European Equities: Will U.S GDP Numbers Stir the Pot? The Futures Say Yes…

Market jitters could return if the U.S economy sees growth slow to below 2%. Ahead of the stats, European corporate earnings will be in focus.·FX Empire
Bob Mason
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Economic Calendar:

Friday, 26th April

French Jobseekers Total

The Majors

There was nothing mixed about the European majors on Thursday. For the DAX, a run of 9 days in the green came to an end, with the DAX falling by 0.25%. Things were not much better for the CAC40 and EuroStoxx600, which slipped by 0.33% and by 0.21% respectively.

While there were no material stats released out of the Eurozone, the ECB’s Economic Bulletin continued to paint a gloomy picture. The content of the bulletin provided few surprises and focused on the effects of protectionism and the trade war.

In spite of the negativity of the Bulletin, the markets largely brushed the ECB views aside as focus remained on corporate earnings.

UBS delivered its earnings results that beat analyst expectations. The better than expected results failed to give the broader sector a boost, however.

While UBS delivered, albeit it with a 27% drop in earnings, Barclays PLC earnings results weighed. Quarterly profit fell by 10% year-on-year, leading to a 3.59% slide on the day.

BNP Paribas slipped by 0.82%, with UniCredit S.p.A. also in the red, down by 0.45% on the day. For Deutsche Bank and Commerzbank, merger talks ended in failure. Commerzbank tumbled by 2.29%, while Deutsche Bank fell by a more modest 1.25%.

Things were not much better in the auto sector. On the DAX, Volkswagen (-1.51%); Daimler (-1.10%) and BMW (-0.54%) all made it into the DAX’s bottom 10. The sector’s sensitivity to the global economic outlook was reflected in the moves on the day. While economic data out of the U.S was better than expected, concerns over the Chinese government’s policy plans remained a red flag.

The noise of a planned scale back on economic stimulus and a rollout of structural reforms led to a 2.19% slide in the CSI300 on Thursday. With the Hang Seng also in the red going into the European session, the stage had been set.

Corporate earnings out of the U.S failed to deliver a recovery and neither did a further slide in the EUR. For the current week, to Thursday’s close, the EUR was down by 1%…

The Day Ahead

France jobseeker figures are the only stats due out of the Eurozone. The figures are unlikely to have an impact on the day.

Focus on the day will remain on corporate earnings. Following yesterday’s end in merger talks, Deutsche Bank will be releasing its earnings results, as will Royal Bank of Scotland. Deutsche Bank will likely be the driver for the sector across the region.

The auto sector will also be in the spotlight as Daimler releases its earnings results. It remains to be seen whether Daimler delivers earnings results that can compete with Ford Motor figures released on Thursday.

Exxon Mobil and Chevron are the key corporate earnings out of the U.S, which are unlikely to have a material impact on the European majors. U.S 1st quarter GDP figures, however, will likely have an impact.

Expectations are for a material slowdown from a 4th quarter 3.4%, but the key will be whether the economy would slow to sub-2% growth in the quarter.

Anything below 2% and the European majors would likely come under pressure.

At the time of writing, the futures were pointing to a bearish open. The DAX30 was down 14 points, while the CAC40 was pointing to a 13.5 point loss at the open.

This article was originally posted on FX Empire

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