European equities: a week in review
At the start of the week, euro zone 2nd the GDP estimate and March trade data were the focus of concern.
While 2nd the estimates were consistent with 1st estimated figures, trade data has been biased negative.
In March, the euro zone’s trade surplus fell from 17.7 billion euros to 15.8 billion euros. Economists had forecast an enlargement to 26.5 billion euros.
The narrowing surplus was the result of a 19.2% jump in imports, signaling strong demand rather than a sharp drop in exports. Exports increased by 8.9% compared to March 2020.
Midweek, finalized Eurozone inflation figures and Germany’s wholesale inflation figures had a moderate impact on the majors.
At the end of the week, however, preliminary private sector PMI figures for May were critical.
According to preliminary figures, the French manufacturing PMI fell from 58.9 to 59.2, the services PMI dropping from 50.3 to 56.6.
Germany’s manufacturing PMI fell from 66.2 to 64.0 while the services PMI fell from 49.9 to 52.8.
For the euro zone
In May, the manufacturing PMI fell from 62.9 to 62.8, while the services PMI rose from 50.5 to a 35-month high at 55.1. Economists had forecast PMIs of 62.5 and 52.3 respectively.
Supported by the recovery in activity in the services sector, the composite PMI rose from 53.8 to 56.9, a high of 39 months. Economists had forecast an increase to 55.1.
According to the Markit survey,
- The rate of expansion in the private sector has reached the highest for more than 3 years.
- New order intake has jumped at a rate unmatched for nearly 15 years.
- Business optimism continued to reach new heights.
- Price indicators continued to rise, however, as demand continued to exceed supply for many goods and services.
The United States
Key statistics included New York and Philadelphia state manufacturing figures, weekly jobless claims figures, and preliminary private sector PMIs.
It was a mixed set of numbers for the greenback and the market in general.
Manufacturing activity grew slower in May, with both the NY Empire State Manufacturing Index and the Philly Manufacturing Index falling.
The modest declines were not enough to scare the markets, however.
The weekly jobless claims figures on Thursday sparked a lot of interest, supporting riskier assets.
In the week ending 14e In May, initial jobless claims rose from 478k to 444k.
At the end of the week, preliminary private sector PMIs for May were the focus of concern.
The services PMI fell from 64.7 to 70.1, with the manufacturing PMI rising from 60.5 to 61.5. Economists had forecast PMIs of 64.5 and 60.2 respectively.
Other statistics for the week included data on the housing sector that had a moderate impact on the dollar and markets in general.
Although the statistics attracted a lot of attention, the minutes of the midweek FOMC meeting were essential.
The minutes revealed chatter among members about the need to review monetary policy amid a strong economic recovery. Asset purchases, in particular, have come to the fore, contradicting assurances from Fed Chairman Powell that asset purchases will remain unchanged. Previously, the markets were nervous because of a possible narrowing of the asset purchase program …
From DAX, it was another bullish week for the auto sector. Daimler and Volkswagen both increased by 1.82% respectively, with Continental and Bmw up 1.55% and 1.48% respectively.
The week has been mixed for the banking sector, however. German Bank increased by 2.12%, while Commerzbank ended the week flat.
From CAC, it was a mixed week for the banks. Soc Gen increased by 0.54%, while BNP Paribas and Agricultural credit ended the week down 1.40% and 7.88% respectively.
It was also a mixed week for the French automotive sector. Stellantis NV increased by 2.38%, while Renault ended the week down 2.54%.
Air France-KLM and Airbus ended the week with losses of 3.12% and 1.67% respectively.
On the VIX index
It was a 2nd consecutive week in the green for the VIX in the week ending the 21stst May. After gaining 12.70% from the previous week, the VIX rose 7.12% to end the week at 20.15.
3 days in the green from 5 sessions, which included an 8.22% rise on Tuesday, brought the rise of the week for the VIX.
For the week, the Dow Jones was down 0.51%, with the NASDAQ and the S & P500 ending the week down 0.31% and 0.43% respectively.