European Equities: A Week in Review – 17/09/21
It was another bearish week for the majors in the week ending 17th September. The CAC40 led the way down, falling by 1.40%, with the DAX30 and the EuroStoxx600 seeing losses of 0.77% and 0.96% respectively.
Economic data for the Eurozone failed to support the majors, in spite of the stats being skewed to the positive.
Mid-week, disappointing economic data from China fueled market concerns over the economic outlook.
Industrial production in China was up by 5.3%, year-on-year, in August versus a forecasted 5.8% increase. In July, production had been up by 6.4%.
Fixed asset investment was up 8.9% versus a forecasted 9.0%. In July, fixed asset investments had been up 10.3%.
While the numbers from China raised yet more red flags, economic data from the U.S impressed, raising policy uncertainty.
Market jitters ahead of next week’s FOMC policy decision and projections delivered the losses for the DAX30 at the end of the week.
Economic data wage growth, industrial production, trade, and finalized inflation figures for the Eurozone.
Finalized inflation figures for Spain, France, and Italy were also out but had a muted impact on the majors.
In the 2nd quarter, wage fell by 0.4%, year-on-year, partially reversing a 2.1% increase recorded in the previous quarter.
Industrial production and trade data were positive, however.
Production increased by 1.5%, reversing a 0.1% fall from June, with the Eurozone’s trade surplus widening from €17.7bn to €20.7bn.
At the end of the week, finalized inflation figures for the Eurozone were in line with prelim figures. The Eurozone’s annual rate of inflation accelerated from 2.2% to 3.0% in August.
From the U.S
In August, the annual rate of core inflation softened from 4.3% to 4.0% versus a forecasted 4.2%. While softer than expected, 4% continued to sit well above the FED’s 2% target, leaving tapering on the table.
Mid-week, industrial production and NY Empire State manufacturing figures were market positive.
On Thursday, retail sales, Philly FED Manufacturing PMI, and jobless claims figures were of greater interest, however.
In August, retail sales increased by 0.7% versus a forecasted 0.2% decline. Core retail sales jumped by 1.8% versus a 0.1% decline. In July retail sales had fallen by 1.1% and core retail sales by 0.4%.
Manufacturing numbers were also upbeat, with the Philly FED Manufacturing PMI increasing from 19.4 to 30.7 in September.
Jobless claims figures failed to impress, however, with sub-300k remaining elusive. In the week ending 10th September, initial jobless claims rose from 312k to 332k. Economists had forecast an increase to 330k.
At the end of the week, consumer sentiment also improved, albeit moderately. In September, the Michigan Consumer Sentiment Index rose from 70.3 to 71.0, falling short of a forecasted 72.0.
The Market Movers
From the DAX, it was a mixed week for the auto sector. Continental slid by 10.98%, with Volkswagen ending the week down by 3.40%. BMW and Daimler ended the week up by 1.44% and by 2.88% respectively, however.
It was also a mixed week for the banking sector. Deutsche Bank rallied by 2.64%, while Commerzbank fell by 0.18%.
From the CAC, it was a mixed week for the banks. BNP Paribas rose by 1.36% to buck the trend. Credit Agricole and Soc Gen fell by 2.59% and by 1.48% respectively.
It was also a mixed week for the French auto sector. Stellantis NV rose by 0.63%, while Renault slid by 1.71%.
Air France-KLM found much needed support, rising by 2.29%, while Airbus ended the week with a 1.15% loss.
On the VIX Index
It was back into the red for the VIX in the week ending 17th September, ending a run of 2 consecutive weekly gains.
Following a 27.67% jump from the previous week, the VIX slipped by 0.67% to end the week at 20.81.
2-days in the red from 5 sessions, which included 6.58% fall on Wednesday delivered the downside. An 11.34% rise on Friday limited the downside from the week, however.
For the week, the NASDAQ fell by 0.47%, with the Dow and the S&P500 ending the week down by 0.07% and by 0.57% respectively.
The Week Ahead
It’s a relatively busy week ahead on the economic calendar.
Key stats include prelim September private sector PMIs for France, Germany, and the Eurozone.
At the end of the week, German IFO business climate figures will also influence.
From the U.S, it’s a quieter but influential week ahead.
On the economic data front, prelim private sector PMIs for September and weekly jobless claims will influence.
The main event of the week, however, is the FED monetary policy decision and projections.
With the FED expected to stand pat on policy, expect the FED’s economic projections and policy outlook to be key.