European Equities: A Week in Review – 30/04/21

The Majors

It was a mixed week for the European majors in the week ending 30^th April.

The CAC40 rose by 0.18%, while the DAX30 and the EuroStoxx600 ended the week down by 0.94% and by 0.34% respectively.

After a positive start to the week, a string of disappointing economic data from the Eurozone weighed on the DAX30 and EuroStoxx600.

Corporate earnings results and market optimism towards the economic recovery provided support to the European majors, however.

The Stats

In the 1^st half of the week, German business and consumer confidence waned as a result of the latest spike in new COVID-19 cases.

In the 2^nd half of the week, stats were also skewed to the negative weighing on the EUR.

While the French economy managed to avoid a contraction in Q1, both Germany and the Eurozone’s economies contracted.

The contraction was aligned with ECB President Lagarde’s outlook and the latest downward revision to Germany’s economic forecasts.

Inflation for the Eurozone and member states, unemployment figures from Germany and the Eurozone, and French consumer spending figures also drew attention.

Consumer spending hit reverse in France while inflationary pressures picked up in France and across the Eurozone.

Unemployment from Germany disappointed, while the Eurozone’s unemployment rate declined from 8.2% to 8.1%.

From the U.S

In the 1^st half of the week, core durable goods and consumer confidence figures were in focus.

The stats were skewed to the positive. Core durable goods reversed a 0.3% fall, with a 1.6% rise in March.

More significantly, the CB Consumer Confidence Index jumped from 109.0 to 121.7.

In the 2^nd half of the week, GDP, jobless claims, personal spending, and inflation figures were in focus.

The stats were also skewed to the positive, supporting market optimism towards the economic outlook.

In the 1^st quarter, the economy expanded by 6.4%, following 4.3% growth in the 4^th quarter of last year.

Jobless claims figures were also positive, with initial jobless claims falling from 566k to 553k in the week ending 23^rd April.

At the end of the week, personal spending also impressed, jumping by 4.2% to reverse a 1% fall from February.

Inflationary pressures were on the rise, with the FED’s preferred Core PCE Price Index rising by 1.8% in March, year-on-year. In February, the index was up by 1.4%. Following the FED’s assurances from earlier in the week, however, the uptick had a muted impact on the markets.

On the monetary policy front, the FED stood pat on policy, which was in line with expectations. FED Chair Powell continued to reassure the markets that there would be no tapering to the asset purchasing program or shift in interest rates any time soon.

The assurances supported riskier assets late in the week.

The Market Movers

From the DAX, it was a mixed week for the auto sector. Volkswagen slid by 5.51%, with BMW and Continental falling by 3.49% and by 4.83% respectively. Daimler bucked the trend, rising by 0.33%.

It was a bullish week for the banking sector. Deutsche Bank jumped by 18.43%, with Commerzbank rallying by 11.22%.

From the CAC, it was a bullish week for the banks. BNP Paribas and Credit Agricole saw gains of 5.70% and 5.75% respectively. Soc Gen led the way, however, rallying by 10.35%.

It was another bearish week for the French auto sector. Renault and Stellantis NV ended the week down by 0.56% and by 4.02% respectively.

Air France-KLM slipped by 0.28%, while Airbus rose by 1.50%.

On the VIX Index

It was a 2^nd consecutive weekly gain for the VIX in the week ending 30^th April. Following a 6.65% gain from the previous week, the VIX rose by 7.39% to end the week at 18.61.

3-days in the green from 5 delivered the upside in the week for the VIX.

For the week, the S&P500 ended the week up by 0.02%, while the NASDAQ and the Dow fell by 0.39% and by 0.50% respectively.

The Week Ahead

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

From the Eurozone key stats include private sector PMIs for Italy and Spain and finalized PMIs for France, Germany, and the Eurozone.

Barring marked revisions, expect Italy and the Eurozone’s numbers to have the greatest impact on the majors.

From Germany, retail sales, factory orders, industrial production, and trade data will also garner plenty of interest.

Economic data from the U.S will also influence. The market’s preferred ISM survey-based PMI numbers, ADP nonfarm employment change, weekly jobless claims, and nonfarm payrolls will be in focus.

From the previous week, U.S economic data continued to support the optimistic economic outlook. Positive stats would support the majors following FED Chair Powell’s assurance on the policy front.

Economic data from China will also influence, with the market’s preferred Caixin survey PMI numbers due out.