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Europe stocks rise ahead of key economic reports

 

Tuesday, November 15, 2022

The news shaping the markets today

Ukrainian national energy company Ukrenergo said Russian forces had destroyed the power plant before retreating from the town of Kherson. The news sent the US dollar index higher this morning.


China’s industrial production surged 5.0% year-over-year in October, lending support to the CNY/USD forex pair.


Japan’s economy shrank 1.2% on an annualised basis in the third quarter, following 4.6% growth in the previous quarter. The latest reading missed market expectations of 1.1% growth, which sent the JPY/USD pair lower in forex trading this morning.


US consumer inflation expectations for the year ahead rose to 5.9% in October, from 5.4% a month ago, which sent the Dow Jones index lower by more than 200 points on Monday.


India’s retail price inflation eased to 6.77% year-over-year in October, compared to September’s five-month high of 7.41%. However, the INR/USD forex pair remained under pressure, mainly due to strength in the US dollar.

 

What’s happening: European stocks rose on Monday, extending gains recorded last week.

What happened: Markets in Europe started the week with optimism amid positive updates from some major companies.

Investors monitored comments from a top Fed official and await key data on inflation and GDP, scheduled for release this week.

Why it matters: European stocks notched their strongest weekly surge in around eight months last week, with an improvement in risk sentiment after the US reported a cooling of inflation in October.

Markets in Europe maintained their uptrend on the first trading day of this week. However, comments from Federal Reserve Governor Christopher Waller, saying the central bank would continue with aggressive rate hikes, limited the overall gains.

Investors also assessed data from Europe, which showed industrial output in the Eurozone growing 0.9% in September, after a 2.0% increase in the previous month. The figure easily topped the consensus estimates of 0.3%.

Shares of Informa gained around 5% on Monday, after the company raised its earnings forecast for the full year. This helped London’s FTSE 100 outperform its European peers. The blue-chip index added 0.92% to settle at 7,385.17 in the session.

Shares of Infineon Technologies jumped around 8% after the chipmaker boosted its long-term financial projections and announced plans to expand its production capacities. This helped Germany’s DAX 40 record gains of 0.62% to close at 14,313.30 on Monday. The index rose for the third session in a row and is up around 20% from the two-year low recorded on September 29. France’s CAC 40 rose 0.22% to settle at 6,609.17 in the session.

The pan-European STOXX 600 index rose 0.14% to close at 432.86 on Monday, hovering close to an 11-week high. Technology stocks recorded strong gains, rising around 1%, while financial services and travel and leisure shares were among the worst performers.

What to watch: Investors await data on balance of trade, employment change and GDP from the Eurozone today. The Eurozone’s trade deficit is expected to narrow to €43.6 billion in September, from a gap of €50.9 billion in August. The number of employed persons in the bloc is expected to increase by 0.4% in the third quarter. Analysts expect the Eurozone economy to grow by 2.1% year-over-year in the third quarter, after a 4.3% expansion in the second quarter.

Data on inflation for October will be released on Thursday.

The markets today

The Canadian dollar will be in focus today ahead of a basket of economic reports

Context: The CAD/USD forex pair declined on Monday amid a downturn in oil prices.

Details: The loonie pulled back from a seven-week high on Monday, as crude oil prices moved lower and the US dollar recorded gains.

The US dollar index, which measures the greenback’s performance versus a basket of major rivals, recovered from a multi-month low, as expectations of the Federal Reserve softening its monetary policy stance faded. The index gained around 0.4% to 106.66 on Monday.

The price of crude oil, one of Canada’s major exports, was also impacted by strength in the greenback. WTI crude oil prices dipped $3.09 to $85.87 per barrel in the session.

The CAD/USD forex pair fell around 0.4% to $1.3317 on Monday. Canadian government bond yields remained mixed on Monday with the market reopening after Friday’s Remembrance Day holiday. The S&P/TSX Composite index declined by 0.94% to settle at 19,921.81, after hitting an 11-week high in the earlier session.

What are expectations: Traders await data on new motor vehicle sales, manufacturing sales and wholesale sales from Canada today. Car registrations in Canada, which rose to 135,988 units in August, are expected to increase to 144,000 in September. Analysts expect total manufacturing sales in Canada to decline 0.5% in September, after a 2% downturn in the previous month. Wholesale sales are expected to decline by 0.2% in September.

Data on Canada’s consumer prices and producer prices will also be released later this week.

Other Markets: US indices closed lower on Monday, with the Dow Jones index, S&P 500 and Nasdaq 100 down by 0.63%, 0.89% and 0.98%, respectively.

Support & resistances for today

Technical Levels News Sentiment
USD/JPY  – 140.23 and 140.35 Positive
USD/CHF – 0.9441 and 0.9452 Positive
Silver – 21.961 and 22.103 Negative
Palladium  – 2018.88 and 2026.10 Positive
DAX 40 – 14293.79 and 14335.60 Negative

Market snapshot

Futures at 0400 (GMT)
EUR/USD (1.0321, -0.08%) Dow ($33,679, 0.35%) Brent ($93.18, 0.1%)
GBP/USD (1.1768, 0.07%) S&P500 ($3,982, 0.41%) WTI ($85.71, -0.2%)
USD/JPY (140.36, 0.34%) Nasdaq ($11,802, 0.58%) Gold ($1,773, -0.2%)

What else to watch today

Saudi Arabia’s inflation rate and wholesale price inflation, France’s unemployment rate and inflation rate, Germany’s wholesale prices, ZEW indicator of economic sentiment and ZEW indicator of current conditions, UK’s unemployment rate, claimant count change, employment change and average weekly earnings, Spain’s inflation rate, Turkey’s central government budget balance, Eurozone’s ZEW economic sentiment index, India’s balance of trade, US producer price index, NY Empire state manufacturing index, Redbook index and API crude oil stocks, as well as Argentina’s inflation rate.


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