European stocks churn on Monday before settling slightly lower

• European data mixed, investors begin to reassess central bank expectations.
• EU PPIs turn lower, German Trade Balance rises as Imports collapse.
• Hefty earnings reports this week alongside EU Retail Sales, ECB Bulletin.

European equities shifted around the centerline on Monday before settling slightly in the red to kick off the new trading week as investors await another raft of earnings data while pan-European economic data continues to get stuck in the mire.

Germany’s Trade Balance rose to a nearly three-year high of €22.2 billion in December with both Imports and Exports declining sharply MoM. December’s German Exports fell -4.6% versus the forecast -2.0%, erasing the previous month’s 3.5% uptick, and German Imports tumbled to an almost four-year low of -6.7%, far below the -1.5% expected and backsliding sharply from the previous month’s 1.5%.

The pan-euro area Producer Price Index (PPI) in December fell to -10.6%, missing the forecast -10.5% and falling even further from the previous month’s -8.8%. Investors latch onto a glimmer of hope from the Sentix Investor Confidence Index for February, which saw a moderate rebound to -12.9 from the previous -15.8.

Retail stocks overall declined over 2% ahead of Tuesday’s EU Retail Sales figures, forecast to improve but still print negative at -0.9% versus the previous -1.1% for the year ended in December, while the MoM figure is forecast to accelerate to the downside at -1.0% compared to the previous month’s -0.3%.

The European Central Bank’s (ECB) latest Economic Bulletin lands on Thursday, and Friday will wrap up the European trading week with German inflation which is forecast to hold steady at 3.1% for the year ended January.

European equities broadly closed lower, but only mildly, with the pan-European STOXX600 declining 0.05% to close down a quarter of a point at €483.69.

France’s CAC40 fell a scant 0.03%, down 2.3% at €7,589.96 while Germany’s DAX shed 0.08% to end at €16,904.06, down 14 points.

London’s FTSE index also fell nearly 3 points to end Monday at £7,612.86, in the red by a svelte 0.04%.

DAX technical outlook

The German DAX index, tightly correlated to the pan-European STOXX600 major equity index, continues to waffle on the south side of the €17,000.00 handle on Monday. Intraday action got squeezed into the midrange near €16,890.00 as the index drifts into the near-term middle.

Daily candles have the DAX strung along near-term congestion, but remaining pinned firmly into bear country with the equity index well-supported in striking distance of all-time highs with a firm technical floor priced in at the 200-day Simple Moving Average (SMA) rising into €16,000.00.

DAX hourly chart

DAX daily chart