Thursday, 26th August
GfK German Consumer Climate (Sep)
It was another mixed day for the European majors on Wednesday.
The DAX30 fell by 0.28%, while the CAC40 and the EuroStoxx600 saw gains of 0.18% and 0.01% respectively.
Economic data was on the lighter side, with the German economy in focus once more. Disappointing business sentiment figures from Germany weighed on the DAX30.
With the Jackson Hole Symposium kicking off today, there was also plenty of caution, pegging the majors back.
While the markets are betting that the FED will kick the policy can further road, it’s not been a sure thing on the tapering front.
Rising delta variant cases globally have also raised concerns over the economic outlook as some economies trail on vaccination rates.
It was a quieter economic calendar through the European session.
Germany’s IFO Business Climate Index figures were in focus early in the session.
In August, the Business IFO Business Climate Index fell from 100.7 to 99.4. Economists had forecast a decline to 100.4.
The decline came in spite of a pickup in business sentiment towards the current situation. In August, the Current Assessment sub-index increased from 100.4 to 101.4.
Weighing on the headline number was business expectations, which fell from 101.0 to 97.5.
According to the August survey,
- In the manufacturing sector, the business climate has deteriorated noticeably. The assessment of the current situation was less positive. While companies were still satisfied with the day-to-day business, the outlook for the coming months hit reverse. The expectation indicator fell to its lowest level since November 2020.
- For the services sector, optimism with regards to the future business development has been dampened. By contrast, the companies assessed the current situation as better than in the previous month.
- Traders were less satisfied with their current business situation. Additionally, pessimism returned with regard to expectations. The retail sector was particularly concerned about the months ahead.
From the U.S
Durable and core durable goods orders also influenced.
Durable goods orders fell by 0.1% in July, partially reversing a 0.9% increase from June. Economists had forecast a 0.3% decline. Core durable goods rose by 0.7%, however, versus a forecasted 0.5% increase. In June, core durable goods had risen by 0.6%.
The Market Movers
For the DAX: It was a mixed day for the auto sector on Wednesday. BMW and Continental fell by 0.57% and by 0.17% respectively. Volkswagen and Daimler ended the day up by 0.40% and by 0.09% respectively.
It was a bullish day for the banks, however. Deutsche Bank and Commerzbank rose by 1.36% and by 2.45% respectively.
From the CAC, it was a bullish day for the banks. BNP Paribas and Soc Gen rallied by 2.04% and by 2.44% respectively, with Credit Agricole gaining by 1.38%.
It was also a relatively bullish day for the French auto sector. Stellantis NV and Renault saw modest gains of 0.55% and 0.22% respectively.
Air France-KLM slipped by 0.36%, while Airbus SE rallied by 2.17%.
On the VIX Index
It was back into the red for the VIX on Wednesday, marking a 3rd day in the red from 4 sessions.
Reversing a 0.40% rise on Tuesday, the VIX fell by 2.50% to end the day at 16.79.
The S&P500 rose by 0.22%, with the Dow and the NASDAQ ending the day up by 0.11% and by 0.15% respectively.
The Day Ahead
It’s a relatively quiet day ahead on the Eurozone’s economic calendar. Consumer sentiment figures for Germany will be in focus in the early part of the session.
While the numbers will provide the DAX30 with direction, we can expect the markets to be tentative ahead of the Symposium.
Later in the day, initial jobless claims and GDP numbers from the U.S will provide the majors with direction.
With the Symposium getting underway, a marked fall in jobless claims could test the market’s dovish bets…
Ultimately, any chatter from the Symposium will be the key driver on the day.
In the futures markets, at the time of writing, the Dow Mini was up by 21 points.
For a look at all of today’s economic events, check out our economic calendar.