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European Equities: Stats to Play 2nd Fiddle as Trump Signs the HK Bill

Bob Mason

Economic Calendar:

Thursday, 28th November 2019

  • Spanish CPI (YoY) (Nov) Prelim
  • Spanish HICP (YoY) (Nov) Prelim
  • German CPI (MoM) (Nov) Prelim

Friday, 29th November 2019

  • German Retail Sales m/m (Oct)
  • French Consumer Spending (MoM) (Oct)
  • French CPI m/m (Oct) Prelim
  • French HICP m/m (Oct) Prelim
  • French GDP (QoQ) (Q3)
  • German Unemployment Change (Nov)
  • German Unemployment Rate (Nov)
  • Italian CPI (MoM) (Nov) Prelim
  • Eurozone CPI (YoY) (Nov) Prelim
  • Eurozone Unemployment Rate (Oct)

The Majors

It was a mixed day once more for the European majors on Wednesday. The DAX30 and EuroStoxx600 rose by 0.38% and by 0.32%, while CAC40 slipped by 0.05% to buck the trend on the day.

Support for the majors continued to come from positive sentiment towards the U.S and China trade war. Trump’s comments from Tuesday continued to resonate across the broader markets on Wednesday. The U.S President had said that China and the U.S were close to securing a phase 1 trade agreement.

UK politics have yet to influence the European majors, with the Tories still ahead in the opinion polls, albeit with a narrower margin.

The Stats

It was a relatively quiet day on the Eurozone economic calendar on Wednesday. Key stats included jobseeker figures and consumer confidence numbers out of France.

According to Insee,

  • The consumer confidence index rose from 104 to 106 in November, coming in ahead of a forecast of 103.
  • Households’ opinion on their future financial situation rose by 2 points, with opinion towards their past financial situation rising by 1 point. Both continued to hold above their long-term averages.
  • Households considering it a suitable time to make major purchases also rose by 1 point.
  • Sentiment towards households considering it a suitable time to save fell by 1 point and remained below its long-term average.
  • One negative, however, was a fall in sentiment towards employment over the next 12-months. The sub-index fell by 2 points to zero, well below a long-term average of 33.

Jobseeker total numbers had less influence on the day, with job seekers rising from 3,326.7k to 3,330.7k.

From the U.S, economic data failed to prop up the CAC40, in spite of an upward revision to 3rd quarter GDP numbers.

According to 3rd estimate figures, the economy grew by 2.1%, quarter-on-quarter, revised upwards from 1.9%.

Core durable goods orders and durable goods orders were also on the rise in October, with both up by 0.6%, month-on-month.

With inflationary pressures easing, according to the latest Core PCE Price Index figures for October, it was the perfect mix for riskier assets.

The Market Movers

For the DAX: It was a mixed day for the auto sector. BMW and Volkswagen led the way, with gains of 1.29% and 1.05% respectively. Continental and Daimler saw red, however, with the pair falling by 0.75% and by 0.13% respectively…

It was a positive day for the banks, however. Deutsche Bank rose by 0.89%, with Commerzbank up by 0.15%.

From the CAC, it was a bullish day for the banks. BNP Paribas rose by 0.65% to lead the way. Credit Agricole and Soc Gen saw more modest gains of 0.48% and 0.25% respectively.

French Autos also found support, with Peugeot and Renault rising by 0.81% and by 0.34% respectively.

On the day, Airbus was amongst a number of the 40 that left the index in the red, with a 1.28% slide.

On the VIX Index

The VIX rose by 1.82% on Wednesday. Partially reversing a 2.78% fall on Tuesday, the VIX ended the day at 11.8.

Upside on the day, a first in four days, came in spite of the U.S equity markets hitting fresh highs on the day.

Economic data from the U.S had also supported risk appetite on the day, with 3rd quarter growth in the U.S being revised upwards.

While positive updates from the U.S – China trade talks also provided support, the lack of an actual conclusion to talks provided the upside on the day.

The Day Ahead

It’s another relatively quiet day ahead on the Eurozone economic calendar. Key stats due out of the Eurozone are limited to prelim inflation figures out of Spain and Germany.

We can expect the markets to brush aside the numbers on the day. Trading volumes later in the day will be on the lighter side, with the U.S markets shut for Thanksgiving…

Outside of the numbers, the markets will continue to be sensitive to any updates from Beijing and Washington on trade.

In the early hours of this morning, Trump signed the HK Bill to protect HK Protestors in spite of Beijing’s demands to veto the bill.

Risk aversion will likely weigh on the European majors as the markets look for a China response to the signing…

In the futures market, at the time of writing, the DAX30 was down by 8 points, with the Dow down by 69 points.

This article was originally posted on FX Empire