Friday, 5th April 2019
- German Industrial Production (MoM) (Feb)
Following a solid first 3-days of the 2nd quarter, it was a mixed bag for the majors on Thursday. Closing out in the red for the first time this week were the CAC40 and EuroStoxx600. The pair ended the day with 0.09% and by 0.27% losses respectively.
Bucking the European trend on the day was the DAX, which rose by 0.28% gain to make it 4% for the start of the 2nd quarter.
Economic data out of the Eurozone was limited to February factory orders out of Germany. While weighing on the EUR, a 4.2% slide did little to shake investor sentiment.
Recent manufacturing PMI numbers had largely prepared the markets for the worst, supporting the DAX recovery from losses in the early part of the day.
Outside of the numbers, the ECB monetary policy meeting minutes painted a gloomy picture, which was also widely expected. Draghi has certainly not held back from talking of a willingness to deliver further easing should the need arise.
The softer EUR provided a degree of support to European multinationals, though it wasn’t enough to prevent profit-taking following a good start to the quarter.
Resource stocks were amongst the worst hit. While updates on the U.S – China trade talks have been positive, there’s been no actual details to support further upside near-term.
For the DAX, the auto sector continues to find its feet. In spite of a profit warning last month, BMW was amongst the top performers, rising by 1.58%. Not far behind were Daimler (1.08%) and Volkswagen (1.05%).
On the other end of the table, Deutsche Bank was amongst the biggest losers, falling by 0.55%. News of Unicredit S.p.A’s interest in Commerzbank led to a 2.8% rally in Commerzbank stock. Things were less rosy for the Italian bank, which slipped by 0.66%. Italian stocks were under pressure following news of the coalition government’s plans to downwardly revise its growth forecasts to just 0.1% for the year. Forecasts were for 1% growth back in December…
Outside of the Eurozone, Brexit continued to be watched closely as the Conservative and Opposition Party continued to search for a compromise. One positive from Wednesday was the vote to block a no-deal Brexit, but there’s far more to the story…
Out of the U.S, the lack of stats played into the hands of the DAX, with the losses elsewhere minor considering the current week gains. Better than expected weekly jobless claims figures alleviated any shift in risk appetite ahead of today’s NFP numbers.
On the US-China trade talk front, updates from Trump’s meeting with China Premier Xi were positive, supporting the S&P500’s 6th consecutive day in the green.
The Day Ahead
It’s another quiet day ahead on the economic calendar. Industrial production figures out of Germany are due out, which will could provide more bad news. Factory orders fell for a 4th consecutive month in February, according to figures released on Thursday. If the manufacturing PMI numbers are anything to go by, a 0.5% rise in industrial production may well be overstated.
There will be some apprehension ahead of today’s nonfarm payroll figures out of the U.S. Positive updates from the U.S – China trade talks could get the majors through the week unscathed, though we may need to start seeing some of the detail…
At the time of writing, the futures pointed to an 11 point rise at the open. Things were not so upbeat for the CAC40, however, which was down by 5.5%.
This article was originally posted on FX Empire
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