European Equities: A Week in Review – 22/04/22

div classBodysc17zpet90 cdBBJodivh2 idthemajorsThe Majorsh2

pIt was a mixed week for the European majors in the week ending April22, 2022.p

pThe EuroStoxx600 slid by 1.42, with the CAC40 and the DAX seeing losses of 0.12 and 0.15, respectively.pdivdivdiv classBodysc17zpet90 cdBBJodiv

pStats from China at the start of the week set the tone, leaving the majors in the red after the Monday holidays.p

pIn Q1, the economy grew by 1.3, which was softer than 1.5 in Q2. Yearonyear, the economy grew by 4.8, picking up from 4.0 in the quarter prior.p

pThe downward trend in industrial production continued with production up by 5.0 yearonyear. In February, industrial production increased by 7.5.p

pFed Chair Powell chatter drove Treasury yields northwards to leave the majors searching for support on Friday.p

pEconomic data from the Eurozone was relatively upbeat but not good enough to offset concerns over supply chain disruption.p

pThe ongoing war in Ukraine and Chinas introduction of new COVID19 restrictions added to the market angst.p

divdivdiv classBodysc17zpet90 cdBBJodivh2 idthestatsThe Statsh2

pEarly in the week, the Eurozone economy was in the spotlight.p

pThe stats were market positive, though not good enough to counter hawkish Fed Chair Powell chatter from later in the week.p

pIn February, industrial production rose by 0.7, reversing a 0.7 decline from January. Trade data was also positive, with the trade deficit narrowing from €27.3bn to €7.6bn.p

pConsumer confidence was also on the rise, despite the ongoing war in Ukraine.p

pAt the end of the week, prelim private sector PMIs for April disappointed. Germanys manufacturing PMI declined from 56.9 to 54.1, leaving the Eurozone Manufacturing PMI down from 56.5 to a 15month low of 55.3.p

pService sector activity accelerated due to easing COVID19 restrictions, supporting a rise in the composite PMI from 54.9 to 55.8.p

h3 idfromtheusFrom the U.Sh3

pIt was a quiet start to the week, with the markets needing to wait until Thursday for the key numbers.p

pIt was a mixed set of numbers. Jobless claims fell from 186k to 184k in the week ending April 15. The Philly Fed Manufacturing Index disappointed, however, falling from 27.4 to 17.6.p

pOn Friday, prelim private sector PMIs for April also drew interest.p

pThe Manufacturing PMI increased from 58.8 to 59.7, while the Services PMI declined from 58.0 to 54.7.p

pThe mixed set of numbers came amidst some hawkish Fed Chair Powell chatter.p

pOn Thursday, Fed Chair Powell a hrefhttps:www.federalreserve.govnewseventsspeechpowell20220321a.htmspokea at the Annual Economic Policy Conference National Association for Business Economics.p

pThere were two key takeaways from the Powell speech. Firstly, the prospect of a fiftybasis point rate hike.p

pDiscussing restoring price stability, Powell said,p

blockquotep“If we conclude that it is appropriate to move more aggressively by raising the federal funds rate by more than 25 basis points at a meeting or in meetings, we will do so. And if we determine that we need to tighten beyond common measures of neutral and into a more restrictive stance, we will do that as well.”pblockquote

pSecondly, Powell talked of the challenges of bringing down inflation without bringing down the economy.p

pConcerning growth, Powell said,p

blockquotep“I hasten to add that no one expects that bringing about a soft landing will be straightforward in the current context – very little is straightforward in the current context. My colleagues and I will do our very best to succeed in this challenging task.”pblockquote

pThe combination of a more rapid move to policyneutral and possible beyond and the threat of recession weighed on riskier assets.p

h2 idthemarketmoversThe Market Moversh2

pstrongFrom the DAXstrong, it was a bullish week for the auto sector. strongBMW strongand strongContinental strongrallied by 2.99 and 3.31, respectively. strongDaimlerstrong and strongVolkswagen strongended the week with gains of 2.23 and 2.39, respectively.p

pIt was also a bullish week for the banking sector. strongDeutsche Bankstrong rose by 0.44, with strongCommerzbankstrong rallying by 5.10.p

pstrongFrom the CACstrong, it was another bullish week for the banks.strong BNP Paribasstrong rose by 4.48, with strongCredit Agricolestrong andstrong Soc Gen strongseeing gains of 5.11 and 5.21, respectively.p

pIt was a mixed week for the French auto sector. strongStellantis NVstrong slid by 6.54, while strongRenaultstrong ended the week up 4.41.p

pstrongAir FranceKLMstrong gained 0.49, while strongAirbusstrong ended the week with a 1.38 loss.p

h2 idonthevixindexOn the VIX Indexh2

pIt was a third consecutive week in the green for the a hrefhttps:www.fxempire.comindicesvixVIXa in the week ending April22.p

pFollowing a 7.28 gain from the previous week, the VIX jumped by 24.27 to end the week at 22.70.p

p2days in the green from 5 sessions, which included an 11.61 rise on Thursday and a 24.38 surge on Friday delivered the upside.p

pIn the week, the NASDAQ slumped by 3.83, with the Dow and the S&P500 falling by 1.86 and 2.75, respectively.p

h2 idtheweekaheadThe Week Aheadh2

pIt is a quieter week ahead on the Eurozone a hrefhttps:www.fxempire.comtoolseconomiccalendareconomic calendara.p

pAt the start of the week, German business sentiment will provide direction. Expect another slide to test support for the majors.p

pOn Wednesday, German consumer sentiment figures will also influence ahead of Q1 GDP numbers on Friday.p

pGDP numbers from France, Germany, and Spain will be key at the end of the week.p

pFrom the U.S, Core durable goods and consumer confidence figures will draw attention on Tuesday. Expect consumer confidence to have a greater influence.p

pOn Thursday, the market focus will shift to Q1 GDP and weekly jobless claims. Barring a spike in jobless claims, the GDP numbers will be key.p

pAt the end of the week, inflation and personal spending will wrap up the week.p

pFrom China, expect private sector PMIs to also influence at the end of the week.p

pAway from the economic calendar, corporate earnings and the war in Ukraine will continue to provide direction.p

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