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European Equities: It’s the Eve of the G20 Summit…

It’s the eve of the G20 Summit… While economic data will provide direction early, the markets will be looking out for any chatter on trade.
Bob Mason
Light Board

Economic Calendar:

Thursday, 27th June

  • Spanish HICP (YoY) (Jun)
  • Eurozone Business Confidence
  • German CPI m/m  (Jun) Prelim

Friday, 28th June

  • French Consumer Spending m/m (May)
  • French CPI m/m (June) Prelim
  • French HICP m/m (June) Prelim
  • Spanish GDP q/q (Q1)
  • Italian CPI m/m (Jun) Prelim
  • Eurozone Core CPI y/y (Jun) Prelim
  • Eurozone CPI y/y (Jun) Prelim

The Majors

The European majors had a mixed session on Wednesday. While the DAX30 ended the day up by 0.14%, the CAC40 and EuroStoxx600 fell by 0.25% and by 0.31% respectively.

Chatter from the U.S ultimately drove the majors. A pullback on expectations of a near-term FED rate cut weighed at the start of the day, following FED Chair Powell comments in the previous U.S session.

Sentiment towards the U.S – China trade talks at tomorrow’s G20 Summit provided some support following optimistic chatter from the administration.

The Stats

Economic data out of the Eurozone on Wednesday included German consumer confidence figures and French employment numbers.

The stats were skewed to the negative on the day. The German consumer climate index eased from 10.10 to 9.80 in July. Forecasts were for a fall to 10.00.

According to the latest GfK survey,

  • The propensity to buy increased in June, while income expectations deteriorated, weighing on the headline figure.
  • The income expectations indicator tumbled by 12.2 points to 45.5 points, its lowest level since March 2017. The indicator stood at 57.5 points this time last year.
  • Consumer sentiment towards the economic outlook improved, with the economic expectations indicator rising by 0.7 points to 2.4 points. In spite of the monthly rise, the indicator remains 17 points below the same time last year.
  • Alongside the improved economic outlook, the propensity to buy indicator rose by 3.2 points to 53.7 points. Compared to the figure from this time last year, the indicator is down 1.4 points.

French jobseekers were on the rise, increasing from 3,372.9k to 3,376.5k.

Out of the U.S economic data included trade and durable goods orders numbers. The numbers were mixed, with core durable goods orders rising by 0.3%, whilst durable goods orders fell by 1.3% in May.

Trade numbers were also negative, with the U.S goods trade deficit widened from $70.92bn to $74.55bn in May.

The Market Movers

From the DAX, the auto and financial sectors were amongst the front runners on Wednesday. Deutsche Bank rallied by 3.91%, with Commerzbank ending the day up by 1.57%. From the auto sector, BMW rallied by 2.46%, with Daimler (+1.61%), Volkswagen (+1.57%) and Continental (+1.10%) all at the top of the table.

Leading the way on the day was ThyssenKrupp, which jumped by 5.44% off the back of news of a possible bid for its elevator unit

From the CAC, bank stocks were also on the rise, with BNP Paribas and Credit Agricole gaining 1.74% and 1.47% respectively.

The Day Ahead

It’s a relatively quiet day ahead on the economic calendar.

June prelim inflation figures are due out of Spain and Germany, with the Eurozone’s business confidence numbers also in focus. Softer inflation figures would provide support, as the markets look to the ECB’s assurances of further easing should inflationary pressures soften.

From the U.S, finalized 1st quarter GDP numbers and the weekly jobless claims will also provide direction.

With the G20 Summit starting tomorrow, any chatter on trade or Iran will likely overshadow the numbers on the day.

At the time of writing, the DAX was up by 46.5 points. The Dow Mini was up by 65 points.

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