The European majors will be tested through the day. French consumer spending figures will provide direction. It will ultimately come down to geopolitics.
The European majors found much-needed support on Thursday, following 3 consecutive days in the red for the DAX30 and CAC40. Leading the way was the CAC40, which rose by 0.66%. DAX30 and EuroStoxx600 weren’t far behind, with gains of 0.44% and 0.61% respectively.
More positive comments from the U.S President on a willingness to form a trade agreement with China provided support to the European majors.
News of China increasing the import of pork was also positive going into the European open.
The more positive sentiment towards trade, coupled with an all-important pickup in German consumer sentiment delivered on the day.
Brexit and Impeachment talk from the U.S limited the upside for the European majors on the day, however.
It was a quiet day on the Eurozone economic calendar on Thursday. Economic data was limited to Germany’s GfK Consumer Climate figures for September.
According to the latest GfK Consumer Climate Study for September,
Following the consumer climate figures, the ECB released its September Economic Bulletin. Key points included:
From the U.S, economic data was on the heavier side but had a muted impact on the majors. The key stat of the day was the 3rd estimate GDP for the 2nd quarter, which came in at 2%. This was in line with the 2nd estimate and forecasts.
From the DAX, autos were mixed on Thursday. Volkswagen and Continental rose by 0.12% and 0.87% respectively, while Daimler and BMW fell by 1.21% and 0.46% respectively.
Banks struggled on the day, with Deutsche Bank sliding by 1.90%, while Commerzbank slipped by 0.37%.
Leading the way on the DAX was Adidas, which rallied by 3.2%. The positive news on trade also supported Infineon Technologies, which rose by 1.22%.
From the CAC, it was a positive day for the banks. BNP Paribas led the way, rising by 0.77%. Credit Agricole and Soc Gen gained 0.50% and 0.06% respectively. For the autos, Renault slid by 1.51%, whilst Peugeot rose by 0.62%.
The VIX Index ended the day relatively flat, with a 0.69% gain to 16.1.
It was bittersweet for the markets on Thursday. Mixed chatter on trade initially provided support, following Trump’s comments on Wednesday. On the negative front, however, was news that there was unlikely to be an extension to the waiver given to U.S firms to continue to supply Huawei.
Mixed sentiment towards trade and the ongoing impeachment story ultimately led the U.S majors into the red, supporting the VIX on the day.
It’s another quiet day ahead on the Eurozone economic calendar. French consumer spending figures are due out ahead of the European open.
With the ECB reliant on consumer spending for support, we can expect the majors to be sensitive to the numbers.
Later in the day, economic data out of the U.S will also influence. Key stats include inflation, durable goods orders, and personal spending figures. Barring particularly impressive figures, the Michigan Consumer Sentiment and Expectation figures will likely have a muted impact late in the session.
On the geopolitical risk front, there’s plenty for the markets to consider. Trade, impeachment and Brexit news will be front line on the day.
In the futures markets, at the time of writing, the DAX was up by 21.5 points, while the Dow Mini was down by 48 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.