European Equities: Brexit and U.S Politics in Focus, with no Stats to Influence

The Majors

It was a bullish end to the week for the European majors on Friday. The CAC40 rose by 0.71% to lead the way, with the DAX300 and EuroStoxx600 gaining 0.07% and 0.55% respectively.

There were no major stats to provide the majors with direction on the day, leaving U.S politics and Brexit to provide direction.

Positive updates from U.S President Trump and Speaker of the House Pelosi on progress towards a U.S stimulus package provided support.

For the broader market, Biden’s widening lead in the polls also eased concerns over political uncertainty next month. The markets are beginning to price in a blue wave and a clean sweep that would eliminate any Trump contention over the outcome. A clean sweep would also deliver more stimulus to support the economic recovery.

The Stats

It was a particularly quiet day on the Eurozone economic calendar. There were no material stats from the Eurozone or the U.S to provide direction.

While updates from Capitol Hill were market positive, a fresh pike in new COVID-19 cases pinned back the majors.

A reintroduction of containment measures in France and other member states could undo the economic recovery…

The Market Movers

For the DAX: It was a bearish day for the auto sector on Friday. Continental slid by 1.72% to lead the way down, with, BMW and Daimler seeing losses of 1.63% and 1.56% respectively. Volkswagen ended the day down by a more modest 0.12%.

It was also a bearish day for the banks. Deutsche Bank and Commerzbank fell by 1.22% and by 0.80% respectively.

From the CAC, it was a bearish day for bank stocks. Credit Agricole and Soc Gen slid by 1.39% and by 1.41% respectively, while BNP Paribas fell by a more modest 0.89%.

It was also a bearish day for the French auto sector. Peugeot and Renault ended the day with losses of 1.83% and 3.35% respectively.

Air France-KLM reversed Thursday’s 1.76% gain with a 2.8% slide, with Airbus SE falling by 0.21%.

On the VIX Index

It was a 3^rd consecutive day in the red for the VIX on Friday. Following a 6.06% slide from Thursday, the VIX fell by 5.16% to end the day at 25.00.

With no material stats from the U.S, updates from Capitol Hill and market sentiment towards the U.S Presidential Election weighed on the VIX.

The Dow and S&P500 rose by 0.57% and by 0.88% respectively, with the NASDAQ gaining 1.39%.

The Day Ahead

It’s a particularly quiet start to the week on the Eurozone economic calendar.

There are no material stats due out of the Eurozone or the U.S to provide the majors with direction.

We can expect the majors to take their cues from any weekend chatter from Washington and updates on Brexit.

The EU and Britain go into final talks this week that could deliver a much-needed EU-Britain trade agreement. Boris Johnson has threatened to walk away if there is no deal in sight by the 15th October Summit, however.

Later in the day, expect updates from Capitol Hill and the U.S Presidential Election polls to also influence.

For the European majors and the economic outlook, however, a continued rise in new COVID-19 cases could also test support.

The Futures

In the futures markets, at the time of writing, the Dow was down by 52 points, while the DAX was up by 10.5 points.

For a look at all of today’s economic events, check out our economic calendar.