FX Empire

European Equities: Futures Point South, with Brexit, COVID-19, and U.S Politics in Focus

Bob Mason
5 min read

In This Article:

Economic Calendar:

Monday, 26th October

German Ifo Business Climate Index (Oct)

Tuesday, 27th October

France Jobseekers Total

Thursday, 29th October

German Unemployment Change (Oct)

German Unemployment Rate (Oct)

Spanish CPI (YoY) Prelim

Spanish HICP (YoY) (Oct) Prelim

ECB Monetary Policy Statement  

ECB Interest Rate Decision (Oct)

German CPI (MoM) (Oct) Prelim

ECB Press Conference  

Friday, 30th October

French GDP (Q3) 1st Estimate

German GDP (Q3) 1st Estimate

German Retail Sales (MoM) (Sep)

French Consumer Spending (MoM) (Sep)

French Inflation (Oct) Prelim

Italian CPI (MoM) Prelim

Spanish GDP (QoQ) (Q3) 1st Estimate

Italian CPI (MoM) (Oct) Prelim

Eurozone Inflation, GDP, and Unemployment

The Majors

It was a bullish end to the week for the European majors on Friday, with the CAC40 rallying by 1.20% to lead the way. The DAX30 and EuroStoxx600 saw a run of 4 consecutive days in the red come to an end. Trailing the CAC40, the pair rose by 0.82% and 0.62% respectively.

While economic data was on the heavier side, corporate earnings delivered the European majors, and bank stocks much-needed support.

Barclays earnings delivered the broader sector with a boost, with Germany’s manufacturing PMI delivering support to the auto sector.

The upside was limited, however, as new COVID-19 cases continued to rise, forcing EU member stats to reintroduce lockdown measures.

Failure to control the 2nd wave will derail the Eurozone economy and lead to a much slower economic recovery on the other side.

The Stats

It was a busy day on the Eurozone economic calendar. Key stats included prelim October private sector PMI numbers for France, Germany, and the Eurozone.

It was a mixed bag on the economic data front. While the French private sector contracted, German manufacturing sector activity picked up at the start of the quarter.

France’s manufacturing PMI slipped from 51.2 to 51.0, while the Services PMI declined from 47.5 to 46.5. Both PMIs fell to 5-month lows in October, according to prelim figures.

From Germany, the Manufacturing PMI jumped from 56.4 to a 30-month high 58.0. By contrast, the Services PMI fell from 50.6 to a 4-month low 48.9.

For the Eurozone, the Manufacturing PMI rose from 53.7 to a 26-month high 54.4, while the Services PMI declined from 48.0 to a 5-month low 46.2.

As a result of the deeper contraction in the services sector, the Eurozone’s Composite PMI fell from 50.4 to a 4-month low of 49.4.

According to the Eurozone’s prelim October Survey,

  • Business activity fell back into decline. An acceleration in manufacturing sector activity was overshadowed by a marked deterioration in service sector activity.

  • Rising concerns over the COVID-19 pandemic weighed on the services sector in the month, as a 2nd wave continued to hit the EU.

  • While the pace of job losses eased, the rate of job losses remained higher than at any time since June 2013 prior to the pandemic.

  • Inflows of new business showed a renewed decline at the start of the quarter.

  • For the manufacturing sector, new orders surged at the quickest pace since January 2018. Inflows of new business into the service sector, however, fell at an accelerated rate.

  • Deflationary pressures eased as costs increased at a faster pace.

  • Private sector confidence over the year ahead fell to the lowest level since May, with France the least optimistic.

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