European Equities: A Week in Review – 16/04/21It was a busy week for the European majors. Economic data and corporate earnings delivered support. COVID-19 vaccine news and geopolitics were a drag, however.
It was yet another bullish week for the European majors in the week ending 16th April, following relatively modest gains from the week prior.
The CAC40 rallied by 1.91%, with the DAX30 and the EuroStoxx600 seeing gains of 1.48% and by 1.20% respectively.
Economic data from the U.S and China continued to support the unfaltering market optimism. Optimism delivered support in spite of COVID-19 vaccine woes and the resurfacing of geopolitical tensions.
In the week, the U.S introduced fresh sanctions on Russia, while U.S – China relations were also back in the spotlight.
Ultimately, however, positive corporate earnings, together with upbeat stats delivered the upside in the week.
It was a busy week on the economic data front.
Key stats included Eurozone retail sales, industrial production, and trade data along with economic sentiment figures for Germany and the Eurozone.
Retail sales rose by more than expected in February, while industrial production hit reverse.
Economic sentiment figures for Germany and the Eurozone were also a disappointment. Sentiment waned in both Germany and the Eurozone.
For Germany, the ZEW Economic Sentiment Index fell from 76.6 to 70.7, while the Eurozone’s declined from 74.0 to 66.3.
At the end of the week, the Eurozone’s trade surplus widened from €11.0bn to €17.7bn, delivering a positive spin at the end of the week.
Throughout the week, inflation figures for member states and the Eurozone were aligned with prelim figures. With the ECB unlikely to shift on policy anytime soon, the pickup in inflationary pressures had a muted impact on the majors.
From the U.S
It was a busier week on the economic data front.
Key stats included inflation, retail sales, and jobless claims figures, which were market risk positive.
A pick in inflationary pressure failed to spook the markets. In spite of the annual core rate of inflation accelerating to 1.6%, the FED’s assurance of unwavering support remained key.
In the week ending 9th April, initial jobless claims decreased from 769k to 576k. Economists had forecast a decline to 700k.
In the month of March, retail sales jumped by 9.8%, reversing a 2.7% decline from February. Core retail sales rose by 8.4%, reversing a 2.5% decline from February.
Economists had forecast retail sales to rise by 5.9% and for core retail sales to increase by 5.0%.
From the manufacturing sector, the Philly FED Manufacturing PMI fell from 51.8 to 50.2 in April. Economists had forecast a sharper decline to 42.0, however.
At the end of the week, stats were also skewed to the positive. The Michigan Consumer Sentiment Index rose from 84.9 to 86.5 in April, according to prelim figures.
Economic data from China also delivered support in the week. Trade data impressed at the start of the week, with GDP, retail sales, unemployment, and industrial production numbers supporting demand for riskier assets at the end of the week.
The Market Movers
From the DAX, it was a bullish week for the auto sector. Continental rallied by 5.81%, with Daimler and Volkswagen seeing solid gains of 3.56% and 2.87% respectively. BMW ended the week with more modest 0.41% rise.
It was another mixed week for the banking sector, however. Deutsche Bank rose by 1.16%, while Commerzbank fell by 1.80%.
From the CAC, it was a mixed week for the banks. Credit Agricole fell by 0.56%, while BNP Paribas and Soc Gen ending the week with gains of 2.80% and 2.24% respectively.
It was a bullish week for the French auto sector. Renault rose by 0.89%, with Stellantis NV ending the week up by 2.27%.
Air France-KLM slid by 7.78% on news of the planned ban of domestic flights, while Airbus rose by 2.55%.
On the VIX Index
It was a 4th consecutive week in the red for the VIX in the week ending 16th April. Following on from a 3.69% decline from the previous week, the VIX fell by 2.64% to end the week at 16.25.
3-days in the red from 5 delivered the downside in the week for the VIX.
For the week, the NASDAQ ended the week up by 1.09%, with the Dow and the S&P500 gaining by 1.18% and 1.37% respectively.
The Week Ahead
It’s a relatively busy week ahead on the economic calendar.
The markets will have to wait until Tuesday for German wholesale inflation figures. With inflationary pressures expected to pickup near-term before easing back, the numbers should have limited impact on the majors, however.
The focus will then shift to prelim April private sector PMIs for France, Germany, and the Eurozone.
Expect plenty of interest in the numbers as the markets look for a continued improvement in private sector conditions.
New orders, employment, and optimism will likely be key areas of focus across both the manufacturing and services sectors.
While the stats will influence, the ECB monetary policy decision and press conference will also be key.
Following the ECB’s vow to ramp up bond purchases, the latest numbers along with the ECB’s economic outlook will be key.
From the U.S, the weekly jobless claims on Thursday and prelim private sector PMIs on Friday will also influence.
Away from the economic calendar, corporate earnings, COVID-19 news, and geopolitics will also need monitoring.
On the geopolitical risk front, the U.S along with China, Russia, and Iran remain areas of focus.