European Equities: Economic Data, Geopolitics, and U.S Earnings in FocusThere’s plenty to consider in the day ahead. Stats, COVID-19 news, Brexit updates, and U.S politics and U.S corporate earnings will also draw attention.
Tuesday, 13th October
German CPI (MoM) (Sep) Final
German ZEW Current Conditions (Oct)
German ZEW Economic Sentiment (Oct)
Eurozone ZEW Economic Sentiment (Oct)
Wednesday, 14th October
Spanish CPI (YoY) (Sep) Final
Spanish HICP (YoY) (Sep) Final
ECB President Lagarde Speaks
Eurozone Industrial Production (MoM) (Aug)
Thursday, 15th October
French CPI (MoM) (Sep) Final
French HICP (MoM) (Sep) Final
ECB President Lagarde Speaks
Friday, 16th October
Italian CPI (MoM) (Sep) Final
Eurozone Inflation (Sep) Final
Eurozone Trade Balance (Aug)
It was a relatively bullish start to the week for the European majors on Monday. The EuroStoxx600 rose by 0.72% to lead the way, with the CAC40 and DAX300 gaining 0.66% and 0.67% respectively.
There were no major stats to provide the majors with direction on the day, leaving U.S politics, COVID-19, and Brexit to influence.
Hopes of Congress agreeing on a COVID-19 relief bill provided support, though the prospect of a pre-Election agreement is fading. While pre-Election hopes are fading, the markets are now pricing in the Democrats to win both houses. That should deliver stimulus by the New Year at the latest.
A reintroduction of lockdown measures in parts of the EU also limited the upside for the European majors on the day.
It was a particularly quiet day on the Eurozone economic calendar. There were no material stats from the Eurozone or the U.S to provide direction.
The Market Movers
For the DAX: It was a mixed day for the auto sector on Monday. Daimler rallied by 2.04% to lead the way, the upside coming off the back of a Goldman Sachs upgrade to “Buy”. BMW and Volkswagen ended the day with gains of 0.70% and 1.09% respectively, while Continental fell by 0.49%
It was a relatively bullish day for the banks. Deutsche Bank eked out a 0.03% gain, with Commerzbank rising by 0.70%.
From the CAC, it was a positive day for bank stocks. BNP Paribas and Credit Agricole rose by 0.36% and by 0.52% respectively. Soc Gen rallied by 2.38%, however, supported by a Jefferies upgrade to “Buy”.
It was also a bullish day for the French auto sector. Peugeot and Renault ended the day with gains of 1.29% and 0.83% respectively.
Air France-KLM fell by 2.69%, with travel stocks under pressure due to the latest spike in new COVID-19 cases. Airbus SE fell by a more modest 1.18%.
On the VIX Index
The VIX ended a run of 3 consecutive days in the red on Monday. Partially reversing a 5.16% loss from Friday, the VIX rose by 0.28% to end the day at 25.07.
There were no material stats to provide the U.S majors with direction, which left U.S politics to influence on the day.
Market expectation of further stimulus by the New Year and easing concerns over post-Election Day political deadlock remained positives.
The Dow and S&P500 rose by 0.88% and by 1.64% respectively, with the NASDAQ rallying by 2.56%.
The Day Ahead
It’s a relatively quiet day on the Eurozone economic calendar.
Key stats from the Eurozone include ZEW Economic Sentiment figures for Germany and the Eurozone. The markets will be looking for a pickup in sentiment to ease concerns over the continued rise in new COVID-19 cases.
Finalized inflation figures from Germany, which are also due out, should have a muted impact on the majors on the day.
From the U.S, September inflation figures will garner some interest. Any softening in inflationary pressures would raise more concerns over the economic recovery.
From Capitol Hill, any progress towards a COVID-19 stimulus bill would soften the effects of any weak numbers. The impasse looks set to continue, however.
Also away from the economic calendar, Brexit and the U.S Presidential Election chatter will need monitoring. With the markets eyeing a “Blue Wave”, the chances of a no-deal Brexit have picked up following Macron’s demands that fishing rights remain the same after Brexit. Enforcement rules also remain an issue, both of which are deal-breakers for the British PM.
With Prime Minister Johnson’s 15th October deadline looming, time is running out. It remains to be seen, however, whether Johnson would agree to stretch the deadline amidst the impasse.
On the corporate earnings front, Blackrock, Citigroup, Delta Airlines, JPMorgan, and Johnson & Johnson are due to release earnings today.
In the futures markets, at the time of writing, the Dow was down by 98 points, with the DAX down by 7.5 points.