European Equities: A Week in Review – 11/07/20
In This Article:
The Majors
It was a bullish week for the European majors in the week ending 17th July. The DAX30 rose by 2.26% to lead the way, with the CAC40 and EuroStoxx600 gaining 1.99% and 1.60% respectively.
While economic data was in focus in the week, COVID-19 numbers and news updates remained a key driver.
A continued rise in the U.S and reintroduction of containment measures in California was market negative. Progress towards a COVID-19 vaccine, however, eased the pain in spite of the U.S continuing to hit new daily highs.
At the end of the week, EU leaders met to agree on the mechanics of the €750bn EU Recovery Fund. The markets were expecting some push back from the likes of Austria and the Netherlands amongst others…
Failure to agree would raise concerns over the durability of the economic recovery.
The Stats
It was a busier week on the Eurozone economic calendar.
Key stats included July’s ZEW economic sentiment figures for Germany and the Eurozone. May trade data and industrial production figures for the Eurozone were also in focus.
It was a mixed set of numbers, however.
Economic sentiment waned in Germany while seeing a marginal pickup in the Eurozone. Industrial production bounced back in May but came up short of forecasts.
The Eurozone’s trade surplus widened, though imports and exports were down significantly from May 2019.
According to Eurostat,
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Exports of goods to the rest of the world tumbled by 29.5% to €143.3bn when compared with May 2019.
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Imports from the rest of the world slumped by 26.7% to €133.9bn.
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In May 2019, the trade surplus had stood at €20.7bn.
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Intra-euro area trade tumbled by 27.9% to €125.3bn.
On the monetary policy front, the ECB stood pat on monetary policy, which was in line with expectations.
From the U.S
The stats were skewed to the positive once more. Manufacturing sector figures delivered mixed results for July. The NY Empire State Manufacturing Index saw a sizeable increase. The Philly FED Manufacturing Index fell back marginally, however.
Retail sales also continued to rise amidst the spike in new COVID-19 cases, with industrial production jumping by 5.4% in June.
The weekly jobless claims figures disappointed, however, with claims rising by 1.3m in the week ending 10th July.
From Elsewhere
A data deluge from China on Thursday weighed on the majors. While China’s economy rebounded sharply in the 2nd quarter, retail sales disappointed, raising some red flags at the end of the quarter.
The Market Movers
From the DAX, it was a bullish week for the auto sector. Daimler rallied by 7.13% to lead the way, with Volkswagen rising by 3.41%. BMW and Continental saw relatively modest gains of 1.28% and 1.98% respectively.