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European Equities: Private Sector PMIs and Geopolitics in Focus

Economic Calendar:

Friday, 24th July

French Manufacturing PMI (Jul) Prelim

French Services PMI (Jul) Prelim

German Manufacturing PMI (Jul) Prelim

German Services PMI (Jul) Prelim

Eurozone Manufacturing PMI (Jul) Prelim

Eurozone Markit Composite PMI (Jul) Prelim

Eurozone Services PMI (Jul) Prelim

The Majors

It was a mixed day for the European majors on Thursday. The EuroStoxx600 eked out a 0.06% gain, while the DAX30 and CAC40 slipped by 0.01% and by 0.07% respectively.

Economic data, earnings, and geopolitics left the European majors flat on the day.

Mid-week, tensions between the U.S and China picked up once more, weighing on market risk appetite. This time around the U.S accused China of hacking U.S companies, leading to an order to shut down China’s consulate in Houston.

The Stats

It was a quiet day on the Eurozone economic calendar. Key stats included Germany’s GfK Consumer Climate figures for August.

According to the GfK Survey,

  • The GfK Consumer Climate Index increased by 9.3 points to -0.3 for August.
  • While economic expectations rose marginally, income expectations and the propensity to buy saw large jumps.
  • Income expectations rose by 12 points to 18.6, leaving the indicator down by around 32 points from the same time last year.
  • The propensity to buy indicator jumped by 23.1 points to 42.5, leaving it down by just 4 points from last year.
  • A reduction in value-added tax contributed to the sharp rebound.

From the U.S

The weekly jobless claims figures were in focus later in the European session.

In the week ending 17th July, initial jobless claims rose by 1.416m, which was worse than a forecasted 1.3m increase.

The figures yet again showed that the U.S economy was struggling to continue to recover as new COVID-19 cases hit the U.S.

The Market Movers

For the DAX: It was a mixed day for the auto sector on Thursday. Daimler rallied by 2.26% to lead the way, with BMW and Continental rising by 0.92% and by 0.69% respectively. Volkswagen bucked the trend, falling by 0.68%.

The upside for Daimler off the back of its quarterly earnings. A projected rise in profit for the Mercedes-Benz and Van divisions delivered support.

It was a bearish day for the banks. Deutsche Bank and Commerzbank ended the day with losses of 2.72% and 1.84% respectively.

From the CAC, it was another bearish day for the banks. Soc Gen slid by 1.47% to lead the way down. BNP Paribas and Credit Agricole ended the day down by 0.62% and by 0.16% respectively.

The French auto sector found support after Wednesday’s pullback. Peugeot and Renault ended the day with gains of 2.69% and by 7.19% respectively.

Air France-KLM and Airbus SE struggled, however, with the pair falling by 1.54% and by 2.73% respectively.

On the VIX Index

It was back into the green for the VIX on Thursday. Reversing a 2.09% fall on Wednesday, the VIX rose by 7.24% to end the day at 26.09.

Disappointing employment figures from the U.S and rising tensions between the U.S and China weighed on the U.S equity markets.

The S&P500 and Dow fell by 1.23% and 1.31% respectively, with the NASDAQ sliding by 2.29%.

VIX 24/07/20 Daily Chart

The Day Ahead

It’s a particularly busy day ahead on the Eurozone economic calendar. Key stats include prelim July private sector PMIs for France, Germany, and the Eurozone.

Expect plenty of interest in the numbers. The markets will be looking for a continued pickup in private sector activity.

We would expect the service sector PMis and the Eurozone’s Composite to garner the greatest interest.

From the U.S

July’s prelim private sector PMIs are also in focus later in the session. From the U.S, we would expect the services PMI to garner the greatest interest.

Away from the economic calendar, updates on the next U.S fiscal stimulus package, COVID-19 news, and U.S – China tensions will also need monitoring.

The Latest Coronavirus Figures

According to figures at the time of writing, the number of new coronavirus cases rose by 270,301 to 15,650,441 on Thursday. On Wednesday, the number of new cases had risen by 288,688. The daily increase was lower than Wednesday’s rise while up from 238,925 new cases from the previous Thursday.

Germany, Italy, and Spain reported 3,593 new cases on Thursday, which was up from 2,217 new cases on Wednesday. On the previous Thursday, 2,175 new cases had been reported.

From the U.S, the total number of cases rose by 69,116 to 4,169,991 on Thursday. On Wednesday, the total number of cases had increased by 72,306. On Thursday, 23rd July, a total of 76,953 new cases had been reported.

The Futures

In the futures markets, at the time of writing, the DAX was down by 92.5 points, while the Dow was up by 37 points.

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