European Equities: It’s All Eyes on BrexitBrexit will be the key driver on the day, with no material stats due out of the Eurozone to influence. U.S stats will also influence later in the day.
It was a mixed day for the European majors on Wednesday. The DAX30 bucked the trend, rising by 0.32%, while the EuroStoxx600 and CAC30 fell by 0.14% and by 0.09% respectively.
The majors failed to make progress on the day as Brexit negotiations continued. News of disagreements over certain areas including future trade had led to the lack of progress on the day.
It was a relatively busy day on the Eurozone economic calendar on Wednesday. Economic data included Italy and the Eurozone’s finalized September inflation figures and the Eurozone’s August trade data.
According to Eurostat,
- The annual rate of inflation came in at 0.8% in September, softening from 1.0% in August, according to finalized figures.
- In September 2018, the annual rate of inflation had stood at 2.1%.
- Cyprus (-0.5%), Portugal (-0.3%), Greece, Spain, and Italy (0.2%) reported the lowest rates of inflation.
- Slovakia registered the highest annual rate of inflation at 3.0%.
- The highest contribution to the annual rate of inflation came from services (0.66 pp), food, alcohol & tobacco (0.29 pp) and non-energy industrial goods (0.06 pp).
- Month-on-month, consumer prices rose by 0.2%, following a 0.1% rise in August. Economists had forecast a rise of 0.2%.
According to Eurostat,
- The Eurozone trade surplus narrowed from €24.8bn to €14.7bn in August. Economists had forecast a narrowing to €17.4bn.
- Exports of goods to the rest of the world fell by 2.2%, year-on-year, to €177.4bn.
- Imports from the rest of the world fell by 4.1% to €162.6bn.
- In August 2018, the trade surplus with the rest of the world had stood at €11.9bn.
- Intra-euro area trade fell by 5.6%, year-on-year,. To €133.7bn.
Inflation figures out of Italy had a muted impact on the majors on the day.
From the U.S, an unexpected fall in retail sales added further pressure on the European majors late in the session. Core retail sales fell by 0.1% in September, which was worse than a forecasted rise of 0.2%.
The Market Movers
For the DAX: Autos found strong support once more, with Volkswagen leading the way, rallying by 2.47%. Daimler was also amongst the best performers on the DAX, rallying by 1.42%. BMW and Continental weren’t far behind, both rising by 0.9%.
Bank stocks also found further support. Deutsche Bank rose by 0.7%, while Commerzbank rallied by 1.48%
From the CAC, it was also a bullish day for the banks. Credit Agricole led the way, rising by 1.97%. BNP Paribas and Soc saw more modest gains of 0.45% and 0.89% respectively. For the autos, it was also positive with Renault rising by 1.14%, while Peugeot gained 1.15%.
On the VIX Index
The VIX Index saw an end to a run of 5 consecutive days in the red on Wednesday, rising by 1.03%. Partially reversing a 7.07% fall from Tuesday, the VIX ended the day at 13.7.
Disappointing retail sales figures from the U.S pinned back the U.S majors on the day, providing support to the VIX.
The Day Ahead
It’s a quiet day ahead on the Eurozone economic calendar. There are no material stats due out of the Eurozone to provide direction.
A lack of stats will leave the majors in the hands of Brexit updates and economic data from the U.S.
Key stats from the U.S include housing data and the more influential Philly FED manufacturing numbers for October.
Expect Brexit chatter to overshadow any stats out of the U.S, however.
In the futures market, at the time of writing, the DAX30 was down by 17 points, with the Dow down by 7 points.