European Equities: Eurozone GDP Numbers in Focus ahead of U.S Retail Sales

The Majors

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

The CAC40 rose by 0.52% to lead the way, with the DAX30 and the EuroStoxx600 gaining 0.34% and 0.28% respectively, however. While the gains were modest, it was record highs on the day.

Economic data from China provided support to riskier assets ahead of the European open.

In October, industrial production rose by 3.5%, year-on-year, which was up from 3.1% in September. Economists had forecast a 3.0% increase.

Retail sales figures were also upbeat, with sales rising by 4.9% year-on-year versus a forecasted 3.6%. In September, retail sales had increased by 4.4%. The pickup in spending came with the unemployment rate holding steady at 4.9%.

Upbeat trade data for the Eurozone also provided support, with ECB President Lagarde towing the dovish line also market positive.

The Stats

Trade data for the Eurozone was in focus early in the European session.

In September, the Eurozone’s trade surplus widened from a revised €3.50bn to €7.30bn.

According to Eurostat,

• Compared with September 2020, exports of goods to the rest of the world increased by 10% to €209.3bn.
• Imports jumped by 21.6% to €202.0bn.
• Intra-euro area trade rose to €191.5bn, which was up 16.4% compared with Sep-2020.

ECB President Lagarde

Salient points from the ECB President’s speech included:

• GDP is expected to exceed its pre-pandemic level around the end of the year.
• Growth momentum is moderating to some extent owing to supply bottlenecks and the rise in energy prices.
• Although the duration of supply constraints is uncertain, they are likely to persist for several months and gradually ease only during 2022.
• Overall, the ECB continues to foresee inflation in the medium-term remaining below the new symmetric 2% target.
• Despite current inflation surge, the outlook for inflation, remains subdued. This means that the 3 conditions needing to be satisfied are very unlikely to be met next year.

From the U.S

Manufacturing sector activity was in focus late in the European session.

In November, the NY Empire State Manufacturing Index increased from 19.8 to 30.9.

According to the November Survey,

• New orders and shipments posted substantial increases, with unfilled orders rising.
• Delivery times were significantly longer.
• Employment grew at its fastest pace on record, and the average workweek increased.
• The prices paid index held near its record high, while the prices received index hit a new high.
• Firms remained optimistic that conditions would improve over the next 6-months, though optimism weakened.

The Market Movers

For the DAX: It was a bullish day for the auto sector on Monday. Continental and Daimler led the way, rising by 1.07% and by 1.12% respectively, with BMW gaining 0.44%. Volkswagen rose by just 0.01%, however.

It was also a bullish day for the banks. Deutsche Bank increased by 0.49%, with Commerzbank rallying by 2.26%.

From the CAC, it was also a bullish day for the banks. BNP Paribas jumped by 3.29%, with Soc Gen and Credit Agricole ending the day up by 1.79% and 0.39% respectively.

It was a mixed day for the French auto sector, however. Stellantis NV rose by 0.09%, while Renault slipped by 0.25%.

Air France-KLM eked out a 0.12% gain, with Airbus SE rising by 1.69%.

On the VIX Index

It was back into the green for the  VIX on Monday.

Partially reversing a 7.76% slide on Friday, the VIX rose by 1.23% to end the day at 16.49.

The S&P500 ended the day flat, while the Dow and the NASDAQ both ended the day with 0.04% losses.