European Equities: Economic Data and Geopolitics in Focus

The Majors

It was a bullish start to the week for the European majors on Monday.

The DAX30 rallied by 2.01%, with CAC40 and the EuroStoxx600 ending the day up by 1.79% and by 1.67% respectively.

For the European majors, the upside came in spite of the U.S administration targeting yet more Chinese companies. News of the possible blacklisting of Semiconductor Manufacturing International Corp. had tested risk appetite in the Asian session.

Even negative chatter on Brexit and the continued rise in the chances of a no Brexit deal failed to deter investors.

Last week’s sell-off drew in buyers, with trade data out of China supporting demand for the European majors.

The U.S markets were closed for Labor Day, giving the European markets a free run following the latest tech stock sell-off.

The Stats

It was a quieter day on the Eurozone economic calendar. Key stats German industrial production figures for July.

Industrial production rose by 1.2% in July, following on from a 9.3% jump in June. Economists had forecast a 4.7% increase.

According to Destatis,

• Production in industry excluding energy and construction was up by 2.8%.
• Within industry, the production of intermediate goods showed an increase of 4.0%.
• The production of consumer goods rose by 1.8%, with the production of capital goods up by 2.1%.
• Outside of industry, energy production was down by 0.6%, with the production of construction down by 4.3%.
• Production in the automotive industry in July rose by 6.9%, month-on-month, while still over 15% lower than in February.
• Compared with the same month a year earlier, production was down by 11.4%.

From the U.S

There were no stats to consider, with the U.S markets closed at the start of the week.

The Market Movers

For the DAX: It was a mixed day for the auto sector on Monday. Volkswagen and Daimler led the 30, with gains of 3.99% and 3.23% respectively. BMW saw a more modest 0.81% rise, while Continental bucked the trend, falling by 0.57.

It was also a bearish day for the banks, however. Deutsche Bank fell by 1.81%, with Commerzbank sliding by 2.21%.

From the CAC, it was a mixed day for the banks. BNP Paribas and Credit Agricole rose by 0.47% and by 0.85% respectively. Soc Gen gave up some of Friday’s 5.59% gain, however, with a 1.08% loss.

It was yet another bullish day for the French auto sector. Peugeot and Renault rose by 2.44% and by 2.90% respectively.

Air France-KLM ended the day up by 0.55%, while Airbus SE reversed a 2.41% loss from Friday, with a 5.72% bounce.

On the VIX Index

The U.S markets were closed on Monday.

The Day Ahead

It’s a busier day ahead on the Eurozone economic calendar. Key stats include German trade data and finalized 2^nd quarter GDP numbers for the Eurozone. Nonfarm payroll numbers from France are also due out.

Barring particularly dire trade and nonfarm payroll numbers, expect any revisions to GDP figures to influence the majors.

There are no material stats from the U.S to provide direction later in the day. A lack of stats will leave the European majors in the hands of geopolitics. Chatter on Brexit and the U.S and China need monitoring as Trump continues to rile Beijing.

Following Monday’s rally, expect the U.S markets to also influence late in the day.

The Futures

In the futures markets, at the time of writing, the Dow up by 215 points.

For a look at all of today’s economic events, check out our economic calendar.