European Equities: Economic Data, Earnings, and U.S Stimulus in Focus

Economic Calendar:

Friday, 31st July

French GDP (QoQ) (Q2)

German Retail Sales (MoM) (Jun)

French Consumer Spending (MoM) (Jun)

French CPI m/m (Jul) Prelim

French HICP m/m (Jul) Prelim

Spanish GDP (QoQ) (Q2)

Italian CPI (MoM) (Jul) Prelim

Eurozone CPI (YoY) (Jul) Prelim

Eurozone Core CPI y/y (Jul) Prelim

Eurozone GDP q/q (Q2) 1st Estimate

Eurozone GDP y/y (Q2) 1st Estimate

The Majors

It was a particularly bearish day for the European majors, with the DAX falling a to 1-month lows on Thursday.

The DAX30 slid by 3.45% to lead the way down, with the CAC40 and EuroStoxx600 falling by 2.13% and 2.16% respectively.

Particularly dire economic data from Germany and the U.S, corporate earnings weighed on the European majors. Trump’s tweet of considering a delay to the U.S Presidential Election added the market angst on the day.

The Stats

It was a busy day on the Eurozone economic calendar. Key stats included 2nd quarter GDP and July unemployment figures from Germany.

The Eurozone’s unemployment figures for June and prelim July inflation figures from Germany had a muted impact on the day.

Germany’s economy contracted by 10.1% in the 2nd quarter, following a 2% contraction in the 1st quarter. Economists had forecast a 9% contraction. This was the largest decline since calculations began 50 years ago.

According to Destatis,

  • An unprecedented slump in exports and imports of goods and services, household final consumption expenditures, and capital formation in machinery and equipment contributed.
  • General government raised its final consumption expenditure, however.

Year-on-year, the economy contracted by 11.7%, following a 1.8% contraction in the 1st quarter. Economists had forecast a 10.9% contraction.

On the positive, however, were better than expected German unemployment figures for July. The unemployment rate held steady at 6.4%, with the number of unemployed falling by 18k, following a 68k rise in June. Economists had forecast a 43k rise in the unemployed and for the unemployment rate to increase to 6.5%.

From the U.S

Late in the European session, 2nd quarter GDP and the weekly jobless claims were in focus.

In the 2nd quarter, the U.S economy contracted by a whopping 32.9%, following a 5% contraction in the 1st quarter. Economists had forecast a 34.1% contraction. Though this was of little consolation.

The weekly jobless claims were also on the rise once more. In the week ending 24th July, initial jobless claims rose by 1.434m, following a 1.422m jump from the previous week. Economists had forecast a 1.450m increase.

The Market Movers

For the DAX: It was a particularly bearish day for the auto sector on Thursday. Volkswagen slumped by 5.96% to lead the way down, with Continental sliding by 3.71%. BMW and Daimler saw more modest losses of 2.56% and 2.95% respectively.

Volkswagen reported an operating loss for the 1st half, while also slashing its dividend, which weighed heavily on the day.

It was another bearish day for the banks. Deutsche Bank fell by 2.65%, with Commerzbank sliding by 4.52%.

From the CAC, it was a particularly bearish day for the banks. Soc Gen and Credit Agricole slid by 5.07% and 4.69% respectively, with BNP Paribas falling by 3.97%.

It was even worse for the French auto sector. While Peugeot slid by 4.80%, Renault tumbled by 9.26%, off the back of a record net loss for the 1st half of the year.

Air France-KLM joined the broader pack, sliding by 4.59%, while Airbus SE bucked the trend, rising by 1.87%.

The upside for Airbus came in spite of second-quarter revenue sliding by 55%. Better than expected FCF and plans not to erode FCF in the 2nd half of the year supported the upside.

On the VIX Index

It was a back into the green for the VIX on Thursday. Partially reversing a 5.72% loss from Wednesday, the VIX rose by 2.74% to end the day at 24.76.

Particularly dire 2nd quarter GDP numbers and a 2nd consecutive rise in U.S initial jobless claims weighed on the S&P500 and the Dow.

U.S President Trump’s tweet of considering a delay to the November Presidential Election didn’t help…

The S&P500 and Dow fell by 0.38% and by 0.85% respectively, while the NASDAQ rose by 0.43%. The upside for the NASDAQ came in anticipation of earnings from Alphabet,, Apple, and Facebook after the market close.

VIX 31/07/20 Daily Chart

The Day Ahead

It’s another busy day ahead on the Eurozone economic calendar. Key stats include 2nd quarter GDP numbers from France, Spain, and the Eurozone. June’s consumer spending and retail sales figures for France and Germany will also draw attention.

Prelim June inflation figures for France, Italy, and the Eurozone are also due out but will likely have a muted impact.

On the earnings front, BNP Paribas and Air France KLM are also in focus on the day.

From the U.S

June’s personal spending and inflation figures, together with finalized July consumer sentiment figures are due out.

Earlier in the day, China’s private sector PMIs for July could influence the mood.

Away from the numbers, tech stocks will likely get a boost following better than expected earnings results after the U.S close.

There is also the expiration of the U.S enhanced federal unemployment insurance policy to consider. With another jump in jobless claims, disagreement on Capitol Hill risks a further delay to the stalled COVID-19 stimulus package.

When considering the state of the U.S economy and the continued spread of COVID-19, even the passing of the stimulus package may not be enough…

The Latest Coronavirus Figures

According to figures at the time of writing, the number of new coronavirus cases rose by 268,725 to 17,440,017 on Thursday. On Wednesday, the number of new cases had risen by 287,638. The daily increase was lower than Wednesday’s rise and down from 270,301 new cases from the previous Thursday.

Germany, Italy, and Spain reported 4,022 new cases on Thursday, which was up from 3,179 new cases on Wednesday. On the previous Thursday, 3,593 new cases had been reported.

From the U.S, the total number of cases rose by 58,655 to 4,626,692 on Thursday. On Wednesday, the total number of cases had increased by 69,828. On Thursday, 23rd July, a total of 69,116 new cases had been reported.

The Futures

In the futures markets, at the time of writing, the Dow was up by 169 points.

For a look at all of today’s economic events, check out our economic calendar.