI fell from 53.3 to 52.7, it was positive for the rest of the member states.

The positively skewed numbers led to a rise in the composite PMI from 50.2 to 50.6.

In spite of the positive numbers, the composite PMI remained close to September’s six-and-a-half-year low.

Out of Germany, factory orders rose by 1.3%, reversing a 0.4% decline in August, providing support, with Eurozone retail sales up by 0.1%.

On Thursday, German industrial production figures failed to pin back the European majors, in spite of a 0.6% decline. The upbeat factory order numbers pointed to a pickup in industrial production at the start of the 4th quarter.

German trade data wrapped things up on Friday. A widening in the trade surplus from €18.1bn to €19.2bn failed to make it a 6th consecutive day in the green for the DAX.

The Market Movers

From the DAX, it was a bullish week for the auto sector. BMW led the way for the week once more, rallying by 8.05. Volkswagen and Continental also saw solid gains, rising by 5.22% and 6.94% respectively. Daimler trailed the pack in the week, rising by just 1.52%.

It was also a bullish week for the banking sector, in spite of a sharp pullback on Friday. Deutsche Bank rallied by 4.54%, with Commerzbank up by 2.57%.

From the CAC, the banks also found strong support, reversing previous week losses. Soc Gen led the way, rallying by 9.78%, with BNP Paribas up by 7.50%. Credit Agricole made a more modest 4.33% gain, with a 2.31% slide on Friday limiting the upside.

Credit Agricole’s slide on Friday came off the back of the bank’s quarterly earnings results. While net profit beat estimates, a slide in net income from the retail operation weighed, as net interest income declined in the quarter.

The French auto sector also saw green. Peugeot rose by 3.25%, while Renault eked out a 0.04% gain.

On the VIX Index

The VIX Index fell 1.87% in the week ending 8th November. Following on from a 2.77% decline from the previous week, the VIX ended the week at 12.1.

In spite of 3 days in the green out of 5, the weekly loss came as a result of the U.S and China’s progress on trade talks.

Throughout the week, economic data provided support, with the stats skewed to the negative for the Greenback.

The Week Ahead

It’s a busy week on the Eurozone economic calendar. November ZEW economic sentiment figures for Germany and the Eurozone are due out on Tuesday.

Following the IMF’s Regional Economic Outlook Report last week, we can expect the majors to be particularly sensitive to consumer sentiment and spending figures.

Eurozone industrial production figures for September will provide direction on Wednesday, ahead of 3rd quarter GDP numbers on Thursday.

Barring a revision to 1st estimate numbers for the Eurozone, Germany’s 1st estimate GDP numbers will have the greatest influence. Forecasts are for the German economy to contract by 0.1%.

The Eurozone’s September trade figures will wrap up the week, with forecasts market positive.

Barring particularly dire numbers, we would expect finalized October inflation figures to have a muted impact throughout the week.

From outside of the Eurozone, expect China industrial production figures, due out on Thursday to also provide direction.

On the geopolitical front, chatter from Beijing and the U.S on trade requires monitoring. There is also UK politics to consider.

There are also corporate earnings to track throughout the week, with Continental and Infineon Tech likely to garner plenty of attention.

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
IMPORTANT DISCLAIMERS
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.
RISK DISCLAIMER
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.
FOLLOW US