European Equities: A Week in Review – 15/10/21

The Majors

It was another bullish week for the majors in the week ending 15^th October. The EuroStoxx600 rallied by 2.65%, with the DAX30 and the CAC40 ending the week with gains of 2.51% and by 2.55% respectively.

Disappointing economic data from the Eurozone took a back seat, with optimism over corporate earnings delivering support.

From the U.S, economic data was also market friendly in spite of inflationary pressures persisting at the end of the 3^rd quarter.

Economic data from China added further upside, with exports picking up to support a widening of the trade surplus.

The Stats

Early in the week, ZEW Economic Sentiment figures for Germany and the Eurozone disappointed.

Germany’s ZEW Economic Sentiment index fell from 26.5 to 22.3, with the Eurozone’s down from 31.1 to 21.0.

For the Eurozone, industrial production and trade data were also on the weaker side.

In August, industrial production fell by 1.6%, reversing a 1.5% increase from the month prior.

On the trade front, the Eurozone’s trade surplus narrowed from €20.7bn to €4.8bn.

From the U.S

Early in the week, job openings and inflation were in focus.

Following softer than expected NFP numbers in the week prior, JOLT’s job openings fell from 11.098m to 10.439m in August.

Of greater significance, however, were inflation figures.

The annual core rate of inflation held steady at 4.0% in September, with core consumer prices up 0.2% in the month. Consumer prices rose by 0.4% off the back of a 0.3% increase in August.

Mid-week, the FOMC meeting minutes provided few surprises ahead of a busy end to the week.

On Thursday, initial jobless claims impressed. In the week ending 8^th October, jobless claims fell from 329k to 293k.

Retail sales figures were also better than expected. In September, core retail sales increased by 0.8%, with retail sales up 0.7%. While better than forecasted sales were softer than in August.

Negative for the Dollar, however, was weaker consumer sentiment. In October, the Michigan Consumer Sentiment Index fell from 72.8 to 71.4.

The Market Movers

From the DAX, it was a bullish week for the auto sector. Volkswagen rallied by 4.71% to lead the way, with Daimler ending the week up by 3.64%. BMW and Continental weren’t far behind, with gains of 3.48% and 3.21%.

It was a bearish week for the banking sector, however. Deutsche Bank and Commerzbank ended the week down by 0.44% and by 2.56% respectively.

From the CAC, it was a bullish week for the banks. Soc Gen and BNP Paribas led the way with gains of 1.91% and by 1.32%. Credit Agricole ended the week with a more modest 0.16% rise.

It was a bullish week for the French auto sector. Stellantis NV rose by 2.00%, with Renault rallying by 5.66%.

Air France-KLM bounced back with a 4.02% gain, with Airbus ending the week up by 1.48%.

On the VIX Index

It was a second consecutive week in the red for the VIX in the week ending 15^th October.

Following an 11.25% fall from the previous week, the VIX slid by 13.16% to end the week at 16.30.

4-days in the green from 5 sessions, which included a 9.55% slide on Thursday delivered the downside for the week.

For the week, the NASDAQ rallied by 2.18%, with the Dow and the S&P500 ending the week up by 1.58% and by 1.82% respectively.

The Week Ahead

It’s another relatively quiet week ahead on the economic calendar.

Early in the week, finalized inflation figures for the Eurozone will be in focus. Barring any marked revisions, we don’t expect the numbers to influence.

On Thursday, flash consumer confidence figures for October will draw attention ahead of private sector PMIs on Friday.

Friday’s prelim PMIs for France, Germany, and the Eurozone will be key, Concerns over inflation and the economic outlook will give the stats plenty of influence.

Economic data from the U.S includes industrial production, Philly FED Manufacturing PMI, jobless claims, and private sector PMIs.

While industrial production will draw interest, expect the jobless claims and service sector PMI figures to be key.

From China, 3^rd quarter GDP numbers due out alongside September retail sales and industrial production figures will set the tone. The numbers are due out on Monday.

Away from the economic calendar, corporate earnings and central bank chatter will also provide the majors with direction.