European Equities: Brexit, Corporate Earnings and Stats in FocusIt’s a busy day ahead for the majors, with economic data, geopolitics and, corporate earnings in focus. Is a Boris Johnson magic act on the cards?
Tuesday, 15th October
- French CPI (MoM) (Sep) Final
- French HICP (MoM) (Sep) Final
- German ZEW Current Conditions (Oct)
- German ZEW Economic Sentiment (Oct)
- Eurozone ZEW Economic Sentiment (Oct)
Wednesday, 16th October
- Italian CPI (MoM) (Sep) Final
- Eurozone Core CPI (YoY) (Sep) Final
- Eurozone CPI (MoM) (Sep)
- Eurozone CPI (YoY) (Sep) Final
- Eurozone Trade Balance (Aug)
It was a bearish start to the week for the European majors. The CAC40 led the way down, falling by 0.4% on Monday. The DAX30 and EuroStoxx600 weren’t far behind with losses of 0.20% and 0.49% respectively.
Uncertainty over the U.S – China trade war and Brexit weighed on the broader markets on the day.
While the U.S agreed to defer the rollout of further tariffs on Chinese goods tomorrow, a lack of commitment to removal existing tariffs weighed on risk sentiment.
On the Brexit front, a lack of progress from last week’s hopes of a deal added to the downside on the day.
It was a relatively quiet day on the Eurozone economic calendar on Monday. Economic data was limited to the Eurozone’s industrial production figures for September.
According to Eurostat, industrial production rose by 0.4%, month-on-month in August, reversing a 0.4% decline in July. Economists had forecast a 0.3% rise.
- The production of capital goods rose by 1.2% and intermediate goods by 0.3%.
- Weighing in August, however, was a 0.3% fall in the production of consumer goods and a 0.6% fall in energy and non-durable consumer goods production.
- Malta (+5.6%), Estonia (+3.9%) and Latvia (+3.0%) reported the highest increases in production.
- Slovakia (-2.6%) and Lithuania (-2.4%) reported the largest declines in August.
- Year-on-year, production fell by 2.8%.
With a lack of U.S stats on the day, geopolitical risk offset upbeat industrial production figures on the day.
The Market Movers
For the DAX: Autos found more upside on Monday, supported by the delay of additional tariffs on Chinese goods. Continental led the way, rising by 0.52%. BMW (+0.50%) and Daimler (+0.40%) saw more modest gains, whilst Volkswagen bucked the trend on the day, however, falling by 0.12%.
Bank stocks found further support, with Deutsche Bank rising by 0.75% and Commerzbank by 0.69%
From the CAC, it was a mixed day for the banks. BNP Paribas and Soc Gen fell by 0.79% and by 0.16% respectively. Credit Agricole managed to buck the trend with a 0.22% gain. For the autos, it was also mixed with Renault rising by 0.69%, while Peugeot slipped by 0.87%.
On the VIX Index
The VIX Index saw red for a 4th consecutive day on Monday, falling by 6.48%. Following on from an 11.33% slide on Friday, the VIX ended the day at 14.6.
Losses on the day came in spite of the U.S majors closing out the day in the red. While existing tariffs on Chinese goods remain, last week’s progress on trade talks was enough to pin back the VIX.
The Day Ahead
It’s a relatively busy day ahead on the Eurozone economic calendar. Economic data includes October economic current conditions and economic sentiment figures out of Germany and the Eurozone.
Germany and the Eurozone’s economic sentiment figures will be the key drivers, which is forecasted EUR negative.
Of less influence on the day will be finalized September inflation figures due out of France.
From the U.S, New York Empire State Manufacturing Index figures for October will also provide direction late on.
Another pullback in the Index would add further pressure on the European majors.
On the earnings front, corporate earnings from the U.S will also have an impact. Citigroup, Goldman, JPMorgan, and Wells Fargo release 3rd quarter results later today.
Geopolitics will also influence on the day, as Johnson looks to wrap up a Brexit deal ahead of the EU Summit this weekend.
In the futures market, at the time of writing, the DAX30 was up by 17 points, with the Dow up by 16 points.