European blue-chips jumps on strong corporate profits, U.S. GDP

The DAX has posted sharp gains in the Friday session. Currently, the DAX is at 11,658, up 1.24% on the day. In France, the CAC 40 has gained 0.80%, trading at 5281 points. The indices have received a boost from strong corporate profits as well as an unexpectedly strong U.S. GDP, which led to sharp gains in U.S. markets on Thursday, and Asian and European markets on Friday.

Corporate profit reports boosted European stock markets on Friday. Carmaker shares are up sharply on both the DAX and CAC. The biggest gainers on the day include Peugeot (3.22%), Volkswagen (2.58%) and Daimler (1.96%).

German numbers were a mix on Friday. Retail sales bounced back with a 3.3% gain in January, after a 4.3% decline in December. The manufacturing sector continues to struggle, as Manufacturing PMI fell below the 50-level for a second straight month, pointing to contraction. German and eurozone manufacturing has fallen off due to the global trade war, which has led to less demand for eurozone and German products. On the labor front, unemployment rolls fell by 21 thousand, crushing the estimate of -5 thousand. There was more good news as the eurozone unemployment rate dropped to 7.8% in January, down from 7.9% a month earlier.

In the U.S., Advance GDP for Q4, which was released a month late due to the government slowdown, showed a gain of 2.6%. Although this was weaker than the 3.4% gain in Q3, it was well above the estimate of 2.2%. The unexpectedly solid reading can be credited to strong consumer spending and business investment. It’s hard to argue that the U.S. economy is not performing well, with a strong expansion of 3.1% in 2018. Still, even with the positive GDP release, it’s unlikely that the Federal Reserve will veer from it dovish stance.

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Economic Calendar

Friday (March 1)

• 2:00 German Retail Sales. Estimate 1.9%. Actual 3.3%
• 3:55 German Final Manufacturing PMI. Estimate 47.6. Actual 47.6
• 3:55 German Unemployment Change. Estimate -5K. Actual -21K
• 4:00 Eurozone Final Manufacturing PMI. Estimate 49.2. Actual 49.3
• 5:00 Eurozone CPI Flash Estimate. Estimate 1.5%. Actual 1.5%
  
• 5:00 Eurozone Core CPI Flash Estimate. Estimate 1.1%. Actual 1.0%
  
• 5:00 Eurozone Unemployment Rate. Estimate 7.9%. Actual 7.8%

*All release times are DST

*Key events are in bold

DAX, Thursday, March 1 at 7:10 EST

Previous Close: 11,515 Open: 11,596 Low: 11,584 High: 11,665 Close: 11,658

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