European Equities: A Week in Review – 12/02/21It was a mixed week for the European majors, with the DAX seeing red, while the CAC40 and EuroStoxx600 found support in spite of weak stats.
It was a mixed week for the European majors, which coughed up some of the games from the previous week’s rebound.
The DAX30 slipped by 0.05%, while the CAC40 and EuroStoxx600 ended the week with gains of 0.78% and 1.09% respectively.
While economic data pointed to a gloomy end to 2020 and a pickup in inflationary pressures in early 2021, corporate earnings provided support.
Hope of a sizeable U.S COVID-19 relief package and a speedy economic recovery ultimately offset the impact of the weak stats.
It was a quiet week on the economic calendar.
Key stats included German industrial production and trade data for December.
While industrial production stalled, there was a slight widening in the trade surplus supported by a pickup in exports to China and the U.S.
Industrial production fell in both France and Italy, however, which disappointed in the week.
On the inflationary front, finalized January inflation figures from Spain and Germany affirmed a pickup in inflationary pressures.
From the U.S
Economic data was also on the lighter side.
Key stats included inflation, labor market and consumer sentiment figures.
It was a mixed bag from the U.S.
Both inflationary pressures weekly jobless came in below forecasts.
Initial jobless claims eased back to from 812k to 793k in the week ending 5th February. While down from the week prior, economists had forecast a fall to 757k.
While jobless claims were disappointing, JOLTs job openings for December were skewed to the positive. Job openings rose from 6.572m to 6.646m in December.
At the end of the week, consumer sentiment and expectations disappointed. The Michigan Consumer Sentiment Index fell from 79.0 to 76.2 in February, according to prelim figures. Consumer expectations also deteriorated, with the Michigan Consumer Expectations Index sliding from 74.0 to 69.8.
The Market Movers
From the DAX, it was a bearish week for the auto sector. Daimler slid by 1.49% to lead the way down, with Continental falling by 1.49%. BMW and Volkswagen saw relatively modest losses of 0.13% and 0.54% respectively for the week.
It was a mixed week for the banking sector. Deutsche Bank rose by 5.15%, while Commerzbank slid by 9.06% as a result of disappointing quarterly earnings and a gloomy outlook.
From the CAC, it was another particularly bullish week for the banks. Credit Agricole rallied 7.30%, with BNP Paribas and Soc Gen rising by 6.61% and by 3.49% respectively.
It was a bearish week for the French auto sector, however. Renault and Stellantis NV ended the week down by 2.53% and by 0.73% respectively.
Air France-KLM reversed last week’s 2.89% gain with a 3.33% loss, with Airbus falling by 1.30%
On the VIX Index
It was a 2nd consecutive week in the red for the VIX. In the week ending 12th February, the VIX fell by 4.31%. Following on from a 36.93% slide from the previous week, the VIX ended the week at 19.97.
For the week, NASDAQ rose by 1.73%, with the Dow and S&P500 ending the week up by 1.00% and by 1.23% respectively.
The Week Ahead
It’s a busy week ahead on the economic calendar.
In the 1st half of the week, the German and Eurozone economies are back in focus.
2nd estimate GDP numbers for the 4th quarter are due out along with ZEW economic sentiment figures for February. Eurozone industrial production figures are also due out, which are likely to be EUR negative following numbers from France, Germany, and Italy last week.
Expect plenty of interest in the numbers ahead of prelim February private sector PMI numbers on Friday.
While German manufacturing remains the key area of focus, the markets will be looking to assess service sector activity. That places focus on both the manufacturing and services sectors.
COVID-19 containment measures remained in place going into February. Dire numbers will bring into question the ECB’s economic growth forecasts for the year.
From the U.S, industrial production, the weekly jobless claims, and February prelim private sector PMIs will also influence.
Away from the economic calendar, COVID-19 news and chatter from Capitol Hill will need continued monitoring.