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European Equities: Corporate Earnings, Stats and the UK Parliament in Focus

Bob Mason

Economic Calendar:

Wednesday, 30th October

  • French GDP (QoQ) (Q3)
  • French Consumer Spending (MoM) (Sep)
  • Spanish HICP (YoY) (Oct)
  • German Unemployment Change /  Rate (Oct)
  • German CPI (MoM) (Oct)

Thursday, 31st October

  • German Retail Sales (MoM) (Sep)
  • Spanish GDP (QoQ) (Q3)
  • Italian CPI (MoM) (Oct)
  • Eurozone CPI (YoY) (Oct) Prelim
  • Eurozone Unemployment Rate (Sep) 

The Majors

It was a relatively bullish start to the week for the European majors, with the DAX30 rising by 0.37% to lead the way. The EuroStoxx600 and CAC40 saw more modest gains of 0.25% and 0.15% respectively.

A lack of economic data left the majors in the hands of geopolitical risk on the day.

Comments from the U.S President on Monday of an imminent phase 1 trade deal with China provided support on the day.

There was also the EU’s decision to approve Britain’s extension request, which further reduced the prospects of a no-deal Brexit.

While geopolitics was the key driver on the day, corporate earnings results added support ahead of Wednesday’s FOMC interest rate decision. The FOMC is expected to cut rates this week, which is also market positive.

The Stats

It a quiet day on the Eurozone economic calendar on Monday. There were no material stats from the Eurozone to provide the EUR with direction on the day.

From the U.S, stats were skewed to the positive providing support to the majors late on. In September, the U.S goods trade deficit narrowed from US$73.06bn to US$73.39bn, with U.S retail inventories ex-auto rising by 0.3%. In August, U.S retail investors ex-auto had fallen by 0.2%.

The Market Movers

For the DAX: It was a bullish day for the auto sector. Continental led the way, rallying by 2.38%. Volkswagen and Daimler were also amongst the top performers on Monday, rising by 2.04% and by 1.63% respectively. BMW saw a more modest gain of just 0.75%.

It was also a positive day for the banks, with Commerzbank and Deutsche Bank gaining 2.34% and 1.03% respectively.

From the CAC, it was also a day in the green for the banks. BNP Paribas rose by 0.71%, with Credit Agricole and Soc Gen gaining 0.21% and 0.55% respectively. For the autos, Peugeot rose by just 0.08%, while Renault rallied by 1.34%.

On the VIX Index

The VIX Index rose by 3.64% on Monday, ending a run of 3rd consecutive days in the red. Following a 7.73% loss on Friday, the VIX ended the day at 13.1.

Upside on the day came in spite of positive updates from the U.S President on trade and the EU’s approval of Britain’s extension request through to January 2020.

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The Day Ahead

It’s another quiet day ahead on the Eurozone economic calendar. There are no material stats on the day to provide the majors with direction.

Through the early part of the European session, geopolitics will be in focus.

Later in the day, economic data from the U.S will have some influence on the European majors. October consumer confidence numbers will need to impress to provide support.

On the corporate earnings front, General Motors releases its 3rd quarter corporate earnings on Tuesday. We can also expect market reaction to Alphabet Inc’s earnings release from Monday. Alphabet Inc. missed earnings estimates for the 3rd quarter, leading to an after-hours slide in the stock.

In the futures market, at the time of writing, the DAX30 was up by 2.5 points, with the Dow up by 11 points.

This article was originally posted on FX Empire