A Week in Review – 29/10/21
In October, the Ifo Business Climate Index fell from 98.9 to 97.7, weighed by business expectations. The Business Expectations sub-index slid from 97.4 to 95.4, while the current assessment sub-index slipped from 100.4 to 100.1.
Consumer sentiment improved, however, with the GfK Consumer Climate Indicator up from 0.4 to 0.9.
In the 2nd half of the week, German unemployment figures were upbeat for October.
A 39k fall in unemployment led to a fall in the unemployment rate from 5.5% to 5.4%.
At the end of the week, 3rd quarter GDP numbers and Eurozone inflation figures for October were key, however.
With GDP numbers from France, Germany, and Spain delivering mixed results, the Eurozone economy grew by 2.2% in the 3rd quarter. The economy had expanded by 2.1% in the previous quarter.
More significantly, however, was another marked pickup in inflationary pressure.
According to prelim figures, the Eurozone’s annual rate of inflation accelerated from 3.4% to 4.1%.
On the monetary policy front, the ECB left policy unchanged, which was in line with expectations.
With inflationary pressures persisting, however, the ECB continued to view inflationary pressures as transitory. The comments suggested status quo on interest rates for the foreseeable future, delivering support.
From the U.S
Early in the week, Consumer confidence and core durable goods and durable goods orders were in focus.
The numbers were skewed to the positive, with a jump in consumer confidence key. In October, the CB Consumer Confidence Index rose from 109.8 to 113.8.
Core durable goods orders increased by a further 0.4% in September following a 0.3% rise in August.
In the 2nd half of the week, the stats were mixed, however.
GDP numbers for the 3rd quarter disappointed, with the U.S economy growing by just 2.0%. In the 2nd quarter, the economy had expanded by 6.7%.
Jobless claims were more upbeat, however, with initial jobless claims falling from 291k to 280k in the week ending 22nd October.
At the end of the week, inflation and personal spending wrapped things up.
In September, personal spending rose by 0.6% following a 1.0% increase in August.
More significantly, however, was persistent inflationary pressure at the end of the 3rd quarter.
In September, the Core PCE Price Index was up by 3.6% year-on-year. The annual rate of inflation held steady from August, while falling short of forecasts.
The Market Movers
From the DAX, it was a mixed week for the auto sector. Volkswagen fell by 1.27% to buck the trend in the week. Continental and Daimler led the way, however, with gains of 3.25% and 4.13% respectively. BMW also found support, rising by 1.86%.
It was a bearish week for the banking sector, however. Deutsche Bank slid by 4.09%, with Commerzbank declining by 0.63%. Disappointing earnings left Deutsche Bank in the deep red, with the markets responding to weak investment banking and trading revenues.
From the CAC, it was a bullish week for the banks. Soc Gen rose by 1.16% to lead the way, with BNP Paribas and Credit Agricole ending the week up by 0.33% and by 0.69% respectively.
It was a mixed week for the French auto sector, however. Stellantis NV rose by 2.37%, while Renault slipped by 0.29%.
Air France-KLM partially reversed a 7.03% slide from the previous week, rising by 3.91%. Airbus rose by a more modest 0.75%, however.
On the VIX Index
It was back into the green for the VIX in the week ending 29th October, ending a run of 3 consecutive weeks in the red.
Reversing a 5.34% fall from the previous week, the VIX rose by 5.38% to end the week at 16.26.
2-days in the green from 5 sessions, which included a 4.86% rise on Tuesday and a 6.26% jump on Wednesday delivered the upside.
For the week, the NASDAQ rallied by 2.71%, with the Dow and the S&P500 ending the week up by 0.40% and by 1.33% respectively.