European Equities: A Week in Review – 12/03/21

The Majors

It was another bullish week for the European majors in the week ending 12th March.

The CAC40 and the DAX30 rallied by 4.56% and by 4.18% respectively, with the EuroStoxx600 gaining 3.56%.

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Impressive trade data from China set the tone going into the week.

Positive data from the U.S, the ECB, and the passing of the $1.9 trillion relief package through the U.S Congress also delivered support.

[fx-article-ad]The Stats

It was a relatively busy week on the economic data front.

Key stats included industrial production and trade figures from Germany and industrial production figures for the Eurozone.

It was a mixed bag on the data front.

German industrial production slid by 2.5% in January, reversing a 1.9% rise from December.

A widening in Germanys trade surplus from €16.4bn to €22.2bn impressed, however, with exports to China on the rise.

For the Eurozone, industrial production rose by 0.8% in January, following a revised 0.1% decline in December.

Other stats included finalized 4th quarter GDP numbers for the Eurozone and finalized inflation figures for Germany and Spain. These stats had a muted impact on the majors, however.

On the monetary policy front, the ECB provided the European majors with support on Thursday.

While standing pat on monetary policy, the ECB vowed to ramp up bond purchases to combat the recent rise in borrowing costs.

From the U.S

Inflation, jobless claims, and consumer sentiment figures were in focus.

In February, the annual rate of core inflation softened from 1.4% to 1.3%, with core consumer prices rising by less than expected in the month of February.

Jobless claim figures were also positive for riskier assets. In the week ending 5th March, initial jobless claims fell back from 754k to 712k.

At the end of the week, the Michigan Consumer Sentiment Index rose from 76.8 to 83.0 for March, according to prelim figures.

Coupled with Bidens signing of the relief package, the stats were also positive for riskier assets at the end of the week.

Other stats included Jolts job openings for January and wholesale inflation figures for February. These stats had a muted impact on the majors, however.

The Market Movers

From the DAX, it was a mixed week for the auto sector.Continentaland Volkswagenslid by 6.87% and by 2.25% respectively. BMWand Daimlerended the week with gains of 2.45% and 0.38% respectively, however.

It was also a mixed week for the banking sector. Deutsche Bankfell by 0.47%, while Commerzbankgained 0.18%.

From the CAC, it was yet another bullish week for the banks.Credit Agricole rose by 0.82%, with BNP ParibasandSoc Gengaining 2.89% and 2.02% respectively.

It was a particularly bullish week for the French auto sector. Renaultrose by 3.22%, with Stellantis NVrallying by 12.76%.

Air France-KLMgained 0.77%, with Airbusending the week up by 4.80%.

On the VIX Index

It was a 2nd consecutive week in the red for the VIX in the week ending 12th March. Following an 11.77% fall from the previous week, the VIX slid by 16.10% to end the week at 20.69.

For the week, the Dow rallied by 4.07%, with NASDAQ and the S&P500 rising by 3.09% and by 2.64% respectively.

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The Week Ahead

Its a relatively busy week ahead on the economic calendar.

In the 1st half of the week, ZEW Economic Sentiment figures for Germany and the Eurozone will provide direction.

Following a 2nd consecutive weekly gain for the European majors, we can expect some sensitivity to the numbers.

The focus will then shift to Eurozone trade data and wage growth figures on Thursday. Expect the trade data to have the greatest influence.

Other stats in the week include finalized inflation figures for France, Italy, and the Eurozone and wholesale inflation figures for Germany. We dont expect too much influence from these numbers, however.

From the U.S, the economic calendar is on the busier side.

Early in the week, retail sales and industrial production figures for February will draw attention.

Following the signing of the relief package last week, the markets may be forgiving on the retail sales front.

The focus will then shift to jobless claims and Philly FED Manufacturing PMI numbers due out on Thursday.

Both sets of numbers will influence, though the European majors will also be responding to the FOMCs monetary policy decision from late Wednesday.

For the global markets, the FOMC monetary policy decision and FOMC projections will be the main event of the week.

From China, fixed asset investment, industrial production, and retail sales figures on Monday will set the tone.