European Equities: A Week in Review – 16/05/20
In This Article:
The Majors
It was a bearish week for the European majors in the week ending 15th May. The CAC30 slid by 5.98% to lead the way down, with the DAX30 and EuroStoxx600 falling by 4.03% and by 3.76 respectively.
For the CAC40 and DAX30, it had been 4 consecutive days in the red before support kicked in on Friday.
Market concerns over a possible 2nd wave of the coronavirus, dovish chatter from FED Chair Powell, and rising tensions between the U.S and China delivered the losses.
Economic data from the Eurozone and the U.S certainly did not help in the week, however, with more records broken.
At the end of the week, the majors did find support. The upside came in spite of some dire stats and the U.S threat to cut the supply of chips to Huawei. In response, China announced that it would ban doing business with U.S marquee companies should the U.S go through with its threat.
Better than expected industrial production figures out of China contributed to the upside on Friday. It wasn’t enough to prevent the worst weekly decline since March, however.
The Stats
It was a relatively busy week on the Eurozone economic calendar. Through the 1st half of the week, economic data was limited to April industrial production figures for the Eurozone. While better than forecasts, an 11.30% slide certainly didn’t help the mood.
The markets then had to wait until Friday for 1st estimate GDP numbers for Germany and 2nd estimate figures for the Eurozone.
In the 1st quarter, the German economy contracted by 2.2%, which was in line with forecasts. Year-on-year, however, the economy contracted by 1.9%, which was worse than a forecasted 1.6% contraction.
For the Eurozone, an upward revision to the year-on-year contraction to 3.2% was the only positive stat of the week.
From the ECB, the Economic Bulletin on Thursday reminded the markets of the ECB’s view on the economy and outlook. There was nothing positive for the more optimistic market participants to cling onto…
Out of the U.S, another 2.9m surge in initial jobless claims and a record 16.4% month-on-month fall in retail sales added to the doom and gloom.
On Friday, China reported a 3.5% rise in industrial production, which provided much-needed support at the end of the week.
The Market Movers
From the DAX, it was a bearish week for the auto sector. BMW and Daimler tumbled by 8.96% and 10.37% respectively to lead the way down. Continental and Volkswagen saw more modest losses of 6.16% and 5.57% respectively.
It was a particularly bearish week for the banking sector. Commerzbank tumbled by 11.13%, with Deutsche Bank sliding by 9.42%.