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European Equities: Manufacturing PMIs and U.S Jobless Claims in Focus

Economic Calendar

Thursday, 1st July

Spanish Manufacturing PMI (Jun)

Italian Manufacturing PMI (Jun)

French Manufacturing PMI (Jun) Final

German Manufacturing PMI (Jun) Final

Eurozone Manufacturing PMI (Jun) Final

Eurozone Unemployment Rate (May)

Friday, 2nd July

German Retail Sales (MoM) (May)

The Majors

It was a bearish day for the European majors on Wednesday, reversing Tuesday’s modest gains.

The DAX30 led the way down, falling by 1.02%, with the CAC40 and the EuroStoxx600 seeing losses of 0.91% and 0.77% respectively.

Economic data from China, the Eurozone, and the U.S were all in focus through the day.

From China, NBS private sector PMI figures for June disappointed. The NBS Manufacturing PMI slipped from 51.0 to 50.9, with the Non-Manufacturing PMI falling from 55.2 to 53.5.

The weaker figures had weighed on the DAX futures ahead of the European open

Through the early part of the week, the markets remained torn. Market optimism towards a speedier economic recovery continued to provide support.

Concerns over the rising number of new Delta variant COVID-19 cases weighed, however.

The Stats

In June, the annual rate of inflation ticked up from 1.4% to 1.5% based on prelim figures. This was in line with forecasts.

According to Insee.fr,

  • Prices for energy were up 10.9%, with prices for tobacco rising by 5.3% year-on-year.
  • Food prices were down by 0.3%, with prices for fresh food (-3.4%) weighing.
  • Month-on-month, consumer prices increased by 0.2% after having risen by 0.3% in May.

German Unemployment

In June, unemployment fell by 38k, following on from a 19k decline in May. Economists had forecast a more modest 20k fall. In spite of the larger than expected drop, the unemployment rate held steady at 5.9%.

The Eurozone

According to prelim figures for the Eurozone, the annual rate of inflation softened from 2.0% to 1.9% in June. Month-on-month, consumer prices rose by 0.3% following a 0.3% increase in May.

From the U.S

ADP nonfarm employment change numbers were in focus.

In June, the ADP reported a 692k increase in nonfarm payrolls, following an 886k surge in May. Economists had forecast a 450k rise.

Chicago PMI and pending home sales figures were also in focus but had a muted impact on the European majors.

The Market Movers

For the DAX: It was a bearish day for the auto sector on Wednesday. Continental and Volkswagen slid by 2.49% and by 2.18% to lead the way down. BMW and Daimler ended the day down by 1.61% and by 0.97% respectively.

It was also a bearish day for the banks. Deutsche Bank fell by 0.22%, with Commerzbank declining by 1.45%.

From the CAC, it was a bearish day for the banks. BNP Paribas and Credit Agricole fell by 1.31% and by 1.24% respectively. Soc Gen saw a more modest 0.92% loss on the day.

It was also a bearish day for the French auto sector. Stellantis NV and Renault fell by 1.59% and by 2.85% respectively.

Air France-KLM fell by 1.33%, while Airbus SE bucked the trend, rising by 1.84%.

On the VIX Index

It was back into the red for the VIX on Wednesday.

Partially reversing a 1.65% gain from Tuesday the VIX fell by 1.19% to end the day at 15.83.

The NASDAQ slipped by 0.17%, while the Dow and the S&P500 ended the day up by 0.61% and by 0.13% respectively.

VIX 010721 Daily Chart

The Day Ahead

It’s another busy day ahead on the economic calendar. Italian and Spanish manufacturing PMIs are due out along with finalized PMIs for France, Germany, and the Eurozone.

Barring any marked revisions to prelim figures, expect Italy and the Eurozone’s PMIs to draw the greatest interest.

Later in the day, Eurozone unemployment figures will also draw interest ahead of key stats from the U.S.

From the U.S, the weekly jobless claim figures and market’s favored ISM Manufacturing PMI numbers will also influence.

Ahead of the European open, the Caixin Manufacturing PMI for June will set the tone, however.

Away from the economic calendar, COVID-19 news updates and any central bank chatter will also provide direction.

The Futures

In the futures markets, at the time of writing, the Dow Mini was up by 67 points, with the DAX up by 53 points.

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