In This Article:
The Majors
It was a week in the red for the European majors. The CAC40 led the way down, falling by 0.88%, with the DAX30 and EuroStoxx600 declining by 0.7% and by 0.3% respectively.
It was another particularly busy week for the markets, with economic data and geopolitical risk in focus.
Geopolitics
Sentiment towards the U.S – China trade war was mixed through the week. While Trump talked up the willingness to reach an agreement with China, an unwillingness to extend the waiver for U.S firms to supply Huawei pressured the majors.
U.S politics and Brexit woes also pressured the majors. A lack of progress on Brexit was negative, as was impeachment talk in the U.S.
Monetary Policy
ECB President Draghi reiterated the ECB’s commitment to delivering further monetary policy easing at the start of the week.
The ECB’s economic bulletin, on Thursday, did little to support the majors following some particularly disappointing stats at the start of the week.
The Stats
It was a relatively busy week on the Eurozone economic calendar. Key stats included prelim private sector PMI numbers on Monday that sent the majors into the red at the start of the week.
Having steadied in August, there had been hopes of further improvement in September. The Prelim figures painted yet more dire conditions. While manufacturing sector activity saw the pace of decline accelerate, service sector activity slowed, adding to the doom and gloom.
German business and consumer sentiment figures later in the week provided some support, however, but not enough to reverse losses from the start of the week.
The Market Movers
From the DAX, it was a bearish week for the auto sector. Daimler and Volkswagen led the way down with losses of 4.29% and 3.12% respectively. BMW and Continental saw more modest losses of 2.02% and 1.67% respectively.
Things were no better for the banking sector. Deutsche Bank slid by a further 4.69%, while Commerzbank tumbled by 6.12%, following on from the previous week’s 5.3% loss.
From the CAC, the banks also struggled. BNP Paribas and Credit Agricole fell by 2.44% and by 1.46% respectively. Soc Gen slid by 4.88% following the previous week’s trend-bucking 0.88% gain. French autos saw red for a second consecutive week. Renault slid by 5.92%, with Peugeot falling by 4.25%.
On the VIX Index
The VIX Index rose by 3.12% in the week. Following on from an 8.51% gain from the previous week, the VIX ended the week at 17.12.
Geopolitical risk and market reaction to dire economic data out of the Eurozone delivered the upside in the week.