European Equities: Business Confidence and Corporate Earnings in FocusWith some financial sector corporate earnings results out of Europe, another set of positive U.S earnings results may not be enough…
Wednesday, 24th April
German IFO Business Climate / IFO Current Conditions /IFO Expectations
Thursday, 25th April
Friday, 26th April
French Jobseekers Total
The European major enjoyed a positive start to the week following on from last week’s gains.
In spite of the European futures pointing to a mixed open to the European session, the majors were able to recover from early losses.
The EuroStoxx600 led the way, rising by 0.23% on the day. The CAC40 and DAX rose by 0.2% and by 0.11% respectively.
On the economic data front, the Eurozone’s consumer confidence index took a turn for the worst. The index fell from -7.2 to -7.9 according to flash figures. While holding well above the long-term average -11.3, it was yet more doom and gloom and would not have helped the European majors on the day.
While economic data out of the Eurozone remained troubling, the majors benefitted from an upswing in the U.S majors on the day.
U.S corporate earnings results provided upward momentum to the U.S majors, supporting the European majors. The numbers and recent economic indicators suggest that the U.S economy is weathering the storm.
A bounce in the Dollar led to the EUR falling back to sub-$1.123 level, a positive for multinationals.
Notable Stock Moves,
Looking across the majors, bank and airline stocks were amongst the worst performing. A jump in crude oil prices, driven by the news of the U.S plan to remove sanction waivers, weighed on the sector. Deutsche Lufthansa slid by 1.64%, while Air France-KLM tumbled by 5.98% on the day.
In the banking sector, Deutsche Bank ended the day with a 2.18% loss. More bad news out of Italy led to a 3.29% slide in UniCredit S.p.A. Things were not much better for Commerzbank and BNP Paribas, which fell by 2.78% and by 1.79% respectively. There are a number of bank earnings results due in the week and, with the Eurozone’s economic woes, apprehension may be warranted.
Ultimately, it was yet another day where the European majors were the beneficiary of solid earnings results out of the U.S…
The Dow and S&P500 rose by 0.55% and 0.95% respectively, while the NASDAQ surged by 1.32%.
In spite of support from the U.S majors, news of Beijing looking to move away from delivering more stimulus, in favor of structural reforms, could test investor resolve as the week progresses.
The Day Ahead,
Economic data scheduled for release through the day is on the lighter side today. Germany’s April IFO Business Climate Index, Current Conditions Index, and Expectations Index are due out.
On the data front, the focus will be on the Business Climate Index. Following some quite dire manufacturing PMI numbers, the markets will be looking for a boost in business sentiment.
The flash composite painted a dark picture for the private sector. Manufacturing sector firms were at their least optimistic since Nov-12. Service sector firms were somewhat more optimistic, but also saw optimism hit the lowest level since January.
While Eurozone consumer confidence may have limited upside in the majors on Tuesday, business confidence could do more damage.
Outside of the numbers, corporate earnings will likely overshadow today’s stats, however.
Key earnings scheduled for release include:
ABN AMRO and Credit Suisse out of Europe ahead of U.S Corporate earnings. Out of the U.S earnings results are due out for AT&T Inc., The Boeing Co., Caterpillar Inc., Facebook Inc., Microsoft Corp., PayPal Holdings Inc., Tesla Inc., and Visa Inc.
At the time of writing, it was a mixed bag for the European futures. The DAX30 was down 9 points, while the CAC40 pointed to a 15.5 point gain at the open.