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European Equities: A Week in Review – 25/10/19

In This Article:

The Majors

It was a positive week for the European majors. The DAX30 rose by 2.07% to lead the way, with the EuroStoxx600 and CAC40 up by 1.57% and by 1.52% respectively.

Gains from the week saw the CAC40 and EuroStoxx600 move back into positive territory for the current month. The pair were up by 0.78% and by 1.24% respectively.

In spite of dire economic data out of Germany, the DAX30 led the way, up by 3.75% going into the final week.

Sensitivity towards trade ultimately provided support as the U.S and China make some progress.

For the week, the DAX30 and EuroStoxx600 saw 5 consecutive days in the green to support the gains. The CAC40 had a minor blip on Wednesday before bouncing back.

Geopolitics and corporate earnings provided the much-needed support in the week, with economic data continuing to be skewed to the negative.

The Stats

It was a relatively busy week on the Eurozone economic calendar.

The markets had to wait until Thursday, however, to digest any material data.

October’s private sector PMI numbers on Thursday failed to dim the mood across the broader markets.

Germany’s manufacturing sector continued to struggle, with the PMI rising from 41.7 to 41.9. Service sector activity also struggled, with the PMI easing from 51.4 to 51.2.

For the Eurozone, the manufacturing PMI held steady at 45.7, while the service sector PMI rose from 51.6 to 51.8. A slight uptick in the composite PMI from 50.1 to 50.2 came off the back of a pickup in private sector activity in France.

France’s manufacturing PMI rose from 50.1 to 50.5, with the service sector PMI rising from 51.1 to 52.9.

Things could have been worse and the fact that there was no further decline in the PMIs was positive on the day.

On Friday, German business and consumer confidence numbers pinned the DAX30 back at the end of the week.

The GfK Consumer Climate Index fell from 9.8 to 9.6, while the IFO Business Climate Index held steady at 94.6.

The Market Movers

From the DAX, it was yet another bullish week for the auto sector. Daimler led the way with an 8.8% gain, supported by positive earnings for the 3rd quarter. Continental found strong support on Friday to end the week up by 6.13%. BMW and Volkswagen saw more modest gains of 2.74% and 1.77% respectively. A trend-bucking 1.19% fall on Friday left Volkswagen trailing the pack.

It was also a positive week for the banking sector. Deutsche Bank gained 0.85%, with Commerzbank up by 3.02%.

While positive sentiment towards trade supported the autos, continued concerns over the economic outlook pegged back bank stocks.