European Equities: Manufacturing PMIs and Prelim Inflation Figures in Focus

The Majors

It was a bearish end to the week for the European majors on Friday. The CAC40 and EuroStoxx600 slid by 1.39% and by 1.64% respectively, with the DAX30 declining by 0.67%.

Following a string of better-than-expected stats in the week, economic data from France disappointed on Friday.

The downside for the majors, however, came from market fears of a shift in central bank policy rather than weak stats.

A continued rise in government bond yields, fueled by reinflationary fears and the need for action did the damage.

The market angst continued in spite of ECB President Lagarde and FED Chair Powell attempting to comfort the markets in the week.

The Stats

It was a relatively quiet day on the economic calendar on Friday, with the French economy in the spotlight.

In January, consumer spending slumped by 4.6%, month-on-month, partially reversing December’s 22.4% rebound. Economists had forecast a 3.5% decline.

According to Insee.fr,

• The consumption of manufactured goods tumbled by 12.9%.
  • Durable goods purchases fell by 9.9%, with spending on clothing and textiles sliding by 27.8%.
  • The 27.8% slide in spending on clothing and textiles left spending down by 14.4% year-on-year.
  • Other manufactured goods purchases fell by a relatively more modest 7.7%.
• Energy consumption rose by 6.3%, however, with food consumption increasing by 1.7%. The upside in energy consumption was attributed to colder weather conditions.

4^th quarter GDP numbers were also market negative. According to 2^nd estimates, the economy contracted by 1.4%, quarter-on-quarter, revised down from a 1^st estimate 1.3%.

Prelim inflation figures were not much better. In February, consumer prices fell by 0.1%, partially reversing a 0.2% rise from January.

From the U.S

It was a relatively busy day, with inflation and personal spending figures the key stats of the day.

Personal spending jumped by 2.4%, reversing a 0.4% decline from December. The numbers supported the more optimistic economic outlook.

Inflationary pressures also picked up in January. The FED’s preferred Core PCE Price Index rose by 1.5%. In December, the index had risen by 1.4%.

The Market Movers

For the DAX: It was a mixed day for the auto sector on Friday. Volkswagen and Daimler saw gains of 1.92% and 1.47% respectively, with BMW rising by 0.90%. Continental saw red, however, falling by 0.04%.

It was a particularly bearish day for the banks, however. Deutsche Bank fell by 2.67%, with Commerzbank sliding by 3.07%.

From the CAC, it was a bearish day for the banks. BNP Paribas slid by 2.06%, with Credit Agricole and Soc Gen falling by 1.57% and by 1.84% respectively.

It was also a bearish day for the French auto sector. Stellantis NV and Renault ended the day down by 0.86% and by 0.62% respectively.

Air France-KLM continued its recovery, rising by a further 1.23%, while Airbus SE slid by 3.05%.

On the VIX Index

It was back into the red for the VIX, delivering a 4^th loss in 9 sessions, with the downside coming in spite of the S&P500 seeing red on the day.

Partially reversing a 35.38% jump from Thursday, the VIX fell by a relatively modest 3.25% to end the day at 27.95.

The NASDAQ rose by 0.56%, while the Dow and the S&P500 fell by 1.50% and by 0.48% respectively.