European Equities: Risk Appetite Could Be Tested on the Day Ahead

The futures markets are pointing to a positive open, but holding on may be another issue…
Bob Mason
List of stock market indices

Economic Calendar:

Wednesday, 12th June

  • Spanish CPI (YoY) (May)
  • Spanish HICP (YoY) (May)

Thursday, 13th June

  • German CPI (MoM) (May)
  • Eurozone Industrial Production (MoM) (Apr)

 

Friday, 14th June

  • French CPI (MoM) (May)
  • French HICP (MoM) (May)
  • Italian CPI (MoM) (May)

The Majors

It was a positive start to the week for the CAC40 and EuroStoxx600, while the German markets were closed for the day.

The CAC40 gained 0.34%, with the EuroStoxx600 rising by 0.21% on the day. Support came from gains from the Asian session and continued to find support from the U.S – Mexico deal and the more dovish FED.

All-important labor market figures have disappointed of late and led to expectations of a more dovish FED at next week’s FOMC.

The Stats

There were no stats to provide direction for the majors on the day.

The lack of stats left the majors to continue to respond to easing trade tensions and hopes of a near-term FED rate cut.

Out of China, a pickup in exports was positive for the morning, through a slide in imports tempered any major rally in Europe.

April JOLTs job opening figures from the U.S had little impact on sentiment as the markets continued to take weak data as a sign of a further extension to cheap funding.

The Market Movers

Looking at the CAC40, bank stocks found strong support on the day. BNP Paribas rallied by 1.63%, with Credit Agricole ending the day with a 1.99% gain.

From the auto sector, Renault also saw sizeable gains on the day, rising by 2.59%.

Elsewhere, Italy’s UniCredit S.p.A rallied by 2.22%.

The Day Ahead

There are no material stats due out of the Eurozone to provide direction to the majors.

The lack of stats could test market risk appetite ahead of U.S wholesale inflation figures due out later in the day.

Following the Friday U.S – Mexico agreement, market focus will likely return to the economic outlook and sentiment towards the U.S – China trade war. Trump has issued a new threat of fresh tariffs. This time it is dependent upon Chinese Premier Xi’s attendance at the G20.

There was some positive reaction to China’s May trade figures, which revealed a narrowing of the trade surplus with the U.S since the start of the year. The numbers will need to continue to reflect a downward trend in the months ahead to support the view of a material shift in trade terms.

It remains to be seen whether the narrowing in the trade surplus was attributed to weaker demand, however.

At the time of writing, the DAX30 futures was up 14.5 points. The Dow Mini was up by 34 points.

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