European Equities: The G20 Summit Sets the Majors Up for a Bounce

The Majors

The European majors bounced back on Friday, with the DAX30 leading the way, rallying by 1.04% to end the week up by 0.48%.

For the CAC40, a 0.83% gain brought a 5 day run of losses to an end, with the CAC40 ending the week up by 0.19%. The EuroStoxx600 ended the day up by 0.7% to leave the index with a 0.03% gain for the week.

Support for the major came from positive chatter from the U.S administration ahead of Trump’s planned meeting with China’s Premier Xi.

The Stats

Economic data out of the Eurozone included prelim June inflation figures out of France, Italy and the Eurozone. May consumer spending figures out of France were also in focus.

The stats were skewed to the positive, with French consumer spending rising by 0.4% in May. Inflation also picked up in June, with the Eurozone’s core annual rate of inflation rising from 0.8% to 1.1%. Forecasts were for a 1% rise. The Eurozone’s annual rate of inflation held steady at 1.2%.

According to Eurostat, supporting inflation were

• Food, alcohol & tobacco, energy, and services, with estimates pointing to 1.6% increases.
• The annual rate of non-energy industrial goods was forecasted to increase by just 0.2%.

Out of the U.S, a contraction in Chicago’s manufacturing sector failed to impact risk sentiment. Inflation held steady at 1.6%, according to the FED’s preferred core PCE price index figures. While easing from a 0.6% rise in April, personal spending rose by 0.4%, which was in line with forecasts.

In contrast to the CB Consumer Confidence figures released earlier in the week, the Michigan Consumer Sentiment Index came in at 98.2. While down from May’s 100.0, the index came in ahead of a prelim 97.9.

The Market Movers

From the DAX, bank stocks were on the move. Deutsche Bank was amongst the front runners on Friday, rallying by 1.41%, with Commerzbank up by 1.92%. From the auto sector, Continental ended the day up by 1.01%. Daimler and Volkswagen also made gains on the day, rising by 1.14% and by 0.43% respectively. BMW bucked the trend, however, falling by 0.2%.

From the CAC, BNP Paribas and Credit Agricole gained 0.77% and 0.52% respectively, while Renault jumped by 1.54% on the day.

The Day Ahead

It’s a busy day ahead.

Key stats due out of the Eurozone include finalized French, German, and Eurozone manufacturing PMI numbers for June. Ahead of the numbers, Italy and Spain’s manufacturing PMIs will also be in focus. Later in the morning, Eurozone unemployment figures will likely have a muted impact on the majors.

Any revisions to Germany’s PMI will influence the DAX and the EuroStoxx600 in particular. Hopes of an end to the U.S – China trade war would limit any impact, however.

While we can expect some direction from the numbers, positive updates from the G20 Summit from Saturday will drive demand for the majors through the day.

At the time of writing, the DAX was up by 100.5 points. The Dow Mini was up by 202 points.