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European Equities: Corporate Earnings and Trade Chatter in Focus

Bob Mason

Economic Calendar:

Tuesday, 12th November

  • German ZEW Current Conditions (Nov)
  • German ZEW Economic Sentiment (Nov)
  • Eurozone ZEW Economic Sentiment (Nov)

Wednesday, 13th November

  • German CPI (MoM) (Oct) Final
  • Eurozone Industrial Production (MoM) (Sep)

Thursday, 14th November

  • German GDP (QoQ) (Q3) 1st Estimate
  • German GDP (YoY) (Q3) 1st Estimate
  • French CPI (MoM) (Oct) Final
  • French HICP (MoM) (Oct) Final
  • Spanish CPI (YoY) (Oct) Final
  • Spanish HICP (YoY) (Oct) Final
  • Eurozone GDP (QoQ) (Q3) 2nd Estimate
  • Eurozone GDP (YoY) (Q3) 2nd Estimate

Friday, 15th November

  • Italian CPI (MoM) (Oct) Final
  • Eurozone Core CPI (YoY) (Oct) Final
  • Eurozone CPI (MoM) (Oct)
  • Eurozone CPI (YoY) (Oct) Final
  • Eurozone Trade Balance (Sep)

The Majors

It was a bearish end to the week for the European majors as a run of 5 consecutive days in the green came to an end on Friday.

The DAX30 led the way down, falling by 0.46%, with the EuroStoxx600 and CAC40 ending the day with losses of 0.28% and 0.02%.

Economic data on the day had a muted impact on the European majors as the markets tracked trade chatter throughout the day.

Doubts reappeared over whether the U.S and China were, in fact, closer to a Phase 1 trade agreement after news hit the wires of U.S President Trump’s unwillingness to roll back tariffs.

On the earnings front, Credit Agricole weighed on the banking sector.

The Stats

It was a relatively quiet day on the Eurozone economic calendar on Friday. Key stats from the Eurozone included September trade data out of Germany and 3rd quarter nonfarm payroll figures out of France.

According to Destatis,

  • Germany’s trade surplus widened from €18.7bn to €19.2bn in September. Economists had forecast a surplus of €18.1bn
  • Month-on-month, exports rose by 1.5% and by 4.6%, year-on-year, to €114.2bn.
  • Imports rose by 1.3%, month-on-month, and by 2.3%, year-on-year, to €93.0bn.
  • Month-on-month, Germany exported €68.4bn of goods to EU member states in September, while importing €53.6bn from EU member states.
  • Germany exported €43.0bn worth of goods to Eurozone member states while importing €34.4bn worth.
  • The exports of goods to countries outside of the EU stood at €45.7bn, while exports totaled €39.4bn.

Out of France, non-farm payrolls increased by 0.3% in the 3rd quarter, following a 0.2% rise in the 2nd quarter, according to figures released by Insee.

The Market Movers

For the DAX: It was a mixed end to the week for the auto sector, as the markets responded to the latest chatter on trade. BMW bucked the trend on the day, rallying by 1.11%, while Continental (-0.73%), Daimler (-0.28%), and Volkswagen (-0.80%) all saw red.

It was no better for the banks on the day. Deutsche Bank fell by 1.92%, with Commerzbank sliding by 3.07%.

From the CAC, bank stocks also saw red at the end of the week. Credit Agricole led the way, sliding by 2.31%. Soc Gen and BNP Paribas saw more modest losses of 1.03% and 1.23% respectively.

Credit Agricole pressured the banking sector following its 3rd quarter earnings release on Friday. While net profit beat estimates, a slide in net income from the retail operation weighed, with net interest income also declining in the quarter.

It was also a mixed day for the autos. While Peugeot rose by 0.50%, Renault fell by 1.48%.

On the VIX Index

It was back into the red for the VIX, which fell by 5.18% on Friday. Reversing a 0.87% rise from Thursday, the VIX ended the day at 12.1.

The loss came as the U.S majors recovered from negative territory in the day to close out with modest gains.

Negative sentiment towards trade had weighed on risk appetite over the course of the day, limiting the upside for the S&P500 to just 0.26%.

The Day Ahead

It’s a quiet day ahead on the Eurozone economic calendar. There are no material stats to provide the European majors with direction at the start of the week.

A lack of stats will leave the majors in the hands of geopolitical risk and corporate earnings.

On the geopolitical risk front, we can expect any chatter on trade and UK politics to provide direction throughout the day.

Corporate earnings will also be in focus on the day. Continental’s earnings results will provide direction to the auto sector.

In the futures market, at the time of writing, the DAX30 was down by 9.5 points, with the Dow down by 66 points.

This article was originally posted on FX Empire

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