European Equities: UK Parliament and EUR Consumer Confidence in Focus

Brexit will take center stage as Boris Johnson’s Brexit Bill gets debated in Parliament. German and Eurozone consumer confidence will also influence.
Bob Mason
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Economic Calendar:

Friday, 20th December 2019

  • GfK German Consumer Climate (Jan)
  • French Consumer Spending (MoM) (Nov)
  • Eurozone Consumer Confidence (Dec) Prelim

The Majors

It was a mixed day for the European majors on Thursday, with the CAC40 and EuroStoxx600 rising by 0.21% and 0.05% respectively, while the DAX30 fell by 0.08%.

On the geopolitical risk front, there was little reaction to the impeachment of U.S President Trump. The House of Representatives, controlled by the Democrats, voted to impeach for abuse of power and obstruction.

Negative sentiment towards Brexit lingered, however, as the Queen delivered the traditional Queen’s Speech following Johnson’s General Election victory.

The Stats

It was a particularly quiet day on the Eurozone economic calendar on Thursday. There were no material stats to provide the majors with direction, leaving geopolitics and U.S data to influence on the day.

From the U.S

Economic data included the Philly FED’s Manufacturing PMI and weekly jobless claims figures.

The stats were skewed to the negative limiting any major breakout, with the Philly FED Manufacturing Index falling from 10.4 to 3.0 in December. The weekly jobless claims figures were also negative, with initial jobless claims rising from 225k to 234k.

Existing home sales figures for November had a muted impact, however.

The Market Movers

For the DAX: It was a bearish day for the auto sector. Continental and Volkswagen led the way down, with losses of 1.90% and 1.48%. BMW and Daimler saw more modest losses of 1.39% and by 0.97% respectively.

The sector was under pressure following news of BMW and Daimler announcing plans to pull out of the North America market.

It was a bullish day for the banks, however. Commerzbank rose by 0.25%, with Deutsche Bank rallying by 1.49%.

From the CAC, it was a mixed day for the banks. BNP Paribas and Soc Gen rose by 0.06% and by 0.24% respectively. Credit Agricole bucked the trend, falling by 0.68%.

It was bearish for the French auto sector, however, with Peugeot and Renault falling by 0.67% and by 1.15% respectively.

On the VIX Index

The VIX ended a short run of 2 consecutive days in the green on Thursday, after falling by 0.64% on the day.

Partially reversing a 2.36% gain from Wednesday, the VIX ended the day at $12.4.

The downside came in spite of Trump’s impeachment, as the U.S majors also brushed aside disappointing weekly jobless claims and Philly FED Manufacturing numbers.

In spite of the weak numbers, a pickup in service sector activity at the year-end and positive labor market conditions reinforced the positive view on the economy. This ultimately offset any effects of negative numbers from the manufacturing sector.

JOLTs job openings for October had also impressed following strong NFP numbers for November, suggesting that the initial jobless claims figures are unlikely to spike.

The Day Ahead

It’s a relatively busy day ahead on the Eurozone economic calendar. Key stats include German and Eurozone consumer confidence figures that will influence.

Later in the day, economic data from the U.S will also influence. Finalized 3rd quarter GDP numbers, inflation, and consumer sentiment figures will provide direction.

On the geopolitical front, expect further pressure in the day ahead as Boris Johnson looks to hasten Britain’s departure from the EU. Parliament is scheduled to debate on Johnson’s amended Brexit Bill later today. The UK Parliament is also scheduled to vote on whether to leave the EU on 31st January. Johnson’s majority will be put to the test for the first time later today. If all Tory members remain aligned, that threat of a hard Brexit may become all the more real…

In the futures markets, at the time of writing, the Dow was up by 8 points.

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