European Equities: Economic Data from China and the U.S to Give Direction

Economic Calendar

Thursday, 15th July

Italy Inflation Rate MoM Final JUN

Friday, 16th July

Eurozone Balance of Trade MAY

Eurozone Core Inflation Final JUN

The Majors

It was another mixed day the European majors on Wednesday, following modest moves on Tuesday.

The EuroStoxx600 fell by 0.08%, while the DAX30 and the CAC40 both ended the day flat.

Economic data from the Eurozone disappointed once more, pegging the majors back mid-week.

While the numbers were disappointing, continued central bank assurances of unwavering support propped up the majors on the day.

The Stats

While inflation was back in focus on Wednesday, industrial production figures for the Eurozone was of greater influence.

Spanish Consumer Prices

Spain’s annual rate of inflation held steady at 2.7% in June, which was up from a prelim 2.6%. The harmonized index for consumer prices rose by 2.5%, which was up from a prelim and May 2.4%.

Eurozone Industrial Production

In May, industrial production fell by 1.0%, reversing a 0.6% increase from April. Economists had forecast a 0.2% decline.

According to Eurostat,

Production of non-durable consumer goods fell 2.3%, energy by 1.9%, and capital goods by 1.6%.

While the production of intermediate goods slipped by 0.2%, durable consumer goods production rose by 1.6%.

Greece (-4.7%) and Ireland (-4.6%) recorded the largest monthly declines in production. By contrast, Lithuania recorded a 7.7% jump in production to lead the way.

Compared with May 2020, industrial production was up 20.5%. In April, production had been up by 39.4%. Economists had forecast a 22.2% increase.

From the U.S

Wholesale inflation was in focus following the sharp pickup in consumer price inflation from the day prior.

In June, the producer price index rose by 1.0%, following a 0.7% increase in May.

The Market Movers

For the DAX: It was a mixed day for the auto sector on Wednesday. Volkswagen slipped by 0.05% to buck the trend on the day. BMW and Daimler rose by 0.67% and by 0.59% respectively, with Continental ending the day up by 1.58%.

It was a mixed day for the banks. Deutsche Bank slipped by 0.10%, while Commerzbank rose by 0.11%.

From the CAC, it was a relatively bullish day for the banks. Credit Agricole and Soc Gen saw gains of 0.60% and 0.45% respectively, with BNP Paribas rising 0.61%.

It was a bearish day for the French auto sector, however. Stellantis NV and Renault ended the day down by 0.20% and by 1.23% respectively.

Air France-KLM slid by a further 2.51%, with Airbus SE falling by 0.23%.

On the VIX Index

It was back into the red for the VIX on Wednesday, marking a 3rd decline in 4-sessions.

Partially reversing a 5.88% gain from Tuesday, the VIX fell by 4.61% to end the day at 16.33.

The NASDAQ slipped by 0.22%, while the Dow and the S&P500 ended the day up by 0.13% and by 0.12% respectively.

VIX 150721 Daily Chart

The Day Ahead

It’s a relatively quiet day ahead on the economic calendar. Finalized June inflation figures for Italy will be in focus later today. We don’t expect the numbers to have a material impact on the European majors, however.

From the U.S, weekly jobless claims and Philly FED Manufacturing PMI numbers will draw plenty of attention, however.

Other stats from the U.S include manufacturing numbers for NY State and industrial production figures for June. Barring particularly dire numbers, however, we don’t expect these numbers to have a material impact on the majors.

Following a sharp pickup in inflationary pressures, a marked fall in jobless claims would likely test support for riskier assets.

Ahead of the European open, 2nd quarter GDP numbers, fixed asset investment, industrial production, and retail sales figures from China will set the tone.

Lingering market jitters over the resilience of the global economic recovery will place greater emphasis on the Q2 GDP numbers.

The Futures

In the futures markets, at the time of writing, the Dow Mini was down by 25 points.

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