In This Article:
The Majors
It was a mixed week for the European majors in the week ending April-15, 2022.
The CAC40 rose by 0.63%, while the DAX and the EuroStoxx600 saw losses of 0.84% and 0.25%, respectively.
A marked shift in central bank monetary policy and forward guidance, coupled with intensifying supply chain disruption weighed on riskier assets.
With U.S inflation hitting a 4 decade high and the war in Ukraine showing no signs of ending, fears of a continued rise in commodities, factory gate prices, and consumer prices were market negative.
An extended war in Ukraine would force central banks to take more aggressive measures to curb inflation, which could adversely affect the global economy.
The Stats
It was a quieter week, with the markets focused on economic sentiment and ECB monetary policy.
Economic sentiment figures for Germany and the Eurozone weakened further. In April, Germany’s ZEW Economic Sentiment Index slipped from -39.3 to -41.0, with the Eurozone’s falling from -38.7 to -43.0.
While inflation expectations softened, limiting the damage, fears of stagflation and the war in Ukraine weighed on sentiment.
Other stats in the week included finalized inflation figures for member states that had a muted impact on the EUR and European bourses.
On the monetary policy front, the ECB left the deposit and cash rates unchanged on Thursday. For the European majors, the more cautious stance was market positive.
Unlike other central banks, the ECB left interest rates unchanged and talked of downside risks to the economy stemming from the war in Ukraine.
From the U.S
At the start of the week, inflation was back in focus, with the U.S annual rate of inflation accelerating from 7.9% to 8.5%. In March, the core annual rate of inflation picked up from 6.4% to 6.5%.
On Thursday, the market focus shifted to retail sales, jobless claims, and consumer sentiment.
In March, retail sales increased by 0.5%, with core retail sales rising by 1.10%. Economists had forecast increases of 0.6% and 1.0%, respectively.
Jobless claims held below the 200k level. In the week ending April-08, jobless claims increased from 167k to 185k.
While of less influence, consumer sentiment also drew interest amidst the shift in FED policy forced by the surge in consumer prices.
In April, the Michigan Consumer Sentiment Index jumped from 59.4 to 65.7.
The Market Movers
From the DAX, it was a bearish week for the auto sector. Volkswagen and Continental slid by 2.65% and 1.61%, respectively, with BMW falling by 0.99%. Daimler ended the week with a modest 0.16% gain.
It was a mixed week for the banking sector. Deutsche Bank tumbled by 7.33%, with Commerzbank falling by 6.91%.