European Equities: Majors Set to Open in the Green, with Earnings in Focus

A lack of economic data leaves corporate earnings in focus. Early support came from Asia, with little in the way of a positive start to the week.
Bob Mason
Light Board

Economic Calendar:

Monday, 15th April 2019

  • N/A

Tuesday, 16th April 2019

  • German ZEW Current Conditions (Apr)
  • German ZEW Economic Sentiment (Apr)
  • Eurozone ZEW Economic Sentiment (Apr)

Wednesday, 17th April 2019

  • Italian CPI m/m (Mar) Final
  • Eurozone Core CPI y/y (Mar) Final
  • Eurozone CPI m/m (Mar)
  • Eurozone CPI y/y (Mar) Final
  • Eurozone Trade Balance (Feb)

Thursday, 18th April 2019

  • German PPI m/m (Mar)
  • French Manufacturing PMI (Apr) prelim
  • French Services PMI (Apr) prelim
  • German Manufacturing PMI (Apr) prelim
  • German Services PMI (Apr) prelim
  • Manufacturing PMI (Apr) prelim (Eurozone)
  • Markit Composite PMI (Apr) prelim (Eurozone)
  • Services PMI (Apr) prelim (Eurozone)

Friday, 19th April 2019

  • N/A

 

The Majors

It was a perfect ending to a mixed week for the European majors last week. A 0.54% gain on Friday left the DAX down 0.08% for the week, with the EuroStoxx600 also losing ground, down by 0.18%.

Things were somewhat better for the CAC40, however, which had been outperforming the DAX until the start of the 2nd quarter.

LVMH earnings results released earlier in the week certainly contributed to the CAC40’s 0.48% rise for the week.

From outside of Europe, trade figures out of China left the markets in limbo. On the one hand, better than expected export figures were a plus, but a larger than anticipated fall in imports would have been of concern. China has become a key buyer of goods from the EU. Weak demand from China and the prospect of U.S tariffs are a bad combination…

The upside on Friday ultimately came off the back of corporate earnings out of the U.S., which will likely remain the theme in the early part of the week ahead.

On the geopolitical front, relief over Britain narrowly avoiding a no-deal departure from the EU also provided support.

Following JPMorgan and Wells Fargo’s better than expected earnings, the markets looked to have been vindicated in brushing off the IMF’s latest growth forecasts. With concerns over the economic outlook lingering, however, a mass exodus from riskier assets would be on the cards should results begin to paint a bleaker picture in the week ahead.

The Day Ahead

It’s a quiet start to the week for Europe. With no material stats scheduled for release, we can expect risk sentiment from the Asian session to spill over in the early part of the day.

On the earnings front, Citigroup and Goldman Sachs are due to release their quarterly earnings. The lack of stats will leave the major bourses particularly sensitive to the results.

While it’s a quiet start to the week, it’s a particularly busy week ahead. Flash April private-sector PMIs due out of Europe and 1st quarter GDP numbers due out of China will likely be key through the week.

At the time of writing, the futures were in the green. The DAX30 was up 16.5 points, with the CAC40 is pointing to a 17 point gain at the open.

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