The DAX and Dow Futures point to a bearish start to the week, with COVID-19 and Election jitters weighing. October's PMIs will need to impress...
Spanish Manufacturing PMI (Oct)
Italian Manufacturing PMI (Oct)
French Manufacturing PMI (Oct) Final
German Manufacturing PMI (Oct) Final
Eurozone Manufacturing PMI (Oct) Final
Spanish Unemployment Change
Spanish Services PMI (Oct)
Italian Services PMI (Oct)
French Services PMI (Oct) Final
German Services PMI (Oct) Final
Eurozone Markit Composite PMI (Oct) Final
Eurozone Services PMI (Oct) Final
German Factory Orders (MoM) (Sep)
German IHS Markit Construction PMI (Oct)
Eurozone Retail Sales (MoM) (Sep)
German Industrial Production (MoM) (Sep)
French Non-Farm Payrolls (QoQ) (Q3)
It was another mixed day for the European majors on Friday. The CAC40 and the EuroStoxx600 ended a run of 4 consecutive days in the red, with gains of 0.54% and 0.18% respectively. It was a bearish end to a particularly bearish week for the DAX30, however, which fell by 0.36%.
Better than expected 3rd quarter GDP figures for the Eurozone and for France supported the CAC40 and the EuroStoxx600.
A slide in German and French consumer spending in September was of concern, however, as both governments roll out lockdown measures.
It was a busy day on the Eurozone economic calendar.
Key stats included 3rd quarter GDP numbers for France, Germany, Spain, and the Eurozone.
September retail sales and consumer spending figures for Germany and France were also in focus on the day.
Prelim October inflation figures for France, Italy, and the Eurozone had a muted impact on the day.
A V-shaped economic recovery impressed. Reversing a 13.7% contraction from the 2nd quarter, the economy expanded by 18.2% in the 3rd quarter. Economists had forecast 15.4% growth.
Consumer spending slid by 5.4% in September, however, to raise further concerns over the economic outlook.
In the 3rd quarter, the economy expanded by 8.20%, quarter, on-quarter, reversing most of a 9.7% contraction in the 2nd quarter. Economists had forecast growth of 7.3%.
Year-on-year, the economy shrank by 4.1%, following an 11.3% contraction in the 2nd quarter. Economists had forecast a 5.2% contraction.
In September, retail sales fell by 2.2%, following a 1.8% rise in August. Economists had forecast a 0.8% decline.
The Eurozone economy expanded by 12.7% in the 3rd quarter, quarter-on-quarter, reversing the 2nd quarter’s 11.8% meltdown. Economists had forecast 9.4% growth. Year-on-year, the economy shrank by 4.3%, following a 14.7% contraction in the 2nd quarter. Economists had forecast a contraction of 7%.
The Eurozone’s annual rate of core inflation held steady at 0.2% in October, according to prelim figures. Year-on-year, consumer prices fell by 0.3%, however, following on from a 0.3% decline in September.
In spite of the disappointing numbers, there was little influence on the majors on the day.
It was also a busier day on the economic calendar. Key stats included personal spending, inflation, and Chicago PMI numbers. The stats had a muted impact on the majors, however, in spite of a 1.4% rise in personal spending.
Finalized consumer sentiment and September inflation figures also had a muted impact on the day.
Negative sentiment towards the economic outlook as a result of the 2nd wave muted the impact of the stats at the end of the week.
For the DAX: It was a mixed day for the auto sector on Friday. Continental rallied by 1.84%, with BMW and Daimler seeing relatively modest gains of 0.72% and 0.63% respectively. Volkswagen slid by 1.01% to buck the trend on the day.
It was another mixed day for the banks. Deutsche Bank rose by 1.40%, with Commerzbank gaining 0.62%
From the CAC, it was a bullish day for the banks. BNP Paribas and Credit Agricole rose by 1.88% and by 1.83% respectively. Soc Gen led the way, however, with a 2.56% gain.
It was a relatively bullish day for the French auto sector. Peugeot and Renault ended the day with gains of 0.82% and 0.66% respectively.
Air France-KLM rose by 1.01%, with Airbus SE ending the day with a 1.77% gain.
The upward trend in the VIX resumed on Friday. Partially reversing a 6.68% fall from Thursday, the VIX rose by 1.14% to end the day at 38.02.
On Friday, the Dow and S&P500 fell by 0.59% and by 1.21% respectively, with the NASDAQ sliding by 2.45%.
While economic data from the U.S was skewed to the positive, negative sentiment towards COVID-19 weighed. There was also uncertainty towards the U.S Presidential Election that added downside pressure.
Apple Inc. and Amazon.com were amongst the big losers on the day.
It’s a busy start to the week on the Eurozone economic calendar. Key stats October Manufacturing PMIs for Italy and Spain.
Finalized Manufacturing PMIs for France, Germany, and the Eurozone will also be in focus.
Barring any marked downward revisions, however, Italy and the Eurozone’s PMIs will be the key drivers.
From the U.S, the market’s preferred ISM Manufacturing PMI for October will also provide direction late in the session.
October’s finalized Markit Survey PMI for October should have a muted impact late in the day.
Ahead of the European session, China’s manufacturing PMI will need to impress to provide support.
Away from the economic calendar, U.S politics and COVID-19 will remain the key drivers on the day, however.
In the futures markets, at the time of writing, the Dow was down by 156 points, with the DAX down by 41 points.
With over 20 years of experience in the finance industry, Bob has been managing regional teams across Europe and Asia and focusing on analytics across both corporate and financial institutions. Currently he is covering developments relating to the financial markets, including currencies, commodities, alternative asset classes, and global equities.