European equities – A week in review – 08/10/2021

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Major

It was a bullish week for the majors in the week ending 8the October. EuroStoxx600 rose 0.96%, with the DAX30 and CAC40 ending the week with gains of 0.33% and 0.65% respectively.

However, disappointing economic data from Germany pegged the DAX30 during the week.

Upward revisions to service sector PMIs for France, Germany and the euro area and positive data from the United States have provided support.

Progress on Capitol Hill towards a debt ceiling deal has also been positive for the markets.

Statistics

At the start of the week, the services sector PMIs for September were in the spotlight.

Member States

Italy’s services PMI rose from 58.0 to 55.5 against 56.5 expected, that of Spain from 60.1 to 56.9. Economists were forecasting a PMI of 58.0.

The final figures for France and Germany were also disappointing.

The French services PMI index slipped from 56.3 to 56.2, up from the preliminary 56.0.

The German services PMI index slipped from 60.8 to 56.2 in September, from 56.0 previously.

The euro zone

Due to better figures from France and Germany, the Eurozone services PMI index fell from 59.0 to 56.4, down from 56.3 previously.

In September, the composite PMI index rose from 59.0 to 56.2, up from the preliminary 56.1.

Through the 2sd half the week, the German economy was the center of attention, with statistics skewed negative.

Factory orders fell 7.7% in August, while industrial production fell 4.0%.

Germany’s trade surplus narrowed from 17.9 billion euros to 13.0 billion euros against an expected shrinkage to 15.8 billion euros.

While statistics were essential, the ECB’s monetary policy minutes were also the center of attention at the weekend.

There were no major surprises, however, as the markets and the ECB were more concerned about the impact of the latest inflation figures on monetary policy.

The United States

At the start of the week, factory orders and ISM non-manufacturing PMI numbers were the center of attention.

Factory orders rose 1.2%, with the ISM non-manufacturing PMI rising from 61.7 to 61.9.

Much attention has been paid to the PMI index, with particular attention to the sub-components of employment and inflation.

In September, the employment sub-index edged down from 53.7 to 53.0. Inflationary pressures intensified, however, with the sub-index rising from 75.4 to 77.5.

ADP’s non-farm figures on Wednesday had a relatively moderate impact on markets. In recent months, significant discrepancies with government figures have mitigated the impact on the markets.

Nonetheless, in September, the ADP reported a 568,000 increase in non-farm payrolls after an increase of 340,000 in August.

Unemployment claims on Thursday drew attention ahead of September’s NFP figures on Friday.

In the week ending 1st October, the first jobless claims fell from 364,000 to 326,000.

More importantly, however, the non-farm payroll only increased by 194,000 in September, well below the expected increase of 500,000. Although lower, the unemployment rate fell by 5.2%. at 4.8%, partly due to a lower participation rate.

Market movers

From DAX, it was another mixed week for the automotive sector. Continental and Daimler led the way, the two rallying 4.44%. Bmw also found support, up 0.99%, while Volkswagen fell 1.91%.

It has been a bullish week for the banking sector. German Bank increased by 3.30%, with Commercial bank end the week up 8.68%.

From CAC, it was a bullish week for the banks. Gen Soc and BNP Paribas ends the week up 4.78% and 3.84%. Agricultural credit however led the way with a rebound of 8.54%.

It was a relatively bullish week for the French automotive sector. Stellantis SA and Renault increased by 1.09% and 1.62% respectively.

Air France-KLM decreased by 5.97%, with Airbus end the week down 2.88%.

On the VIX index

It came back in the red for the VIX in the week ending 8e October.

Partially reversing a 19.15% jump from the previous week, the VIX slipped 11.25% to end the week at 18.77.

4 days in the red after 5 sessions, which included a 7.23% drop on Tuesday, delivered the setback for the week.

For the week, the NASDAQ rose 0.09%, with the Dow Jones and S & P500 ending the week up 1.22% and 0.79% respectively.

The coming week

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

At the start of the week, the ZEW economic sentiment figures for Germany and the Eurozone will be the center of attention.

For the eurozone, industrial production and trade data will also attract attention on Wednesday and Friday.

With increased market sensitivity to inflation, the finalized September inflation figures for Member States will influence the week. Expect upward revisions to preliminary numbers to test the majors’ support.

In the United States, Wednesday’s inflation numbers will be key, along with Friday’s retail sales numbers.

After relatively disappointing NFP figures from last week, weekly jobless claims will also have an influence on Thursday.

Outside of China, trade data and inflation figures for September are due for review on Wednesday and Thursday.

Outside of the economic calendar, central bank chatter and geopolitics will also be the focus.

This article originally appeared on FX Empire

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