European Equities: A Week in Review – 02/04/21

The Majors

It was a bullish week for the European majors in the week ending 1^st April.

The DAX30 rallied by 2.43%, with the CAC40 and the EuroStoxx600 gaining 1.91% and 1.23% respectively.

Impressive economic data from the Eurozone and beyond delivered support for the European majors in the week.

Adding to the upside was a further pickup in optimism towards the economic outlook for the U.S and beyond.

From the U.S, government spending plans also delivered plenty of support for the major boerses in the week.

For the Eurozone, in spite of vaccine shortages, the fact that manufacturing sector activity surged was good enough to mute concerns over new lockdown measures in France and other member states.

The Stats

Consumer spending, unemployment, manufacturing PMIs, and inflation figures were in focus.

It was a mixed set of numbers, though the stats were skewed to the positive in a shorted week.

While consumer spending fell in France, retail sales was on the rise in Germany.

Germany’s unemployment rate held steady following a further decline in the number of unemployed.

Providing strong support, however, were better than expect manufacturing PMI numbers.

With Italy and Spain seeing manufacturing sector activity pickup at a marked pace, the Eurozone’s PMI hit an all-time high 62.5.

Germany’s PMI also hit an all-time high 66.6 in March.

Mixed inflation figures had little impact on the majors in the week.

While the Eurozone’s annual core rate of inflation softened in March, the Eurozone’s annual rate of inflation accelerated at the end of the 1^st quarter.

A marked pickup in inflationary pressures across member states was aligned with market expectations.

From the U.S

There were some key stats for the markets to consider.

In the 1^st half of the week, consumer confidence and ADP nonfarm employment change figures delivered.

The CB consumer confidence index jumped from 90.4 to 109.7 in March.

Justifying improving consumer sentiment was a 517k rise in nonfarm employment, according to ADP figures.

In the 2^nd half of the week, manufacturing PMI and labor market numbers were in focus.

The market’s preferred ISM Manufacturing PMI increased from 60.8 to 64.7 in March,

On Thursday, jobless claims disappointed, however, rising from 658k to 719k in the week ending 26^th March.

The Market Movers

From the DAX, it was a bullish week for the auto sector. BMW and Volkswagen rallied by 5.91% and by 5.28% respectively. Continental and Daimler ended the week with more modest gains of 2.47% and 2.82% respectively.

It was a mixed week for the banking sector, however. Deutsche Bank slid by 2.01%, while Commerzbank rose by 0.38%.

From the CAC, it was a bullish week for the banks. BNP Paribas rose by 0.93%, with Credit Agricole and Soc Gen ending the week with gains of 1.72% and 1.98% respectively.

It was also a bullish week for the French auto sector. Renault and Stellantis NV rose by 4.29% and by 2.92% respectively.

Air France-KLM and Airbus also found strong support, gaining 2.92% and 2.81% respectively.

On the VIX Index

It was a 2^nd consecutive week in the red for the VIX. Following on from a 9.98% decline from the previous week, the VIX fell by 8.11% to end the week at 17.33.

Three days in the red that included a 5.45% fall on Tuesday and a 10.67% slide on Thursday contributed to the downside in the week.

For the week through Thursday, the NASDAQ rallied by 2.60%, with the Dow and the S&P500 gaining by 0.24% and 1.14% respectively.

The Week Ahead

It’s a busy week ahead on the economic calendar.

After Monday’s holiday, Eurozone unemployment figures for February get things going. Barring particularly dire numbers, however, we don’t expect the numbers to influence.

The reintroduction of lockdown measures across a number of member states will likely impact labor market conditions in March.

On Wednesday, the focus will shift to service sector PMI figures from Italy and Spain.

Finalized service and composite PMIs for France, Germany, and the Eurozone are also due out.

Barring marked deviation from prelims, expect Italy and the Eurozone’s PMIs to garner the greatest interest.

Through the second half of the week, the German economy is back in focus.

German factory orders, industrial production, trade data for February are due out on Thursday and Friday.

Following an all-time high March Manufacturing PMI, the markets will be looking for the stats to be aligned with Germany’s survey-based numbers.

ISM Non-Manufacturing PMI, jobless claims, and wholesale inflation figures from the U.S will also be in focus.

Going into the week, U.S labor market numbers from Friday will likely set the tone.

From elsewhere, there are also service sector PMI numbers and inflation figures from China to consider in the week.

Away from the economic calendar, geopolitics and COVID-19 news updates will also continue to influence.