European Equities: Private Sector PMIs for July in the Spotlight

Economic Calendar

Friday, 23rd July

French Markit Manufacturing PMI Flash

French Markit Services PMI Flash

German Markit Services PMI Flash

German Markit Manufacturing PMI Flash

Eurozone Markit Services PMI Flash

Eurozone Markit Manufacturing PMI Flash

The Majors

It was relatively bullish day for the majors on Thursday.

The CAC40 rose by 0.26%, with the DAX30 and the EuroStoxx600 ending the day up by 0.60% and by 0.56% respectively.

A busier economic calendar and the ECB monetary policy decision and press conference were key drivers on the day.

Away from the economic calendar, COVID-19, the spike in new cases, and possible impact on the global economic recovery remained a drag, however.

The Stats

consumer confidence figures for the Eurozone were in focus on the day.

In June, the Eurozone’s Consumer Confidence Index took an unexpected fall from -3.3 to -4.4. Economists had forecast an increase to -2.6.

While the stats were of influence, the ECB monetary policy decision and the press conference were the key drivers.

In line with market expectations, the ECB left monetary policy unchanged.

From the press conference, ECB President Lagarde looked to deliver further assurances that there would be no rate hikes until inflation reaches its 2% target.

Lagarde comment on inflation was categoric. “Our rate policy would be lifted only if the evidence is sufficiently clear, sufficiently persistent, sufficiently lasting and we have the degree of confidence that our inflation will reach 2% on a durable basis.”

With the Delta variant impacting many economies, the ECB President also highlighted the downside risks stemming from the pandemic.

From the U.S

Jobless claims figures were in focus. In the week ending 16th July, initial jobless claims rose from 368k to 419k. Economists had forecast a decline to 340k.

The Market Movers

For the DAX: It was a mixed day for the auto sector on Thursday. Daimler rose by 0.53% to buck the trend on the day. Volkswagen and Continental fell 1.37% and by 1.44% respectively. BMW saw a more modest 0.79% decline,

It was a bearish day for the banks, however. Deutsche Bank and Commerzbank ended the day down by 0.55% and by 1.02% respectively.

From the CAC, it was a bearish day for the banks. Soc Gen fell by 0.67%, with BNP Paribas and Credit Agricole declining by 0.55% and by 0.46% respectively.

It was also a bearish day for the French auto sector. Stellantis NV and Renault ended the day down by 0.57% and by 1.58% respectively.

Air France-KLM rose by a modest 0.41%, while Airbus SE fell by 1.01%.

On the VIX Index

It was a 3rd consecutive day in the red for the VIX on Thursday, reversing a run of 3 consecutive days in the green.

Following a 9.22% decline on Wednesday, the VIX fell by 1.23% to end the day at 17.69.

The NASDAQ rose by 0.36%, with the Dow and the S&P500 ending the day up by 0.07% and by 0.20% respectively.

VIX 230721 Daily Chart

The Day Ahead

It’s a busy day ahead on the economic calendar. Prelim private sector PMIs for France, Germany, and the Eurozone will be in focus. Expect plenty of interest in the numbers.

The markets will be looking for any economic speedbumps that would test support for the majors.

From the U.S, private sector PMIs are also due out. Expect the services PMI to have the greatest influence on the majors later in the session.

Away from the economic calendar, COVID-19 news updates will also need continued monitoring.

The Futures

In the futures markets, at the time of writing, the Dow Mini was up by 49 points.

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