European Equities: FED Chair Powell, Geopolitics and Stats in Focus

Trump comments on trade and caution ahead of Powell’s testimony to Congress later today leaves the futures in the red early on…
Bob Mason
Businessman touching stock market graph on a virtual screen display.

Economic Calendar:

Wednesday, 13th November

  • German CPI (MoM) (Oct) Final
  • Eurozone Industrial Production (MoM) (Sep)

Thursday, 14th November

  • German GDP (QoQ) (Q3) 1st Estimate
  • German GDP (YoY) (Q3) 1st Estimate
  • French CPI (MoM) (Oct) Final
  • French HICP (MoM) (Oct) Final
  • Spanish CPI (YoY) (Oct) Final
  • Spanish HICP (YoY) (Oct) Final
  • Eurozone GDP (QoQ) (Q3) 2nd Estimate
  • Eurozone GDP (YoY) (Q3) 2nd Estimate

Friday, 15th November

  • Italian CPI (MoM) (Oct) Final
  • Eurozone Core CPI (YoY) (Oct) Final
  • Eurozone CPI (MoM) (Oct)
  • Eurozone CPI (YoY) (Oct) Final
  • Eurozone Trade Balance (Sep)

The Majors

It was a bullish day for the European majors on Tuesday, with the DAX30 and EuroStoxx600 reversing Monday’s losses.

On the day, the DAX30 led the way, rising by 0.65%, with the CAC40 and EuroStoxx600 up by 0.44% and by 0.38% respectively.

Economic data on the day provided support, while there was some caution ahead of Trump’s speech to the Economic Club in New York.

Doubts had reappeared over whether the U.S and China were, in fact, closer to a Phase 1 trade agreement after news had hit the wires of U.S President Trump is unwilling to rollback tariffs.

Trump’s speech came after the European close, leaving the markets to respond in the early part of the session.

The Stats

It was a relatively quiet day on the Eurozone economic calendar on Tuesday. November’s ZEW Economic sentiment and current conditions figures for Germany and the Eurozone provided direction early on.

According to the ZEW reports,

  • Germany’s ZEW Current Conditions Index rose from -25.3 to -24.7, which was better than a forecast of -26.0 More importantly, the Economic Sentiment index jumped from -22.8 to -2.1. Economists had forecast a rise to -13.2.
  • For the Eurozone, the ZEW Economic Sentiment Index rose from -23.5 to -1.0, coming in ahead of a forecasted -11.5.

There were no material stats from the U.S on the day to provide the majors with direction later in the day.

The Market Movers

For the DAX: It was a mixed day for the auto sector, as the markets continued to respond to the latest chatter on trade. Daimler and Volkswagen found support, rising by 0.67% and by 0.34% respectively. BMW and Continental saw red, however, with losses of 0.54% and 3.18% respectively.

It was better for the banks on the day. Deutsche Bank rose by 0.86%, while Commerzbank rallied by 2.29%.

On the earnings front, Infineon Technologies reported positive earnings and forecasts on Tuesday, supporting a 5.59% rally on the day. Continental AG, however, announced a net loss for the quarter and a negative outlook, leading to the 3.18% slide.

The contrasting results put Infineon Tech at the top of the table and Continental at the bottom.

From the CAC, bank stocks were mixed on the day. Credit Agricole led the way, rallying by 2.54%. BNP Paribas saw a more modest 0.69% gain, whilst Soc Gen ended the day flat.

It was also a mixed day for the autos. While Peugeot rose by 1.25%, Renault fell by 1.03%.

On the VIX Index

It was back into the red for the VIX, which fell by 0.08% on Tuesday. Following a 5.14% rise from Monday, the VIX ended the day at 12.7.

While the S&P500 closed out the day in positive territory, a loss of larger gains from earlier in the day left the VIX with a minor loss.

The U.S President’s speech to the Economic Club in New York tested risk appetite after the European close, as the administration continues to deliver mixed messages on trade.

The Day Ahead

It’s a relatively quiet day ahead on the Eurozone economic calendar. Economic data due out of the Eurozone includes finalized October inflation figures out of Germany and the Eurozone’s industrial production numbers for September.

We would expect the industrial production figures to have the greatest influence on the European majors.

From the U.S, October inflation figures will likely have a muted impact ahead of FED Chair Powell’s Testimony scheduled late in the day.

Any pickup in inflationary pressures would normally be considered negative for the broader market. With the FED in pause mode, however, the numbers would need to be quite dire to force another rate cut.

On the geopolitical risk front, we can expect any chatter on trade and UK politics to also provide direction throughout the day.

In the futures market, at the time of writing, the DAX30 was down by 72.5 points, with the Dow down by 67 points.

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