It will be another testy day ahead for the majors, with earnings, economic data, and sentiment towards trade providing direction.
It was a 4th consecutive day in the green for the European majors on Wednesday, with the CAC40 rising by 0.34% to lead the way. The EuroStoxx600 and DAX30 weren’t far behind, with gains of 0.21% and 0.24% respectively.
In a choppy session that saw the majors in the red early in the day, economic data from the Eurozone provided much-needed support.
On the geopolitical front, news of China pushing for the U.S Administration to remove September tariffs as part of the Phase 1 deal raised concerns over whether a Phase 1 agreement would materialize.
Earnings were also in focus on the day, with a number of European heavyweights delivering results.
It was a busy day on the Eurozone economic calendar on Wednesday. Key stats from the Eurozone included German factory orders, Spanish and Italian service PMIs and the Eurozone’s September retail sales figures.
France, Germany, and the Eurozone’s finalized service sector and composite PMI were also of influence.
From Germany, factory orders rose by 1.3% in September, reversing a 0.6% fall in August. Economists had forecast a 0.1% rise.
According to Destatis,
Spain’s service PMI fell from 53.3 to 52.7 in October. Economists had forecast a fall to 52.8.
Italy’s service PMI rose from 51.4 to 52.2 in October, coming in ahead of a forecasted decline to 51.0.
France’s finalized service PMI came in at 52.9, in line with prelim and up from a September 51.1
Germany’s finalized service PMI stood at 51.6, up from a prelim 51.2 and September 51.4.
With the Eurozone service PMI rising from 51.6 to 52.2, (Prelim: 51.8), the composite index came in at 50.6. This was up from a prelim 50.2 and September 50.1.
According to the Eurozone’s Composite PMI Survey,
For the Eurozone
Later in the day, retail sales rose by 0.1% in September, following a revised 0.6% rise in August. Economists had forecast a 0.1% rise.
According to Eurostat,
The stats provided much-needed support through the early part of the session, with the DAX30 recovering from early losses.
For the DAX: It was a mixed day for the auto sector, as the markets responded to earnings results and trade news. Volkswagen found strong support, rising by 1.05% to lead the way. BMW and Continental also ended the day in positive territory with gains of 0.66% and 0.19% respectively. Daimler bucked the trend, falling by 0.78%.
Banks were mixed on the day. Commerzbank rose by 0.05%, while Deutsche Bank slipped by 0.16%.
Adidas and BMW delivered earnings results on the day. While Adidas failed to impress, leading to a 4.33% slide, BMW reported a 33% increase in 3rd quarter operating profit, supporting upside on the day. A weak forecast for full-year pre-tax profit limited gains, however.
From the CAC, bank stocks also found support. Soc Gen and BNP Paribas led the way, rising by 3.41% and by 1.57% respectively, with Credit Agricole up by 0.79%.
It was bearish for the autos, however. Peugeot and Renault fell by 1.68% and by 1.59% respectively.
Soc gen delivered earnings results that were slightly below expectations. The bank’s solid ratios, however, delivered upside on the day, with the bank in a strong position to weather economic storms.
The VIX Index resumed its downward trend on Wednesday, falling by 3.66%. Reversing a 2.10% rise from Tuesday, the VIX ended the day at 12.6
A choppy session for the U.S majors saw the Dow and S&P500 see red before a late recovery. Concerns over Phase 1 of a U.S – China agreement tested the majors through the session.
The late recovery led to a late VIX slide into the red.
It’s a relatively quiet day ahead on the Eurozone economic calendar. Key stats due out of the Eurozone include German industrial production figures for September.
From the ECB, the Economic Bulletin is also due out later in the day.
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, with Commerzbank due to release quarterly earnings today.
In the futures market, at the time of writing, the DAX30 was up by 7 points, while the Dow down by 3 points.
With over 20 years of experience in the finance industry, Bob has been managing regional teams across Europe and Asia and focusing on analytics across both corporate and financial institutions. Currently he is covering developments relating to the financial markets, including currencies, commodities, alternative asset classes, and global equities.