Thursday, 9th July
German Trade Balance (May)
It was a bearish day for the European majors on Tuesday. The DAX30 fell by 0.92%, with the CAC40 and EuroStoxx600 seeing losses of 0.74% and 0.61% respectively.
Following the bullish sentiment on Monday, some caution hit the markets as summer economic forecasts rolled out.
On Tuesday, the European Commission projected an 8.7% contraction for 2020 followed by 6.1% growth in 2021. For the markets, the 1 percentage point downward revision will have been of concern when considering both fiscal and monetary policy support.
A continued rise in new coronavirus cases will also not have helped the majors on the day.
It was a relatively quiet day on the Eurozone economic calendar on Tuesday. Key stats included Germany’s industrial production figures for May.
According to Destatis,
- Industrial production increased by 7.8% in May, partially reversing a 17.5% slide from April.
- Production in industry excluding energy and construction was up by 10.3%.
- Within industry, the production of intermediate goods showed a 0.1% decrease.
- The production of consumer goods increased by 1.4%, while the production of capital goods jumped by 27.6%.
- Outside industry, energy production was up by 1.7%, with the production of construction up by 0.5%.
From the U.S
It was also a relatively quiet day on the economic calendar, with May’s JOLTs job openings in focus.
In May, job openings rose from 4.996m to 5.397m. Economists had forecast a fall to 4.85m.
The Market Movers
For the DAX: It was a mixed day for the auto sector on Tuesday. Continental and Volkswagen slid by 1.00% and by 1.16% to lead the way down. Daimler fell by a more modest 0.20%, while BMW bucked the trend, with a 0.12% gain.
It was also a mixed day for the banks. Deutsche Bank fell by 0.68%, while Commerzbank rallied by 3.56% following on from Monday’s 4.26% gain.
WIRECARD AG rallied by 32.51% to reverse Monday’s 25.55% tumble.
From the CAC, it was a bearish day for the banks. Soc Gen fell by 1.26% to lead the way down. BNP Paribas and Credit Agricole saw more modest losses of 0.28% and 0.25% respectively.
The French auto sector saw further gains on Tuesday. Peugeot and Renault rose by 0.34% and by 0.54% respectively.
Air France-KLM and Airbus SE fell by 1.17% and by 0.59% respectively.
On the VIX Index
It was a 2nd consecutive day in the green for the VIX on Tuesday. Following on from a 0.94% gain on Monday, the VIX rose by 5.33% to end the day at 29.43.
A pullback across the major U.S equity markets came on Tuesday as investors turned cautious ahead of a busy week next week. With economic data limited to JOLTs job openings, some profit-taking weighed ahead of earnings season.
A continued rise in new coronavirus cases across the U.S will have also weighed on risk appetite on the day.
The S&P500 fell by 1.08%, with the Dow and NASDAQ ended the day down by 1.17% and 0.86% respectively.
The Day Ahead
It’s a quiet day ahead on the Eurozone economic calendar. There are no material stats to provide the majors with direction.
A lack of stats will leave the majors in the hands of the news wires and COVID-19 numbers. Following the 2nd quarter rebound in the majors and a positive start to July, the markets may remain relatively cautious.
Plenty of downside risks remain that could hit the majors, including a widespread reintroduction of lockdown measures. There are also rising tensions with a number of G7 countries and China to also consider…
From the U.S
There are no material stats due out later today. This will likely give the weekly crude oil inventory numbers, COVID-19, and geopolitics greater airtime.
The Latest Coronavirus Figures
On Tuesday, the number of new coronavirus cases rose by 227,176 to 11,940,258. On Monday, the number of new cases had risen by 177,554. The daily increase was higher than Monday’s rise and 201,507 new cases from the previous Tuesday.
Germany, Italy, and Spain reported 776 new cases on Tuesday, which was down from 1,876 new cases on Monday. On the previous Tuesday, 934 new cases had been reported.
From the U.S, the total number of cases rose by 67,655 to 3,096,516 on Tuesday. On Monday, the total number of cases had increased by 45,706. On Tuesday, 30th June, a total of 53,471 new cases had been reported.
In the futures markets, at the time of writing, the DAX was down by 14.5 points, while the Dow was up by 124 points.
For a look at all of today’s economic events, check out our economic calendar.