European Equities: Futures Point South, with Brexit, COVID-19, and U.S Politics in FocusFutures point south, with COVID-19 and stalemate on Capitol Hill testing sentiment. German business sentiment figures will influence later.
Monday, 26th October
German Ifo Business Climate Index (Oct)
Tuesday, 27th October
France Jobseekers Total
Thursday, 29th October
German Unemployment Change (Oct)
German Unemployment Rate (Oct)
Spanish CPI (YoY) Prelim
Spanish HICP (YoY) (Oct) Prelim
ECB Monetary Policy Statement
ECB Interest Rate Decision (Oct)
German CPI (MoM) (Oct) Prelim
ECB Press Conference
Friday, 30th October
French GDP (Q3) 1st Estimate
German GDP (Q3) 1st Estimate
German Retail Sales (MoM) (Sep)
French Consumer Spending (MoM) (Sep)
French Inflation (Oct) Prelim
Italian CPI (MoM) Prelim
Spanish GDP (QoQ) (Q3) 1st Estimate
Italian CPI (MoM) (Oct) Prelim
Eurozone Inflation, GDP, and Unemployment
It was a bullish end to the week for the European majors on Friday, with the CAC40 rallying by 1.20% to lead the way. The DAX30 and EuroStoxx600 saw a run of 4 consecutive days in the red come to an end. Trailing the CAC40, the pair rose by 0.82% and 0.62% respectively.
While economic data was on the heavier side, corporate earnings delivered the European majors, and bank stocks much-needed support.
Barclays earnings delivered the broader sector with a boost, with Germany’s manufacturing PMI delivering support to the auto sector.
The upside was limited, however, as new COVID-19 cases continued to rise, forcing EU member stats to reintroduce lockdown measures.
Failure to control the 2nd wave will derail the Eurozone economy and lead to a much slower economic recovery on the other side.
It was a busy day on the Eurozone economic calendar. Key stats included prelim October private sector PMI numbers for France, Germany, and the Eurozone.
It was a mixed bag on the economic data front. While the French private sector contracted, German manufacturing sector activity picked up at the start of the quarter.
France’s manufacturing PMI slipped from 51.2 to 51.0, while the Services PMI declined from 47.5 to 46.5. Both PMIs fell to 5-month lows in October, according to prelim figures.
From Germany, the Manufacturing PMI jumped from 56.4 to a 30-month high 58.0. By contrast, the Services PMI fell from 50.6 to a 4-month low 48.9.
For the Eurozone, the Manufacturing PMI rose from 53.7 to a 26-month high 54.4, while the Services PMI declined from 48.0 to a 5-month low 46.2.
As a result of the deeper contraction in the services sector, the Eurozone’s Composite PMI fell from 50.4 to a 4-month low of 49.4.
According to the Eurozone’s prelim October Survey,
- Business activity fell back into decline. An acceleration in manufacturing sector activity was overshadowed by a marked deterioration in service sector activity.
- Rising concerns over the COVID-19 pandemic weighed on the services sector in the month, as a 2nd wave continued to hit the EU.
- While the pace of job losses eased, the rate of job losses remained higher than at any time since June 2013 prior to the pandemic.
- Inflows of new business showed a renewed decline at the start of the quarter.
- For the manufacturing sector, new orders surged at the quickest pace since January 2018. Inflows of new business into the service sector, however, fell at an accelerated rate.
- Deflationary pressures eased as costs increased at a faster pace.
- Private sector confidence over the year ahead fell to the lowest level since May, with France the least optimistic.
From the U.S
It was also a busier day on the economic calendar, with the private sector PMIs also in focus later in the day.
The stats were skewed to the positive for October. The Manufacturing PMI rose from 53.2 to 53.3, with the Services PMI jumping from 54.6 to 56.0.
Ahead of the European open, the final live U.S Presidential Debate set the tone ahead of the European open.
A Joe Biden slip on the oil sector caused a stir. Other than that it was business as usual for the markets on the day.
The Market Movers
For the DAX: It was another mixed day for the auto sector on Friday. Continental and Volkswagen rose by 0.70% and by 0.72% respectively, with Daimler gaining 0.48%. BMW fell by 0.14%, however, to buck the trend on the day.
It was a bullish day for the banks. Deutsche Bank rose by 1.83%, while Commerzbank rallying by 3.11%
From the CAC, it was also a bullish day for the banks. BNP Paribas rallied by 2.81%, with Credit Agricole and Soc Gen rising by 1.87% and by 1.93% respectively.
It was a mixed day for the French auto sector, however. Peugeot rose by 1.20%, while Renault slipped by 0.48%.
Air France-KLM rose by 1.83% off the back of a 3.13% rally on Thursday, with Airbus SE rallying by 5.55%.
News of a planned jump in output drove demand for Airbus SE on the day.
On the VIX Index
It was a 3rd consecutive day in the red for the VIX on Friday. Following a 1.88% fall on Thursday, the VIX fell by 1.99% to end the week at 27.55.
COVID-19 updates and progress towards a U.S stimulus package remained in focus on Friday.
While COVID-19 and a lack of progress on Capitol Hill were negatives, economic data provided the majors with support.
On Friday, the NASDAQ and S&P500 rose by 0.37% and by 0.34% respectively, while the Dow fell by 0.10%.
The Day Ahead
It’s a relatively busy day on the Eurozone economic calendar. Key stats include Germany’s IFO Business Climate Index and sub-index numbers for October.
Expect plenty of influence from the numbers in the early part of the European session.
With no stats due out of the U.S, Brexit, COVID-19, and U.S politics will remain key drivers at the start of the week, however.
In the futures markets, at the time of writing, the Dow was down by 85 points, with the DAX down by 46.5 points.
For a look at all of today’s economic events, check out our economic calendar.