European Equities: China Trade Data and Geopolitics to InfluenceChina trade data and Brexit updates to set the tone at the start of the week.
Monday, 14th October
- Eurozone Industrial Production (MoM) (Aug)
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 CPI (MoM) (Sep)
- Eurozone Trade Balance (Aug)
It was a bullish end to the week for the majors, with the DAX rallying by 2.86% to lead the way. The EuroStoxx600 and CAC40 weren’t far behind with gains of 2.31% and 1.73% respectively.
Support for the majors came off the back of news that the U.S administration delayed the rollout of fresh tariffs on Chinese goods. Tariffs were due to hit Chinese goods on 15th October.
Progress on trade talks in Washington led to the delay.
Brexit also provided support as the EU affirmed that progress was indeed being made on an alternative to the Irish backstop.
It a relatively busy day on the Eurozone economic calendar on Friday. Economic data included German and Spanish finalized inflation figures for September.
Out of Germany, consumer prices held steady in September, which was in line with prelim figures. In August, consumer prices had fallen by 0.2%.
Inflationary pressures eased in Spain, however, with consumer prices rising by just 0.1%, month-on-month, which was in line with forecast. Consumer prices had risen by 0.3% in August.
From the U.S, a pickup in consumer expectations and sentiment for October also provided support on the data front.
Further upside in consumer sentiment can be expected as the U.S and China make progress on ironing out a trade agreement.
The Market Movers
For the DAX: Autos found further support on Friday, driven by updates from the U.S – China trade talks in Washington. Volkswagen led the way, rallying by 4.71%. Daimler (+3.13%), Continental (+2.50%), and BMW (+3.13%) weren’t far behind.
Bank stocks also found support, with Deutsche Bank rallying by 4.96% and Commerzbank by 4.09%
From the CAC, it was also a positive day for the banks. Soc Gen led the way, rallying by 5.27% off the back of a 3.32% gain on Thursday. BNP Paribas and Credit Agricole weren’t far behind, with gains of 4.72% and 4.52% respectively. For the autos, Renault jumped by 5.12%, while Peugeot up by 4.63% following a 3.48% gain on Thursday.
On the VIX Index
The VIX Index saw red for a 3rd consecutive day on Friday, sliding by 11.33%. Following on from a 5.74% fall on Wednesday, the VIX ended the day at 15.6.
Further progress on the U.S – China trade talks and Brexit supported risk appetite to pull the VIX back into the red.
The Day Ahead
It’s a relatively quiet day ahead on the Eurozone economic calendar. Economic data out of the Eurozone is limited to August’s industrial production figures.
Better than forecasted production figures would provide support in the early part of the session.
A lack of stats due out of the U.S, however, will leave geopolitics to continue to influence in the day.
Ahead of the European open, trade data due out of China through the Asian session will set the tone. Any weak numbers and expect market jitters over the global economy to return.
In the futures market, at the time of writing, the DAX30 was down by 35 points, while the Dow was up by 38 points.