European Equities: No Stats Leaves Geopolitics in Focus

The news wires will need to be market-friendly for the majors to brush off geopolitically woes on the day…
Bob Mason
List of stock market indices

Economic Calendar:

Tuesday, 13th August

  • German CPI (MoM) (Jul) Final
  • Spanish CPI (YoY) (Jul) Final
  • Spanish HICP (YoY) (Jul) Final
  • German ZEW Current Conditions (Aug)
  • German ZEW Economic Sentiment (Aug)
  • Eurozone ZEW Economic Sentiment (Aug)

Wednesday, 14th August

  • German GDP (YoY) (Q2)
  • German GDP (QoQ) (Q2)
  • French CPI (MoM) (Jul) Final
  • French HICP (MoM) (Jul) Final
  • Eurozone GDP (QoQ) (Q2)
  • Eurozone GDP (YoY) (Q2)
  • Eurozone Industrial Production (MoM) (Jun)

Friday, 15th August

  • Eurozone Trade Balance (Jun)

The Majors

A bearish end to the week left the European majors in the red for the week. The DAX led the way down on the day, falling by 1.28% on Friday to end the week down by 1.5%. For the CAC40 and EuroStoxx600, the pair fell by 1.11% and 0.84% respectively.

For the week, the EuroStoxx600 saw the heaviest loss, falling by 1.7%, while the CAC40 fell by just 0.58%.

While the U.S – China trade war continued to pressure the global equity markets, it was Italian politics that weighed on Friday.

On the trade war front, U.S President Trump delivered with his usual end of week messages, stating that he was not ready to do a trade deal with China. Trump also said that the U.S was not prepared to do business with Huawei…

The Stats

It was a relatively quiet day on the Eurozone economic calendar. Economic data was limited to Germany’s June trade data that came out ahead of the European open.

According to Destatis,

  • Germany’s trade surplus stood at €18.1bn in June, which was unchanged from a revised €18.1bn in May. Economists had forecast a surplus of €18.4bn.
  • Exports fell by 0.1% month-on-month and were down by 8% year-on-year.
  • Imports increased by 0.5% from the previous month, while down by 4.4% year-on-year.
  • Of a total €106.bn in exports, Germany exported goods to the value of €63.5bn to EU member states. Germany imported goods to the value of €53.3bn from EU member states.
  • Year-on-year, exports to EU countries fell by 6.2%, while imports fell by 1.1%.
  • Exports to the Euro area fell by 5.6% in June, while imports fell by just 0.3%.
  • To countries outside of the EU, exports slid by 10.7%, with imports falling by 8.9%.

The figures reflected the ongoing troubles within Germany’s manufacturing sector and the effects of the extended U.S – China trade war.

Of less influence on the day were 2nd quarter nonfarm payroll figures out of France and finalized inflation figures out of Italy.

French nonfarm payrolls increased by 0.3% in the 2nd quarter, easing from a 0.4% rise in the 1st quarter. Out of Italy, consumer prices held steady in July, which was softer than a forecasted 0.1% rise.

The Market Movers

From the DAX, ThyssenKrupp was the worst performer on the day, sliding by 5.16%. The materials stock joined a broad-based resource stock sell-off on the day. Things were no much better for the auto sector, with Continental leading the way, falling by 2.43%. BMW and Daimler weren’t far behind with losses of 2.17% and 2.14% respectively. Volkswagen saw a more modest 1.53% fall on Friday.

From the banking sector, the Italian coalition government implosion and trade war chatter weighed. Deutsche Bank and Commerzbank slid by 1.83% and 2.63% respectively.

On the day, Bayer AG managed to buck the trend with a 4.33% rally, with the upside coming off the back of news of a possible Elanco Animal Health Inc. deal.

From the CAC, the banking sector also saw red on the day. Soc Gen led the way down, sliding by 2.15%. BNP Paribas and Credit Agricole fell by 1.33% and by 1.5% respectively. Renault also joined its German peers in the red with a 1.43% decline.

The Day Ahead

It’s a quiet day ahead on the Eurozone economic calendar. With no material stats due out of the Eurozone, the markets will likely focus on geopolitics through the day.

Chatter from the weekend on trade, Brexit and the Salvini’s call for a snap Italian general election are in play ahead of a busy week on the day front.

In the futures markets, the DAX was up by 78 points, while the Dow Mini was up by 40 points, at the time of writing.

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