It was a relatively bullish week for the European majors in the week ending 29th November.
The EuroStoxx600 rose by 0.85% to lead the way, with the DAX30 and CAC40 rising by 0.55% and by 0.20% respectively.
A 2nd consecutive day in the red for the DAX30 and EuroStoxx600 and a 3rd consecutive day in the red for the CAC40 limited the upside, however.
The upside in the week contributed to a positive month for the European majors, which reached 4-year highs in the week. Leading the charge was the CAC40, which rallied by 3.06%, with the DAX30 and EuroStoxx600 rising by 2.87% and by 2.69% respectively.
In spite of positive economic data out of the Eurozone, sentiment towards trade influenced late in the week.
Trump’s signing of the HK Bills in the early hours of Thursday morning weighing on risk riskier assets. It wasn’t enough to reverse gains from earlier in the week, however, with China yet to have retaliated with more than the threat of countermeasures by the market close.
In the 1st half of the week, consumer and business confidence figures out of France and Germany provided support.
From Germany, the Ifo Business Climate Index rose from 94.7 to 95.0, with the GfK Consumer Climate Index rising from 9.6 to 9.7.
From France, the Consumer Confidence Index rose from 104 to 106, also providing the majors with support.
After a relatively quiet Thursday, with stats limited to prelim November inflation figures out of Germany and Spain, the focus shifted to a busy Friday.
On the negative side, were disappointing retail sales figures out of Germany and France. German retail sales slid by 1.9% in October, with consumer spending in France rising by just 0.2%.
The rest of the stats were market positive on the day, however. German unemployment fell by 16k in November, to leave the unemployment rate at 5.0%. From the Eurozone, the unemployment rate from 7.6% to 7.5% in October.
Of less influence in the week, however, were French jobseeker and 3rd quarter GDP numbers and the Eurozone and member state prelim November inflation figures.
From the U.S, an upward revision to 3rd quarter GDP numbers was also market positive.
The Market Movers
From the DAX, it was a bearish week for the auto sector. Continental slid by 2.80% to lead the way. Daimler, BMW, and Volkswagen weren’t far behind with losses of 1.73%, 1.11%, and 1.05% respectively.
It was a mixed bag for the month, however, with Continental and Daimler falling by 1.04% and by 2.57% respectively. In stark contrast, BMW and Volkswagen rallied by 6.50% and by 2.38% respectively.
It was a mixed week for the banking sector. Deutsche Bank fell by 1.65%, while Commerzbank rose by 0.38%.
For the month it was also mixed. Deutsche Bank rose by 1.23% gain, while Commerzbank fell by 1.87%.
From the CAC, it was a bearish week for the banks. Credit Agricole fell by 1.90% to lead the way, with BNP Paribas and Soc Gen down by 1.13% and by 0.28% respectively.
It was a bullish month, however, with Soc Gen rallying by 12.22% to lead the way. BNP Paribas and Credit Agricole also found strong support, with the pair gaining 8.89% and 6.25% respectively.
French auto sector also took a hit in the week, with Peugeot and Renault falling by 2.79% and by 1.54% respectively.
Things were not much better for the month of November, with Peugeot and Renault sliding by 3.44% and by 5.04% respectively.
On the VIX Index
The VIX Index rose 2.27% in the week ending 29th November. Following on from a 2.41% gain from the previous week, the VIX ended the week at 12.6.
After a fall to an intraweek low 11.4 on Tuesday, a rebound on Wednesday and Friday delivered the upside for the week.
While economic data was skewed to the positive from the U.S, geopolitics remained the key driver as the U.S majors eased back from record highs from Wednesday.
Negative sentiment towards Trump’s signing of the HK Bills and the threat of countermeasures from China weighed on risk appetite in the 2nd half of the week.
For the month of November, however, the VIX was down by 3.08%, as the S&P500 gained 3.40% in the month.
The Week Ahead
It’s a busy week on the Eurozone economic calendar. Through the 1st half of the week, November private sector PMIs are in focus. Barring deviation from prelims out of France and Germany, the focus will be on the Eurozone Composite PMI.
In the 2nd half of the week, economic data out of Germany is in focus. German factory orders and industrial production figures are due out on Thursday and Friday.
The Eurozone’s October retail sales figures will also influence on Thursday. 3rd estimate GDP numbers for the Eurozone should have a muted impact, however, barring any changes from 2nd estimates.
From elsewhere, expect China and U.S PMI numbers to also provide direction. At the end of the week, U.S nonfarm payrolls and wage growth figures will also influence.
Once again, however, it may ultimately come down to updates from Washington and Beijing on trade. Another week passed without a phase 1 agreement in place. This time around, with Trump having signed the HK Bills, the markets will be looking for China’s response.
Fresh tariffs are due to hit China on 15th December. With just 2-weeks remaining and tensions returning, positive updates will be needed to support the majors in the week.
