European Equities: Corporate Earnings and Stats to Test on Draghi’s Last Day

On Draghi’s last day, the Eurozone’s 3rd quarter GDP numbers are due out. A busy economic calendar and corporate earnings will influence on the day.
Bob Mason
Europe Map

Economic Calendar:

Thursday, 31st October

  • German Retail Sales (MoM) (Sep)
  • Spanish GDP (QoQ) (Q3)
  • Italian CPI (MoM) (Oct)
  • Eurozone CPI (YoY) (Oct) Prelim
  • Eurozone Unemployment Rate (Sep)

The Majors

It was another mixed day for the European majors on Wednesday. The DAX30 saw red for a 2nd consecutive day, falling by 0.23%, while the CAC40 and EuroStoxx600 rose by 0.45% and 0.08% respectively.

Negative news on the trade front pressured the majors as the markets awaited the FED’s interest rate decision due after the close.

According to reports, U.S President Trump has demanded that China buy $50bn worth of U.S agri as part of the phase 1 agreement. There has been some reluctance to commit to the demand, which may delay any signing until next month.

Corporate earnings were also in focus on the day, with Deutsche Bank pulling the DAX30 into the red, after reporting a net loss in the quarter.

The Stats

It was a busy day on the Eurozone economic calendar on Wednesday. Key stats included 3rd quarter GDP and September consumer spending figures out of France. Later in the morning, Germany’s October unemployment figures also influenced.

Of less impact on the day were Spain and Germany’s prelim October inflation figures.

According to Insee,

The French economy grew by 0.3% in the 3rd quarter, quarter-on-quarter, which was better than a forecast of 0.2%. In the 2nd quarter, the economy had also grown by 0.3%.

  • Household consumption expenditures picked up from 0.2% to 0.3% providing support.
  • Total GFCF, however, slipped from a 1.2% increase in the 2nd quarter to a 0.9% increase in the 3rd
  • Final domestic demand, excl. inventory changes grew at the same pace as in the 2nd quarter and contributed 0.5 points to GDP growth.
  • Imports jumped by 1.4%, following a 0.3% decline in the 2nd quarter, while exports rose by 0.3%, reversing a 0.1% decline.
  • There was also a positive contribution from inventories that contributed 0.1 points in the quarter.

French consumer spending fell by 0.2% in September, following a stall in August. Economists had forecast a 0.1% decline.

According to Insee,

  • While consumer spending slipped in September, consumption rose by 0.4% in the 3rd
  • A slide on spending on manufacturing goods (-1.3%) weighed in September, with spending on energy (-0.1%) also weighing.
  • There was a jump in spending on food, however, which rose by 0.5% to provide support.

From Germany, while the unemployment rate held steady at 5.0% in October, the number of unemployment increased by 6k, according to Destatis, following a 10k fall in September. Economists had forecast a 5k rise.

Later in the day, economic data out of the U.S also influenced.

According to the latest ADP figures, nonfarm employment rose by 125K in October, coming in ahead of a 120k rise. In September nonfarm employment had risen by a revised 93k.

On the U.S economic front, the markets couldn’t have asked for more ahead of an anticipated rate cut later in the day.

The U.S economy grew by 1.9% in the 3rd quarter, quarter-on-quarter, coming in ahead of a forecasted 1.6%. In the 2nd quarter, the economy had grown by 2%, quarter-on-quarter.

The Market Movers

For the DAX: It was another mixed day for the auto sector. Volkswagen bucked the trend on the day, rising by 0.56%. It was bearish for the rest, with Continental sliding by 3.83% to lead the way. BMW and Daimler saw more modest losses of 0.30% and 0.73% respectively.

It was a bearish day for the banks, however, with Commerzbank falling by 3.42% and Deutsche Bank tumbling by 7.43%.

The slide in Deutsche Bank came off the back of its 3rd quarter earnings release on Wednesday. A 3rd quarter loss of €832m, attributed to restructuring costs and a fall in fixed-income trading revenue did the damage.

It was a different story for Volkswagen, however, which beat earnings estimates to support the upside on the day. The upside came in spite of lowering its outlook on deliveries due to a slowdown in the sector globally.

From the CAC, it was another day in the red for the banks. Soc Gen and BNP Paribas slid by 2.47% and by 2.23% respectively, with Credit Agricole down by 2.13%.

It was a mixed day for the autos, however. Peugeot rallied by 4.53%, while Renault slid by 4.02% on the day.

The upside for Peugeot came off the back of M&A chatter with Fiat Chrysler. L’Oreal was the best performer on the day, however, rallying by 7.56% in response to solid 3rd quarter earnings numbers.

On the VIX Index

The VIX Index saw red for the first day in three, falling by 6.59% on Wednesday. Reversing a 0.69% gain from Tuesday, the VIX ended the day at 12.3.

A late in the day reversal left the VIX in the red, as the markets responded to the FED rate cut, which had been anticipated.

The Day Ahead

It’s another busy day ahead on the Eurozone economic calendar. Key stats due out of the Eurozone include the Eurozone’s 1st estimate GDP numbers for the 3rd quarter and September retail sales figures out of Germany.

The Eurozone’s September unemployment rate and prelim October inflation figures will also be in focus.

Prelim October inflation figures out of France and Italy and 3rd quarter GDP numbers out of Spain will likely have less influence on the day.

From the U.S, it’s also a busy day on the economic calendar, with September Core PCE Price Index and personal spending figures due out.

There are also corporate earnings to consider along with any further updates from Beijing and Washington on phase 1 of the trade agreement.

Ahead of the European session, October private sector PMI numbers from China failed to weigh in spite of the manufacturing sector contracting for a 6 consecutive month.

In the futures market, at the time of writing, the DAX30 was up by 18.5 points, with the Dow up by 9 points.

Don't miss a thing!

Discover what's moving the markets. Sign up for a daily update delivered to your inbox

Latest Articles

See All

Expand Your Knowledge

See All
IMPORTANT DISCLAIMERS
The content provided on the website includes general news and publications, our personal analysis and opinions, and contents provided by third parties, which are intended for educational and research purposes only. It does not constitute, and should not be read as, any recommendation or advice to take any action whatsoever, including to make any investment or buy any product. When making any financial decision, you should perform your own due diligence checks, apply your own discretion and consult your competent advisors. The content of the website is not personally directed to you, and we does not take into account your financial situation or needs.The information contained in this website is not necessarily provided in real-time nor is it necessarily accurate. Prices provided herein may be provided by market makers and not by exchanges.Any trading or other financial decision you make shall be at your full responsibility, and you must not rely on any information provided through the website. FX Empire does not provide any warranty regarding any of the information contained in the website, and shall bear no responsibility for any trading losses you might incur as a result of using any information contained in the website.The website may include advertisements and other promotional contents, and FX Empire may receive compensation from third parties in connection with the content. FX Empire does not endorse any third party or recommends using any third party's services, and does not assume responsibility for your use of any such third party's website or services.FX Empire and its employees, officers, subsidiaries and associates, are not liable nor shall they be held liable for any loss or damage resulting from your use of the website or reliance on the information provided on this website.
RISK DISCLAIMER
This website includes information about cryptocurrencies, contracts for difference (CFDs) and other financial instruments, and about brokers, exchanges and other entities trading in such instruments. Both cryptocurrencies and CFDs are complex instruments and come with a high risk of losing money. You should carefully consider whether you understand how these instruments work and whether you can afford to take the high risk of losing your money.FX Empire encourages you to perform your own research before making any investment decision, and to avoid investing in any financial instrument which you do not fully understand how it works and what are the risks involved.
FOLLOW US