European Equities: Geopolitics and U.S Corporate Earnings in Focus

While the U.S majors see fresh record highs, pressure on autos pinned back the European majors. A lack of stats will leave geopolitics in focus.
Bob Mason
Financial stock market numbers and forex trading graph, business and stock market data, financial investment concept on bull and bear shapes symbols background.

Economic Calendar:

Wednesday, 15th January 2020

French CPI (MoM) (Dec) Final

French HICP (MoM) (Dec) Final

Spanish CPI (YoY) (Dec) Final

Spanish HICP (YoY) (Dec) Final

Industrial Production (MoM) (Nov)

Trade Balance (Nov)

Thursday, 16th January 2020

German CPI (MoM) (Dec) Final

ECB Monetary Policy Meeting Minutes

Friday, 17th January 2020

Italian CPI (MoM) (Dec) Final

Eurozone Core CPI (YoY) (Dec) Final

Eurozone CPI (YoY) (Dec) Final

The Majors

It was another day in the red for the European majors on Monday, with the DAX30 falling by 0.24% to lead the way. The CAC40 and EuroStoxx600 saw more modest losses of 0.02% and 0.18% respectively.

The pullback came off the back of the China Association of Automobile Manufacturers forecasts for car sales for 2020. For the coming year, the CAAM expects auto sales to decline for a 3rd year-in-a-row.

There was little else to provide direction on the day, with the markets now waiting on the signing of the phase 1 trade agreement.

The Stats

It was a quiet day on the Eurozone economic calendar on Monday, with no material stats to provide the European majors with direction.

There were also no material stats from the U.S to influence, leaving the majors in the hands of the news wires.

The Market Movers

For the DAX: It was a mixed day for the auto sector. Volkswagen bucked the trend once more, rising by 0.48%. Continental led the way down, sliding by 2.26%. BMW and Daimler saw more modest losses of 0.75% and 0.92% respectively.

It was another bearish day for the banks, however, with Commerzbank and Deutsche Bank falling by 1.39% and by 0.98% respectively.

From the CAC, it was also a bearish day for the banks. BNP Paribas fell by 0.44%, with Credit Agricole ending the day down by 0.16%. Soc Gen closed out the day flat.

For the French auto sector, stocks tracked their European peers. Peugeot and Renault fell by 0.86% and by 2.82% respectively.

Renault’s heavier losses came as concerns rose over whether the Renault – Nissan alliance can survive without Ghosn at the helm.

On the VIX Index

It was back into the red for the VIX, which fell by 1.91% on Monday. Reversing a 0.16% gain from Friday, the VIX ended the day at 12.3.

The downside came as the U.S majors recovered from Friday’s losses. A 0.70% gain saw the S&P500 hit yet another record high.

Optimism over the phase 1 trade agreement continued to provide support on the day. News of the U.S Treasury removing China as a currency manipulator was also market positive, weighing on the VIX.

The Day Ahead

It’s another quiet day on the Eurozone economic calendar, with no material stats scheduled for release on the day.

The lack of stats will continue to leave the focus on geopolitics. Barring a pickup in Inflationary pressure, inflation figures from the U.S should have a muted impact on the European majors.

On the day, we can expect geopolitics to remain in focus as the market readies for the U.S and China to sign the phase 1 agreement tomorrow.

On the corporate earnings front, Citigroup and JPMorgan are due to release earnings later today that will also influence.

In the futures markets, at the time of writing, the DAX30 was down by 56 points, while the Dow was up by 51 points.

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