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European Equities: Can the Majors Stop the Slide?

Economic Calendar:

Friday, 12th July

  • Spanish CPI (YoY) (Jun) Final
  • Spanish HICP (YoY) (Jun) Final
  • Eurozone Industrial Production (MoM) (May)

The Majors

The majors continued to see red on Thursday. The EuroStoxx600 led the way down on the day, falling by 0.45%. It wasn’t much better for the DAX30 and CAC40, which fell by 0.33% and by 0.28% respectively.

The reversals through the week have left the DAX down by 1.88% Monday to Thursday.

The Stats

Economic data out of the Eurozone on Thursday included finalized June inflation figures out of Germany and France.

The ECB also released its monetary policy meeting minutes from the 6th June monetary policy decision.

While the stats and the minutes had a muted impact on the majors on the day, the IMF weighed on the day.

The IMF stated on Thursday that the Eurozone economy faced rising risks that were attributed to the Brexit, Italy, and trade.

Interestingly, the IMF also called for the ECB to loosen monetary policy further. The statement came following last week’s announcement that Lagarde would take over later this year.

On the trade front, Trump was back on Tweeter, this time complaining about China trade practices, which weighed. Trump’s reaction to a new digital services tax in France, aimed at targeting the U.S tech giants, was also negative.

On the U.S economic calendar, U.S June inflation figures and FED Chair Powell’s 2nd day of testimony to Congress also provided direction.

While the annual rate of inflation picked up to 2.1%, FED Chair Powell continued to assure lawmakers of FED support. The reassurances led to fresh highs for the S&P500.

The Market Movers

From the DAX, Deutsche Bank was amongst the front runners on the day, rising by 1.07%, with Commerzbank rallying by 1.51%. It was a different story for the auto sector, however, with Continental the worse performer on the day. Continental slid by 2.65%, with Daimler falling by 0.83%. BMW was not far behind, down by 0.56% on the day, while Volkswagen slipped by just 0.04%.

From the CAC, it was a mixed bag for the bank stocks. BNP Paribas fell by 0.29%, while Soc Gen rose by 0.04%. Credit Agricole ended the day flat. Renault joined its German peers in the red, falling by 0.73%.

The Day Ahead

It’s a relatively busy day ahead, with finalized June inflation figures, Spain, and Eurozone industrial production figures due out.

We would expect the markets to brush aside the finalized inflation figures and focus on the industrial production numbers.

From the U.S session, June wholesale inflation figures could also provide direction should the numbers come in ahead of forecast. Strong numbers would be considered negative.

Ahead of the European open, the Asian markets were mixed at the time of writing. The Hang Seng and CSI300 were up by 0.44% and by 0.69% respectively. The Nikkie and ASX200 were flat.

At the time of writing, the DAX was up by 49.5 points, while the Dow Mini was up by 95 points.