European Equities: The Majors Are in for a Mixed Day Ahead

No major shocks from the EU elections should be positive for the majors, leaving sentiment towards trade to influence on the day.
Bob Mason
Light Board

The Majors

The European majors managed to find support at the end of a particularly dire week for the European equity markets.

The CAC40 gained 0.67%, with the DAX and EuroStoxx600 rising by 0.49% and by 0.56% respectively.

In spite of the Friday gains, the DAX ended the week down by 2.7%, with the CAC and EuroStoxx600 down by 2.24% and 1.6% respectively.

Support at the end of the week came off the back of comments from U.S President Trump, which eased market jitters over the ongoing U.S – China trade war.

Trump talked of the possible inclusion of Huawei in any trade deal, having blacklisted the Chinese telco in response to a lack of progress on trade talks.

There was also support from China, with China’s vice Premier talking of further fiscal policy support from the Chinese government.

The Stats

Following some disappointing economic data on Thursday, there were no material stats to provide direction on the day.

Gains in the equity markets came in spite of the EU elections taking place through the weekend, where populist and far-right governments could find their voice.

The Market Movers

For the DAX, Wirecard led the way on the day. A 2% gain partially reversed Thursday’s 3.91% slide. Things were less rosy for ThyssenKrupp and Infineon Technologies, however. The pair led the way down on Friday. ThyssenKrupp followed Thursday’s 4.46% slide with a 2.09% fall on Friday. Infineon Tech fell by 1.91%, following a 3.83% fall on Thursday.

ThyssenKrupp and Infineon Tech ended the week down by 4.47% and 8.57% respectively.

Deutsche Bank and Commerzbank also saw heavy losses on Friday, falling by 1.58% and by 1.19% respectively.

The auto sector found support, however, following the shift in sentiment towards the U.S – China trade war. BMW rose by 1.03%, with Continental and Volkswagen gaining 0.86% and 0.62% respectively. Bucking the trend was Daimler, which slipped by 0.13% on the day.

From the CAC40, BNP Paribas and Credit Agricole gained 0.58% and 2% respectively, supported by the better than expected French PMI numbers from Thursday. In spite of the gains on the day, the pair were in the red for the week.

The Day Ahead

It’s another quiet start to the week, with no material stats due out of the Eurozone on the day.

We can expect market reaction to the EU election results to provide direction at the start of the week.

The lack of any major election shocks, coupled with Friday’s shift in sentiment towards the U.S – China trade war, should provide some early support. A lack of direction, however, will see sentiment towards the economic outlook to also influence.

The markets will also look for more updates from the U.S and China on trade, though with the U.S on holiday, there could be little forthcoming from the U.S administration.

At the time of writing, the DAX30 was up by 36 points, with the Dow Mini up by 10 points.

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