Thursday, 1st August
- Spanish Manufacturing PMI (Jul)
- Italian Manufacturing PMI (Jul)
- French Manufacturing PMI (Jul) Final
- German Manufacturing PMI (Jul) Final
- Eurozone Manufacturing PMI (Jul) Final
Friday, 2nd August
- Eurozone Retail Sales (MoM) (Jun)
The European majors closed out the last day of the month in the green, with the DAX30 leading the way, rising by 0.34%. The CAC40 and EuroStoxx600 saw more modest gains of 0.14% and 0.17% respectively.
A bearish week left the majors mixed for July, with the DAX and CAC falling by 1.69% and by 0.36% respectively in the month. The EuroStoxx600 bucked the trend, rising by 0.23% in spite of a 1.27% loss for the current week.
The moves on the day came ahead of the FED’s interest rate decision that caught the U.S markets off guard later in the day. A hawkish rate cut led to the last day of the month fall in the U.S majors.
Out of France
According to Insee,
Consumer prices rose by 0.2%, month-on-month, which was worse than a forecasted 0.3%. Prices rose by 0.3% in June. Baseline consumer prices fell by 0.2% in July, month-on-month, which was in line with forecast. The Harmonized Index for Consumer prices had risen by 0.3% in June.
Out of Germany
According to Destatis, retail sales jumped by 3.5% in June, which was well ahead of a forecasted 0.5% rise. Sales had fallen by 0.6% in May.
Germany’s unemployment rate held steady at 5% in July, which was in line with forecast. According to Destatis,
- Unemployment increased by 1K, which was better than a forecasted 2K rise. Unemployment had fallen by 1K in June.
Out of the Eurozone
According to Eurostat:
The Eurozone economy grew by 1.1% in the 2nd quarter, following a 1.2% rise in the 1st. Economists had forecast a 1.0% year-on-year growth. Quarter-on-quarter, the economy grew by 0.2%, following 0.4% growth in the 1st quarter. Economists had forecast 0.2% growth.
On the labor market front, the Eurozone’s unemployment rate slipped from a revised 7.6% to 7.5% in June. Economists had forecast the unemployment rate to come in at 7.5%.
On the inflation front, the Eurozone’s July annual rate of core inflation came in at 0.9%, easing from 1.1% in June, according to prelim figures. The Eurozone’s annual rate of inflation came in at 1.1%, easing from 1.3% in June.
Out of the U.S
From outside of the Eurozone, economic data out of the U.S was also of influence on the day. ADP nonfarm employment rose by 156K in July, which was better than a forecasted 150K rise. In June, nonfarm employment rose by an upwardly revised 112K.
On the monetary policy front, the FED cut interest rates by 25 basis points, as had been forecasted. A less dovish than anticipated FED Chair weighed on the U.S majors while fuelling a Greenback rally in response. The European markets were closed at the time of the FED interest rate decision.
The Market Movers
From the DAX, the auto sector saw red on Wednesday, with Continental and Daimler falling by 1.14% and by 0.96% respectively. BMW and Volkswagen saw more modest losses of 0.88% and 0.45% respectively. From the banking sector, Deutsche Bank was amongst the best performers, rallying by 2.37%. Commerzbank bucked the trend, however, falling by 0.13% on the day.
From the CAC, it was also a bullish end to the month for bank stocks. BNP Paribas and Credit Agricole rose by 1.59% and by 1.27% respectively. Soc Gen saw a more modest gain of 0.68%. Renault joined the German autos in the red, falling by 0.63%.
The Day Ahead
It’s a relatively busy day ahead on the economic data front.
Economic data due out of the Eurozone include July manufacturing PMI numbers out of Spain and Italy. While finalized manufacturing PMIs out of France and Germany will unlikely have an influence, the Eurozone’s manufacturing PMI will also have an impact on the day.
While the stats will provide direction, we can expect the majors to respond to the FED’s interest rate cut and the FOMC rate statement.
Out of the U.S, the market’s preferred ISM manufacturing PMI will also have an impact on the majors.
On the corporate earnings front, BMW, Infineon Technologies AG, and Siemens AG will also have an impact on the day.
At the time of writing, the DAX futures was down by 20 points, while the Dow Mini was down by 6 points.