European Equities: A Week in Review – 13/08/21

The Majors

It was another bullish week for the majors in the week ending 13^th August.

The CAC40 rose by 1.16%, with the DAX30 and the EuroStoxx600 ending the week with gains of 1.37% and 1.25% respectively. Friday’s gains delivered a 10^th consecutive day in the green for the EuroStoxx600

A marked shift in sentiment towards FED monetary policy delivered support for the majors in the 2^nd half of the week.

U.S inflation figures came in softer than expected, dampening expectations of an imminent FED move following the NFP numbers. Weekly labor market numbers and consumer sentiment figures also contributed to the shift in sentiment.

A continued rise in new Delta variant cases and mixed economic data from the Eurozone did limit the upside, however.

The Stats

It was a mixed set of numbers on the economic data front.

German and Eurozone trade and economic sentiment figures drew plenty of attention.

Germany’s trade surplus widened from €12.5bn to €16.3bn, with the Eurozone’s widening from €12.3bn to €18.1bn.

Economic sentiment figures were disappointing, however.

Germany’s ZEW Economic Sentiment Index fell from 63.3 to 40.4 in August. The Eurozone’s Index slid from 61.2 to 41.7.

Also negative was an unexpected fall in Eurozone industrial production, which declined by 0.3% in June. Production had fallen by 1.1% in May.

From the U.S

Key stats in the week included inflation, jobless claims, and consumer sentiment figures.

In July, inflation numbers came in softer than expected, with the core annual rate of inflation softening from 4.5% to 4.3%.

While the annual rate of inflation held steady at 5.4%, however, consumer prices rose by just 0.5% in July. In June, consumer prices had risen by 0.9%.

Weekly jobless claims fell from 387k to 375k in the week ending 6^th August. Economists had forecast a decline to 365k.

All in all, the numbers looked to have eased pressure on the FED following the impressive NFP numbers from the week prior.

At the end of the week, consumer sentiment added further downward pressure on the greenback.

According to prelim figures, the Michigan Consumer Sentiment Index slid from 81.2 to 702. Economists had forecast an increase to 81.5. The Michigan Consumer Expectations Index also took a hit, falling from 79.0 to 65.2.

The Market Movers

From the DAX, it was another mixed week for the auto sector. Daimler fell by 0.66% to buck the trend in the week. Continental led the way, however, rallying by 2.27%. BMW and Volkswagen ended the week up by 1.24% and 0.36% respectively.

It was a bullish week for the banking sector, however. Deutsche Bank rose by 1.62%, with Commerzbank gaining 2.82%.

From the CAC, it was a mixed week for the banks. Soc Gen slipped by 0.29%, while BNP Paribas and Credit Agricole rose by 0.70% and by 0.08% respectively.

The French auto sector also had mixed fortunes. Stellantis NV rallied by 4.12%, while Renault fell by 1.81%.

Air France-KLM and Airbus ended the week with losses of 1.37% and 1.25% respectively.

On the VIX Index

It was a 2^nd consecutive week in the red for the VIX.

In the week ending 13^th August, the VIX fell by 4.33%. Following an 11.46% slide from the previous week, the VIX ended the week at 15.45.

3-days in the red from 5 sessions, which included a 4.35% fall on Wednesday delivered the downside.

For the week, the NASDAQ slipped by 0.09%, while the Dow and the S&P500 ended the week up by 0.87% and by 0.71% respectively.

The Week Ahead

It’s a quiet week ahead on the economic calendar.

Key stats include 2^nd estimate GDP numbers for the Eurozone and finalized Eurozone inflation figures for July.

Expect any revisions to the GDP numbers to be key.

Other stats include employment figures for the Eurozone, which will likely have a muted impact on the EUR.

From the U.S, retail sales, weekly jobless claims, and Philly FED Manufacturing figures will be key.

Barring dire numbers, industrial production and NY Empire State Manufacturing data should have limited impact on the majors.

At the start of the week, expect economic data from China to set the tone. Key stats include industrial production, retail sales, fixed asset investment and unemployment figures.

On the monetary policy front, the FOMC meeting minutes released overnight on Wednesday will also influence.

Away from the economic calendar, COVID-19 news updates will also need monitoring.