A Week in Review – 15/02/20February 15, 2020
It was another bullish week for the European majors in the week ending 14th February, with the DAX30 rallying by 1.70% to lead the way. The CAC40 and EuroStoxx600 saw more modest gains of 0.66% and 1.49% respectively.
A bullish start to the week delivered the gains, with the markets responding to a slower rate of infection in China, according to figures that had been released on Tuesday.
Economic data from the Eurozone was of little help in the week, while hopes of a sizeable stimulus package from Beijing took the edge off.
Through the 2nd half of the week, updates on the spread of COVID-19 pinned back the majors that saw red for 3 consecutive days.
It was a relatively busy week on the Eurozone economic calendar.
Key stats included December industrial production figures out of the Eurozone and 4th quarter GDP numbers for Germany and the Eurozone.
Industrial production slid by 2.10%, reversing a 0.2% rise from November with interest. The figures, released on Tuesday, had a muted impact on the majors, however, as the markets reacted to the brief lull in COVID-19 cases.
The market focus then shifted to 4th quarter GDP numbers out of Germany on Friday. According to 1st estimate numbers released by Destatis, the German economy stalled in the 4th quarter. Economists had forecast growth of 0.1%, quarter-on-quarter. In the 3rd quarter, the economy had grown by 0.2%.
While the German economy stalled in the 4th quarter, avoiding a contraction limited the impact on the DAX30.
Year-on-year, the economy grew by 0.3%, which was down from 1.1% in the 3rd quarter. Economists had forecast growth of 0.2%.
For the Eurozone, 2nd estimate growth for the 4th quarter was unchanged at 0.1%, while revised down from 1.0% to 0.9% year-on-year.
Inflation figures released during the week had a muted impact.
Elsewhere, key stats from the U.S provided support, with consumer confidence on the rise, according to figures released on Friday. Retail sales figures failed to impress on Friday, however.
The Market Movers
From the DAX, it was a bullish week for the auto sector. Continental and Volkswagen led the way once more, rallying by 5.46% and by 2.73% respectively. BMW and Daimler saw more modest gains of 1.78% and 0.89% respectively.
The gains came in spite of a bearish 2nd half of the week, with auto sales figures out of China weighing.
According to the latest figures released by China’s Association of Automobiles, there was an 18% slump in car sales to China in January, year-on-year. It was the 19th consecutive fall in car sales. China’s Association of Automobiles also warned that the virus will deliver a huge shock to the car industry.
It was a particularly bullish week for the banking sector, with Deutsche Bank rallying by 7.17% and Commerzbank up by 13.77%.
From the CAC, it was a relatively bullish week for the banks. BNP Paribas and Soc Gen rallied by 3.57% and by 3.86% respectively, while Credit Agricole saw a more modest 0.37% gain.
It was a bearish week for the…