European Equities: Can They Make it 6-in-a-row? The Futures Say No…Trade data out of Germany and corporate earnings are in focus, with trade data out of China to set the tone earlier in the day.
Friday, 8th November
- German Trade Balance (Sep)
- French Non-Farm Payrolls (QoQ) (Q3)
It was another bullish day for the European majors, which saw their 5th consecutive day in the green. The DAX30 led the way, rising by 0.84%, with the CAC40 and EuroStoxx600 up by 0.41% and by 0.37% respectively.
While economic data continued to disappoint, positive updates from the ongoing U.S – China trade talks provided support.
News of both the U.S and China agreeing to roll back a portion of existing tariffs as part of the Phase 1 agreement delivered the upside.
It was a relatively quiet day on the Eurozone economic calendar on Thursday. Key stats from the Eurozone was limited to German industrial production figures for September.
According to Destatis,
- Industrial production fell by 0.6% in September, month-on-month, reversing a 0.3% rise in August. Economists had forecast a fall of 0.4%.
- Production in industry excluding energy and construction fell by 1.3%.
- Within industry, the production of intermediate goods fell by 1.3% and the production of capital goods by 1.5%.
- The production of consumer goods fell by a more modest 0.5%.
- Outside industry, energy production rose by 2.0%, with the production in construction up by 1.8%.
- Year-on-year, production fell by 4.3%.
The Market Movers
For the DAX: It was a bullish day for the auto sector, as the markets brushed aside yet more negative data out of Germany. Daimler and Volkswagen led the way, rallying by 2.39% and by 2.38% respectively. BMW and Continental also made solid gains, rising by 1.38% and by 1.66% respectively.
It was mixed for the banks, however. While Deutsche Bank rallied by 2.26%, Commerzbank fell by 0.16%.
Commerzbank saw red as the bank cut its full-year profit outlook for 2019 on Thursday.
From the CAC, bank stocks found support. Credit Agricole led the way, rallying by 3.37%. Soc Gen and BNP Paribas also saw solid gains, rising by 2.85 % and by 2.95% respectively.
It was also a mixed day for the autos, however. While Peugeot ended the day flat, Renault rose by 2.83%.
On the VIX Index
The VIX Index rose by 0.87% on Thursday. Partially reversing a 3.66% decline from Wednesday, the VIX ended the day at 12.7
Support kicked in late in the day as the U.S majors gave up some of their gains from earlier in the day.
The upside came in spite of news hitting the wires of the U.S and China finding common ground on how to remove tariffs.
The Day Ahead
It’s a relatively quiet day ahead on the Eurozone economic calendar. Key stats due out of the Eurozone include German trade data for September and 3rd quarter nonfarm payroll figures out of France.
Barring dire numbers, Germany’s trade data will likely have the greatest influence.
Chatter from the gathering of EU finance ministers will also need monitoring on the day.
Ahead of the European session, October trade data out of China will set the tone. While forecasts are for the trade surplus to widen, both exports and imports are forecasted to slide. Worse than forecasts would place pressure on the majors at the open.
From the U.S, prelim consumer sentiment figures for November will likely have a muted impact on the European majors late in the session.
On the geopolitical risk front, we can expect any chatter on trade and UK politics to also provide direction throughout the day.
Corporate earnings will also be in focus on the day. Credit Agricole earnings results will likely garner plenty of attention.
In the futures market, at the time of writing, the DAX30 was down by 17.5 points, with the Dow down by 32 points.