Yahoo Finance European Equities: The Bulls Could Face their First Test of the Week
Economic Calendar:
Thursday, 4th April 2019
German Factory Orders (MoM) (Feb)
ECB Monetary Policy Meeting Minutes
Friday, 5th April 2019
German Industrial Production (MoM) (Feb)
The Majors
The 2nd quarter bullish sentiment continued for a 3rd consecutive day on Wednesday. Leading the charge once more was the DAX, which jumped by 1.7%. The EuroStoxx600 and CAC40 also closed out in positive territory, with gains of 1.01% and 0.84% respectively.
For the DAX, 3 consecutive days in the green has delivered a 3.72% gain for the week. Out of the majors, the CSI300 is the only index to have outperformed, rising by 3.87%.
Progress on the U.S – China trade talks continued to drive the majors through the start of the quarter.
The auto sector and financial sectors continued to find support from the shift in market sentiment, with Volkswagen rising by 1.36% and BNP Paribas up by 1.39% on the day. Deutsche Bank and Commerzbank continued to lag, in spite of the improved sentiment, the pair up by 0.25% and 0.53% respectively.
Resource stocks were also on the bounce, joining the auto sector, with the two sectors having the greatest exposure to China.
Economic data released through the European session was on the heavier side through the day. Key stats included service sector PMI numbers and Eurozone retail sales figures.
The Eurozone’s composite PMI fell from 51.9 to 51.6 in March. The decline came in spite of an upward revision from a prelim 51.3.
Germany’s composite came in at 51.4, down from a prelim 51.5 to hit a 69-month low. While France and Italy hit 2-month and 6-month lows respectively, Spain bucked the trend to hit a 10-month high 55.4.
The majors were able to brush off the disappointing PMI numbers. Expectations are that private sector activity will rebound once a U.S – China trade agreement is in place and U.S tariffs have been removed.
The ongoing threat of U.S tariffs on the EU’s auto sector is one issue yet to influence, however. Once the U.S wraps up negotiations with China, one can only assume that the EU will be next on Trump’s hit list.
Eurozone retail sales figures released on Wednesday came in ahead of forecasts. Sales rose by 0.4% in February, following a 0.9% rise in January.
Out of the U.S, the non-manufacturing PMI fell more than had been expected, down 3.6% to 56.1. The markets brushed off the softer number, which was attributed to a 6.2% fall in new orders and a 7.3% slide in business activity in the month.
The Day Ahead
It’s a quieter day on the economic calendar. Key stats out of the Eurozone were limited to Germany’s factory order numbers for February.
A 4.2% slide in factory orders was aligned with the downward trend in PMI numbers. The February and March PMIs had reported sizeable declines in new orders.
Forecasts had been for a 0.3% rise in factory orders in February.
Outside of the numbers released ahead of the European open, the ECB will release its monetary policy meeting minutes from the 7th March.
Following Draghi’s dovish commentary, the minutes could weigh on the EUR later. For the European equity markets, ECB’s willingness to support could offset the effects of any doom and gloom over the economy.
At the time of writing, the DAX and CAC40 futures were down by 21 points and 9.5 points respectively. Disappointing factory order numbers out of Germany contributed to the pullback early on, with a mixed Asia session failing to set up another jump at the open.
This article was originally posted on FX Empire
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