The Weekly Wrap – Economic Datta and COVID-19 Hit Riskier Assets

The Stats

It was a quiet week on the economic calendar, in the week ending 25th September.

A total of 32 stats were monitored, following 69 stats from the week prior.

Of the 32 stats, 13 came in ahead forecasts, while 17 economic indicators came up short of forecasts. 2 stats were in line with forecasts in the week.

Looking at the numbers, 15 of the stats also reflected an upward trend from previous figures. The remaining 17 stats reflected a deterioration from previous.

For the Greenback, the recovery continued following last week’s pullback. In the week ending 25th September, the Dollar Spot Index rallied by 1.85% to 94.624. In the week prior, the Dollar had fallen by 0.44% to 92.926.

Out of the U.S

It was a relatively quiet week on the economic data front.

Key stats included September’s prelim private sector PMIs, the weekly jobless claims, and August durable goods and core durable orders.

The stats were skewed to the negative in the week.

Service sector growth slowed marginally, with the PMI slipping from 55.0 to 54.6, which weighed on the composite. The manufacturing sector saw a pickup in growth, however, with the PMI rising from 53.1 to 53.5.

Labor market numbers also disappointed. In the week ending 18th September, initial jobless claims came in at 870k. This was up from 866k from the week prior.

At the end of the week, durable goods orders and core durable goods orders wrapped up the week.

In August, durable goods orders rose by 0.4%, with core durable goods orders also rising by 0.4%. The numbers fell well short of forecasts and increases in July.

FED Chair Powell was also a key driver in the week.

Giving testimony on Capitol Hill, Powell talked of the need for more support from all levels of the U.S government. The FED Chair called for more government support to speed up the economic recovery. Powell noted that the outlook remained dependent upon the containment of the coronavirus. Aligned with other central banks, Powell also pointed out that, while the economy is showing a marked improvement, uncertainty remained.

In the equity markets, the NASDAQ rose by 1.11%, while the Dow and S&P500 fell by 1.75% and by 0.63% respectively.

Out of the UK

It was a quieter week on the economic calendar.

Key stats included September’s prelim private sector PMIs and CBI Industrial Trend Orders.

The stats were also skewed to the negative.

For September, the CBI Industrial Trend Orders fell from -44 to -48. Economists had forecast a rise to -40.

Of greater significance, however, was slower service sector growth at the end of the 3rd quarter.

The services PMI fell from 58.8 to 55.1. Manufacturing sector activity also slowed, with the PMI falling from 55.2 to 54.3.

Following the talk of negative rates, the stats were not bad enough to force a move by the BoE.

A reintroduction of containment measures could adversely affect the path of the economic recovery, however.

On the Brexit front, failing hopes of a trade agreement between the EU and Britain also weighed.

In the week, the Pound slid by 1.32% to $1.2746, reversing a 0.95% gain from the previous week.

The FTSE100 ended the week down by 2.74%, following a 0.42% decline from the previous week.

Out of the Eurozone

It was another busy week on the economic data front.

Key stats included consumer and business confidence figures and prelim private sector PMIs for September.

It was a mixed bag on the data front.

Eurozone and German consumer confidence saw marginal improvements but not enough to impress. From Germany, business confidence also improved, while coming up short of forecasts.

Key in the week, however, was the prelim PMIs.

While manufacturing sector activity picked up in September, service sector activity slumped, raising concerns over the economic recovery.

France, Germany, and the Eurozone saw a contraction in the services sector. Partially offset by a pickup in the manufacturing sector activity, private sector activity stalled at the end of the quarter.

The Eurozone’s services PMI fell from 50.5 to 47.6, with the composite PMI declining from 51.9 to 50.1. On the positive, was a rise in the manufacturing PMI from 51.7 to 53.7.

While the stats provided direction, a spike in new COVID-19 cases in Europe weighed heavily on the EUR. Concerns over the possible need to reintroduce lockdown measures drove demand for the safety of the Greenback.

For the week, the EUR slid by 1.77% to $1.1631. In the week prior, the EUR had fallen by 0.05% to $1.1840.

For the European major indexes, it was a particularly bearish week. The CAC40 and DAX30 slid by 4.99% and by 4.93% respectively, with the EuroStoxx600 falling by 3.60%.

For the Loonie

It was a particularly quiet week on the economic calendar.

Economic data was limited to August house price figures that had a muted impact on the Loonie.

Concerns over the global economic recovery amidst the spike in new COVID-19 cases weighed on crude oil prices and the Loonie.

The Loonie fell by 1.38% to end the week at C$1.3386. In the week prior, the Loonie had fallen by 0.19%.

Elsewhere

It was a particularly bearish week for the Aussie Dollar and the Kiwi Dollar.

In the week ending 25th September, the Aussie Dollar slid by 3.54% to $0.7031. The Kiwi Dollar wasn’t far behind, ending the week down by 3.15% to $0.6546

For the Aussie Dollar

It was another quiet week for the Aussie Dollar on the economic calendar.

There were no material stats from Australia to provide the Aussie Dollar with direction.

The lack of stats left market sentiment towards COVID-19 and the global economic recovery to sink the Aussie.

For the Kiwi Dollar

It was a relatively quiet week on the economic calendar.

Key stats included August trade figures that failed to support the Kiwi Dollar late in the week.

In August, New Zealand’s trade balance slid from a NZ$447m surplus to a NZ$353m deficit. Year-on-year, however, the trade surplus widened from NZ$50m to NZ$1,340m.

A sharp fall in imports and a rise in Kiwi fruit and aircraft drove the trade surplus to its largest since 2014.

On the monetary policy front, the RBNZ was also in action mid-week. Following the talk of negative rates in the month prior, the RBNZ continued to promise further support if needed. In the RBNZ Statement, the RBNZ stated that additional support could come in the form of Funding for Lending Programme (FLP), a negative OCR, and purchases of foreign assets.

For the Japanese Yen

It was a relatively quiet week on the economic calendar.

September’s private sector PMIs were in focus mid-week.

While the numbers were on the positive side, the private sector continued to contract at a marked pace in September. The Manufacturing PMI rose from 47.2 to 47.3, with the Services PMI rising from 45.0 to 45.6.

According to the prelim survey, new orders fell at a weaker pace, while new export orders fell at a stronger pace.

The pace of job shedding eased across the private sector, while the backlogs of work rose at a stronger pace.

Optimism improved across the private sector in spite of the stronger decline in new export orders.

September’s PMIs reaffirmed the BoJ’s statement last week that the Japanese economy was in a serious condition.

The Japanese Yen fell by 0.97% to ¥105.58 against the U.S Dollar. In the week prior, the Yen had risen by 1.50%.

Out of China

It was a particularly quiet week on the economic data front.

There were no material stats to provide the Yuan direction in the week.

On the monetary policy front, the PBoC was in action, however. In line with forward guidance from the summer and market expectations, the PBoC left loan prime rates unchanged.

On the geopolitical front, tensions between the U.S and China continued to hit the global financial markets.

Early in the week, Trump continued to blame China for the COVID-19 pandemic at the UN National Assembly. The war of words continued in the week.

In the week ending 25th September, the Chinese Yuan fell by 0.81% to CNY6.8238. In the week prior, the Yuan had risen by 0.95%.

The CSI300 and Hang Seng fell by 3.53% and by 4.99% respectively.

European Equities: A Week in Review – 25/09/20

The Majors

It was a particularly bearish week for the European majors in the week ending 25th September. The CAC40 and DAX30 slid by 4.99% and by 4.93% respectively, with the EuroStoxx600, falling by 3.60%.

Another banking scandal, a fresh spike in new COVID-19 cases, geopolitics, and economic data left the majors deep in the red.

The Stats

It was a relatively busy week on the Eurozone economic calendar.

Key stats included consumer and business confidence figures and prelim private sector PMIs for September.

Eurozone and German consumer confidence saw marginal improvements but not enough to impress. From Germany, business confidence also improved, while coming up short of forecasts.

Key in the week, however, was the prelim PMIs.

While manufacturing sector activity picked up in September, service sector activity slumped, raising concerns over the economic recovery.

France, Germany, and the Eurozone saw a contraction in the services sector. Partially offset by a pickup in manufacturing sector activity, private sector activity stalled in the Eurozone at the end of the quarter.

The Eurozone’s services PMI fell from 50.5 to 47.6, with the composite PMI declining from 51.9 to 50.1.

With the stats raising some red flags, the spike in new COVID-19 cases across Europe also weighed on risk sentiment. Concerns over the possible need to reintroduce lockdown measures left riskier assets in the deep red for the week.

From the U.S

It was a relatively quiet week. Key stats included the durable goods and core durable orders, weekly jobless claims, and September’s prelim private sector PMIs.

The stats were skewed to the negative, adding downward pressure on the majors later in the week.

While manufacturing sector activity picked up in September, service sector growth slowed at the end of the quarter. While steering clear of the 50 mark, the marginal fall in the services PMI was a red flag mid-week.

On Thursday, the jobless claims figures also disappointed. In the week ending 18th September, initial jobless claims came in at 870k, which was up from 866k in the week prior.

At the end of the week, durable goods and core durable goods orders delivered more disappointing numbers.

Durable goods orders and core durable goods orders both increased by 0.4% in August, falling well short of expectations.

While the stats provided direction in the week, central bank commentary also garnered plenty of attention.

FED Chair Powell delivered testimony through the 1st half of the week, calling for support from all levels of government. Powell also stated that plenty of uncertainty remains, with the containment of COVID-19 key to a sustainable economic recovery.

The Market Movers

From the DAX, it was a particularly bearish week for the auto sector. BMW and Volkswagen slid by 5.94% and by 5.47% to lead the way down. Continental and Daimler saw more modest losses of 0.42% and 2.33% respectively.

It was an even more bearish week for the banking sector. Commerzbank and Deutsche Bank tumbled by 10.71% and by 10.69% respectively.

From the CAC, things were not much better for the banks. BNP Paribas and Soc Gen tumbled by 12.57% and by 13.70% respectively, with Credit Agricole sliding by 11.60%.

For the banking sector, yet another scandal rocked bank stocks across the major exchanges. HSBC and Standard Chartered were among the banks that were in the news for the wrong reasons.

The French auto sector also struggled in the week. Peugeot and Renault ended the week down by 1.87% and by 4.73% respectively.

Air France-KLM was among the worst performers, however, tumbling by 19.1%, with Airbus down by 12.51%.

Rising new COVID-19 cases weighed heavily on travel stocks in the week, as concerns over the possible reintroduction of lockdown measures weighed.

On the VIX Index

It was back into the green for the week ending 25th September. Partially reversing a 3.87% fall from the week prior, the VIX rose by 2.13% to end the week at 26.38.

A 4th weekly loss for the S&P500 delivered the upside for VIX in the week.

For the week ending 25th September, the S&P500 and the Dow ended the week down by 0.63% and by 1.75% respectively. The NASDAQ ended the week up by 1.11%, with a 2.26% rally on Friday delivering the upside.

The Week Ahead

It’s a busy week ahead on the Eurozone economic calendar.

Through the 1st half of the week, prelim inflation figures are due out of France, Spain, Germany, and the Eurozone.

Following market concerns over deflationary pressures last time around, expect the numbers to influence.

Alongside Eurozone prelim inflation figures on Wednesday, German and French consumer spending and German unemployment figures will also influence.

The focus will then shift to September manufacturing PMIs for Italy and Spain. Finalized PMIs for France, Germany, and the Eurozone are also due out.

Barring deviation from prelim numbers, expect Italy and the Eurozone’s PMIs to have the greatest impact on Thursday.

Economic data from the U.S and from China will also provide direction in the week.

U.S consumer confidence, finalized GDP numbers, weekly jobless claims, ISM Manufacturing PMI and nonfarm payrolls, and the U.S unemployment rate are due out.

From China, September’s private sector PMIs on Thursday will also influence market risk appetite. The market’s favored Caixin Manufacturing PMI will have the greatest impact.

Away from the economic calendar, COVID-19 news, Brexit, and U.S-China chatter will also need monitoring.

European Equities: A Quiet Economic Calendar Leaves Geopolitics and COVID-19 in Focus

The Majors

It was a bearish day for the European majors on Thursday. The CAC40 and EuroStoxx600 fell by 0.83% and by 1.02% respectively, with the DAX30 ending the day down by 0.29%.

Economic data and the latest uptrend in new COVID-19 cases weighed on the majors, with the markets now expecting further stimulus to counter the sputtering economic recovery.

The Stats

It was a relatively busy day on the Eurozone economic calendar. Germany’s IFO Business Climate Index and sub-index figures were in focus early in the European session.

In September, the Business Climate Index rose from 92.5 to 93.4. Economists had forecast a rise to 93.8. The current assessment sub-index rose from 87.9 to 89.2, with the expectations index up from 97.5 to 97.7.

By sector:

Manufacturing: The Business Climate Index saw a sizeable increase, with significantly fewer companies assessing their current business situation as difficult. More companies also expected that their business situation will improve.

Services: By contrast, the index fell for the 1st time in 5-months, as a result of weaker optimism. Firms viewed their current situation as marginally better.

Trade: Companies were considerably more satisfied with the current business situation, with many being more optimistic about the near-term.

Construction: The index was on the rise once more, with the current situation indicator hitting its highest level since March. While pessimism persisted, firms were less pessimistic than back in August.

From the U.S

It was a relatively busy day on the economic calendar. August new home sales and the weekly jobless claims figures were in focus late in the European session.

In August, new home sales rose by 4.8%, following a 13.9% spike in July. Economists had forecast a 0.1% decline, month-on-month.

More significantly, however, were the jobless claims figures.

In the week ending 21st September, initial jobless claims stood at 870k, which was up from 866k from the previous week. Economists had forecast 840k.

The Market Movers

For the DAX: It was a bullish day for the auto sector on Thursday. Continental rallied by 3.53% to lead the way, with Daimler and Volkswagen rising by 1.60% and by 1.90% respectively. BMW saw a more modest 0.48% gain on the day.

It was a mixed day for the banks after the scandal-driven sell-off. Deutsche Bank rose by 0.46% while Commerzbank ended the day down by 0.87%.

From the CAC, bank stocks saw more losses. Credit Agricole and Soc Gen slid by 1.83% and by 2.61% respectively. BNP Paribas saw a relatively modest 0.94% loss, however.

It was also a bearish day for the French auto sector. Peugeot and Renault ended the day down by 0.55% and by 0.36% respectively.

Air France-KLM hit reverse once more, sliding by 6.77%, with Airbus SE ending the day down by 3.46%.

On the VIX Index

The VIX fell by 0.24% on Thursday. Following a 6.40% gain on Wednesday, the VIX ended the day at 28.51.

Disappointing economic data from the U.S weighed on the majors, while FED Chair Powell’s talk of more support provided a cushion for the U.S markets on the day.

The NASDAQ and S&P500 rose by 0.37% and by 0.30% respectively, with the Dow ending the day up by 0.20%

VIX 25/09/20 Hourly Chart

The Day Ahead

It’s a particularly quiet day ahead on the Eurozone economic calendar. There are no material stats to provide the European majors with direction.

Late in the session, U.S durable goods and core durable goods will garner some interest, however.

With no stats to influence early on, geopolitics and COVID-19 will be the key drivers on the day. On the COVID-19 front, any talk of a reintroduction of restrictions would test support.

U.S – China tensions and Brexit chatter will also need monitoring.

The Futures

In the futures markets, at the time of writing, the Dow was up by 116 points, with the DAX up by 82.5 points.

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

Dollar is The King Again

CAC tries to recover on the 4770 support

Nasdaq creates bearish engulfing pattern and goes lower

SP500 still trying to defend the 23,6% Fibonacci support.

Dollar Index breaks the neckline of the iH&S formation and goes higher

USDJPY breaks the 105.2 resistance and successfully uses it as a support

EURUSD falls and aims the 38,2% Fibonacci

EURAUD is testing the upper line of the rectangle pattern

GBPJPY creates inverse head and shoulders pattern. One thing left for the proper buy signal is the breakout of the neckline

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

European Equities: Economic Data, COVID-19 News, and Geopolitics in Focus

Economic Calendar:

Thursday, 24th September

German IFO Business Climate Index (Sep)

The Majors

It was a relatively bullish day for the European majors on Wednesday, with the CAC40 rising by 0.62% to lead the way. The DAX30 and EuroStoxx600 weren’t far behind, with gains of 0.39% and 0.55% respectively.

A sharp pickup in manufacturing sector activity in September delivered support on the day, with the Eurozone Manufacturing PMI hitting a 25-month high. Service sector activity waned, however, limiting the upside for the majors.

Adding to the upside on the day was a continued slide in the EUR, which fell back to $1.16 levels.

The Stats

It was a particularly busy day on the Eurozone economic calendar. Ahead of the European open, German consumer confidence figures were in focus.

For October, Germany’s GfK Consumer Climate Index rose from a revised -1.7 to -1.6. Economists had forecast an increase to -1.0.

According to the GfK Survey,

  • Both economic and income expectations were on the rise, while propensity to buy tumbled.
  • The indicator for consumer income expectations rose by 3.3 points to 16.1 points.
  • There was an even sharper rise in consumer sentiment towards the German economic outlook. Economic expectations rose by 12.4 points to 24.1, logging a 5th consecutive monthly increase.
  • The propensity to buy indicator fell by 5.3 points to 38.4, however.

Later in the morning, prelim private sector PMI numbers for September were in focus.

France’s manufacturing PMI rose from 49.8 to 50.9, while the services PMI declined from 51.5 to 47.5. Economists had forecast PMIs of 50.5 and 51.5 respectively.

For Germany, the Manufacturing PMI increased from 52.2 to 56.6, while the services PMI slid from 52.5 to 49.1 Economists had forecast PMIs of 52.5 and 53.0 respectively.

In September, the Eurozone’s Services PMI slid from 50.5 to 47.6, while the Manufacturing PMI rose from 51.7 to 53.7. Economists had forecast PMIs of 51.9 and 50.5 respectively.

According to the prelim September survey,

  • The prelim Eurozone composite output index fell from 51.9 to a 3-month low 50.1.
  • On the slide was the Service PMI Activity Index that slid from 50.5 to a 4-month low 47.6.
  • By contrast, the Manufacturing PMI rose to a 25-month high 53.7.
  • For the manufacturing sector, a surge in new orders drove the PMI, with Germany’s private sector leading the way.
  • A general trend was seen across the bloc, however, with the service sector sounding the alarm bells.
  • On employment, the private sector reported a 7th consecutive month of job cuts, albeit at a slower pace.

From the U.S

It was a busier day. September’s prelim Makit private sector PMIs provided direction later in the session.

The Services PMI slipped from 55.0 to 54.6, while the Manufacturing PMI rose from 53.1 to 53.5. Economists had forecast PMIs of 54.7 and 53.1 respectively.

FED Chair Powell was also in focus on Tuesday, delivering a 2nd day of testimony on Capitol Hill. Powell talked of the need for more policy to support economic recovery. The FED Chair also noted that there is still a long way to go and that the recovery would be faster if support came from both the FED and from Congress…

The Market Movers

For the DAX: It was back into the red for the auto sector on Wednesday. BMW and Volkswagen fell by 1.08% and by 1.34% to lead the way down. Continental and Daimler saw more modest losses of 0.42% and 0.70% respectively.

It was yet another day in the red for the banks. Deutsche Bank fell by 0.83%, with Commerzbank ending the day down by 2.60%.

While there was plenty of red across the DAX, Adidas rallied by 2.68%. Better than expected Nike earnings delivered support on the day.

From the CAC, bank stocks also continued to struggle in the wake of the latest scandal. BNP Paribas fell by 2.60%. to lead the way down. Credit Agricole and Soc Gen saw more modest losses of 0.76% and 1.18% respectively.

It was another bullish day for the French auto sector, however. Peugeot and Renault ended the day with gains of 1.77% and 3.41% respectively.

Air France-KLM found much-needed support, rising by 0.12%, while Airbus SE slipped by 0.93%.

On the VIX Index

The VIX rose by 6.40% on Wednesday. Reversing a 3.31% fall from Tuesday, the VIX ended the day at 28.58.

Market reaction to dovish chatter from the FED weighed on the majors mid-week. FED Chair Powell talked of the need for more support to sustain the economic recovery.

On the economic data front, service sector activity saw marginally slower growth in September, raising further questions over the economic outlook.

The NASDAQ and S&P500 slid by 3.02% and by 2.37% respectively, with the Dow ending the day down by 1.92%

VIX 24/09/20 Daily Chart

The Day Ahead

It’s a quieter day ahead on the Eurozone economic calendar. Key stats include Germany’s IFO Business Climate Index figures for September.

Expect the numbers to influence, though the latest spike in new COVID-19 cases across the EU could overshadow any upbeat numbers.

From the U.S, the weekly jobless claims figures will also draw plenty of attention later in the session.

Aside from the economic indicators, FED Chair Powell and U.S Treasury Secretary Mnuchin are also in focus…

The Futures

In the futures markets, at the time of writing, the Dow was up by 58 points, while the DAX was down by 95.5 points.

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

European Equities: Private Sector PMIs , Powell, and COVID-19 in Focus

Economic Calendar:

Wednesday, 23rd September

GfK German Consumer Climate (Oct)

Spanish GDP (QoQ) (Q2)

French Manufacturing PMI (Sep) Prelim

French Services PMI (Sep) Prelim

German Manufacturing PMI (Sep) Prelim

German Services PMI (Sep) Prelim

Eurozone Manufacturing PMI (Sep) Prelim

Eurozone Markit Composite PMI (Sep) Prelim

Eurozone Services PMI (Sep) Prelim

Thursday, 24th September

German IFO Business Climate Index (Sep)

The Majors

It was a mixed day for the European majors following Monday’s sell-off. The DAX30 and EuroStoxx600 rose by 0.41% and by 0.20% respectively, while the CAC40 fell by 0.40%.

There was little influence from a light economic calendar on the day. While bank stocks continued to struggle amidst the latest scandal, dip-buyers delivered support on the day.

A softer EUR added support to the DAX30 in particular as the Dollar bounce back continued.

The Stats

It was a quiet day on the Eurozone economic calendar. The Eurozone’s flash consumer confidence figure was in focus late in the European session.

According to the latest survey, the Eurozone’s Consumer Confidence Indicator rose from -14.7 to -13.9 in September. Economists had forecast a rise to -14.6.

While up on the month, the indicator continued to sit well below the long-run average -11.1.

From the U.S

It was a busier day. While existing home sales figures for August were in focus, FED Chair Powell’s testimony on Capitol Hill was the main event of the day.

FED Chair Powell provided few surprises in his first speech of the week, however. Powell cited the path forward would depend on keeping COVID-19 under control and government policy moves.

The Market Movers

For the DAX: It was a relatively bullish day for the auto sector on Tuesday. Continental and Daimler rose by 1.48% and by 0.86% respectively to lead the way. BMW and Volkswagen weren’t far behind, with gains of 0.41% and 0.75% respectively.

It was another day in the red for the banks, however. Deutsche Bank fell by 1.78% following Monday’s 7.64% tumble, with Commerzbank ending the day down by 0.07%.

From the CAC, it was also a bearish day for the banks. BNP Paribas and Credit Agricole ended the day down by 0.52% and by 0.57% respectively. Soc Gen saw a more modest 0.10% loss following Monday’s 7.66% slide.

For the banking sector, the latest scandal continued to pressure European bank stocks on the day.

It was a bullish day for the French auto sector, which bucked the trend on the day. Peugeot and Renault ended the day with gains of 3.63% and 2.66% respectively.

Air France-KLM slid by 4.35% following Monday’s 7.63% slump, with Airbus SE following Monday’s 6.57% slide with a 2.68% loss.

The spike in new COVID-19 cases and fears of a reintroduction of containment measures continued to weigh on travel stocks.

On the VIX Index

On Tuesday, the VIX fell by 3.31%. Partially reversing a 7.55% gain from Monday, the VIX ended the day at 26.86.

Support came from dip-buying, with little else to provide the majors with direction following Monday’s pullback.

FED Chair Powell’s delivery also provided nothing new for investors to fret about on the day.

The NASDAQ and S&P500 rose by 1.71% and by 1.05% respectively, with the Dow seeing a more modest 0.52% gain.

VIX 23/09/20 Daily Chart

The Day Ahead

It’s a busy day ahead on the Eurozone economic calendar. Key stats German consumer confidence figures that are due out ahead of the European open.

Later in the morning, September’s prelim private sector PMIs are due out of France, Germany, and the Eurozone.

Following some disappointing numbers from August, there will be plenty of interest in today’s stats.

Any general downward trend in the PMIs and expect the majors to come under pressure. With new COVID-19 cases on the rise and the threat of lockdown measures lingering, COVID-19 chatter will also influence.

On the geopolitical risk front, there’s also Brexit and tensions between the U.S and China to monitor.

From the U.S, prelim private sector PMIs and Powell’s 2nd day of testimony on Capitol Hill will also influence late in the day.

The Futures

In the futures markets, at the time of writing, the Dow was up by 36 points.

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

Buyers Try to Stop This Bearish Madness

 

DAX broke the lower line of the wedge

CAC broke the lower line of the triangle

NASDAQ creates inverse head and shoulders pattern

SP500 bounces from the 38,2% Fibonacci

Dollar Index creates double top formation just above crucial resistance

EURUSD and GBPUSD try to initiate a bullish reversal with the double bottom formations

EURPLN finally escapes from the triangle to the upside

AUDNZD tests the broken support as a resistance

AUDJPY with the false bullish breakout and the head and shoulders pattern

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

European Equities: The Futures Point Northwards after Monday’s COVID-19 Sell-off

Economic Calendar:

Tuesday, 22nd September

Eurozone Flash Consumer Confidence

Wednesday, 23rd September

GfK German Consumer Climate (Oct)

Spanish GDP (QoQ) (Q2)

French Manufacturing PMI (Sep) Prelim

French Services PMI (Sep) Prelim

German Manufacturing PMI (Sep) Prelim

German Services PMI (Sep) Prelim

Eurozone Manufacturing PMI (Sep) Prelim

Eurozone Markit Composite PMI (Sep) Prelim

Eurozone Services PMI (Sep) Prelim

Thursday, 24th September

German IFO Business Climate Index (Sep)

The Majors

It was a particularly bearish start to the week for the European majors on Monday. The DAX30 slumped by 4.37% to lead the way down, with the CAC40 and EuroStoxx600 sliding by 3.74% and by 3.24% respectively.

A fresh spike in new COVID-19 cases across EU member states weighed on the European majors on the day.

The sell-off continued on from Friday, following the WHO’s warning of Europe being in a “very serious situation”.

There were no major stats to distract the markets, with the fear of a reintroduction of lockdown measures doing the damage.

Following recent central bank commentary and economic indicators, the economic recovery had already begun to wane. A reintroduction of lockdown measures could hit the European economy far harder than the 1st time around.

The Stats

It was a quiet day on the Eurozone economic calendar. There were no material stats to provide the European majors with direction at the start of the week.

From the U.S

It was also a quiet day, with no material stats from the U.S session to provide the majors with direction.

The Market Movers

For the DAX: It was a bearish day for the auto sector on Monday. Continental and Volkswagen slid by 5.21% and by 5.13% respectively to lead the way down. BMW and Daimler weren’t far behind, with losses of 4.41% and 3.91% respectively.

It was also a particularly bearish day for the banks. Deutsche Bank tumbled by 7.64%, with Commerzbank sliding by 5.42%.

From the CAC, it was much better for the banks. BNP Paribas and Credit Agricole ended the day down by 6.37% and by 5.36% respectively. Soc Gen led the way down, however, tumbling by 7.66%.

It was also a particularly bearish day for the French auto sector. Peugeot and Renault ended the day with losses of 4.91% and 7.75% respectively.

Air France-KLM slumped by 7.63%, with Airbus SE sliding by 6.57%.

On the VIX Index

It was back into the green for the VIX on Monday. Reversing a 2.38% loss from Friday, the VIX rose by 7.55% to end the day at 27.78.

The U.S majors hit reverse as investors responded to the spike in new COVID-19 cases that could derail the sputtering economic recovery.

The Dow and S&P500 fell by 1.84% and by 1.16% respectively, while the NASDAQ saw a more modest loss of 0.13%.

VIX 22/09/20 Daily Chart

The Day Ahead

It’s a quiet day ahead on the Eurozone economic calendar. Key stats include the Eurozone’s flash consumer confidence figures due out late in the day.

With little else to focus on through the day, we can expect sensitivity to the numbers. Consumer confidence and spending remain key to any sustainable economic recovery. Expect any disappointing numbers to peg the majors back.

From the U.S, FED Chair Powell is back in the spotlight, however. We would expect Powell’s testimony to have the final say on the day.

Away from the economic calendar, geopolitics and COVID-19 news updates will also need tracking.

The Futures

In the futures markets, at the time of writing, the Dow was up by 34 points, the DAX up by 148.5 points.

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

New Week Starts With Bearish Stocks and Bullish Yen

DAX and CAC start the new week on the back foot

Nasdaq drops below 23,6% Fibonacci and uses it as a resistance

SP500 is in a slightly better position and buyers are still above crucial supports

EURUSD consolidates below dynamic resistance

GBPUSD bounces from the important horizontal resistance

USDJPY continues heavy drop after the bearish breakout from the triangle

EURJPY bounces from the neckline of a very handsome H&S pattern

CHFJPY also has a H&S pattern but the price is currently above crucial support so a further drop is not so certain

GBPJPY breaks long-term dynamic support which changes the sentiment into a negative one

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

European Equities: Futures Point Lower, with COVID-19 and Geopolitics in Focus

Economic Calendar:

Monday, 21st September

ECB President Lagarde Speaks

Tuesday, 22nd September

Eurozone Flash Consumer Confidence

Wednesday, 23rd September

GfK German Consumer Climate (Oct)

Spanish GDP (QoQ) (Q2)

French Manufacturing PMI (Sep) Prelim

French Services PMI (Sep) Prelim

German Manufacturing PMI (Sep) Prelim

German Services PMI (Sep) Prelim

Eurozone Manufacturing PMI (Sep) Prelim

Eurozone Markit Composite PMI (Sep) Prelim

Eurozone Services PMI (Sep) Prelim

Thursday, 24th September

German IFO Business Climate Index (Sep)

The Majors

It was a bearish end to the week for the European majors on Friday. The CAC40 slid by 1.22%, with the DAX30 and EuroStoxx600 ending the day with losses of 0.70% and 0.66% respectively.

A fresh spike in new COVID-19 cases across EU member states weighed on the European majors on the day.

Ahead of the European session, the WHO had warned of a “very serious situation” developing in Europe. In a bid to revive consumption and tourism, governments have been active in reopening the respective economies.

With a reliance on consumption to deliver an economic recovery, the latest spikes raise the chances of fresh lockdown measures.

Adding further pressures on the majors at the end of the week were Brexit and U.S – China tensions.

The Stats

It was yet another quiet day on the Eurozone economic calendar. Key stats included August wholesale inflation figures from Germany.

Germany’s producer price index stalled in August, after having risen by 0.20% in July. Whilst beating forecasts of a 0.1% decline, market jitters over deflationary pressures tested the majors going into the European open.

With stats on the lighter side, there was little to distract the markets from the latest U.S-China spat, Brexit, and COVID-19, however.

From the U.S

Key stats included prelim September consumer sentiment and expectations figures.

While both stats were skewed to the positive, both indicators remained well below pre-pandemic levels.

In September, the Michigan Consumer Sentiment Index rose from 74.1 to 78.9, according to prelim figures. While coming in ahead of a forecasted 75.0, the indicator had stood at 101.0 for January.

The Market Movers

For the DAX: It was a bearish day for the auto sector on Friday. Continental and Volkswagen slid by 3.97% and by 3.52% respectively. BMW and Daimler saw more modest losses of 1.72% and 1.91% respectively.

It was also a bearish day for the banks. Deutsche Bank and Commerzbank fell by 1.38% and by 3.11% respectively.

From the CAC, it was a bearish day for the banks. Credit Agricole and Soc Gen fell by 3.16% and by 3.05% respectively. BNP Paribas ended the day down by 2.34%.

It was a particularly bearish day for the French auto sector, however. Peugeot and Renault ended the day with losses of 4.35% and 4.03% respectively.

Air France-KLM fell by 1.93%, with Airbus SE sliding by 3.54%.

On the VIX Index

It was back into the red for the VIX, bringing to an end a run of 2 consecutive days in the green.

On Friday, the VIX fell by 2.38%. Reversing a 1.61% gain from Thursday, the VIX ended the day at 25.83.

U.S – China tension over TikTok and WeChat, rising COVID-19 cases, and the FED’s dovish outlook weighed on the majors.

The NASDAQ and S&P500 fell by 1.07% and by 1.12% respectively, with the Dow seeing a more modest loss of 0.88%.

VIX 21/09/20 Daily Chart

The Day Ahead

It’s a quiet day ahead on the Eurozone economic calendar. There are no material stats due out to provide the majors with direction.

With no material stats from the U.S, talk of retaliation from Beijing over Trump’s targeting of Chinese companies will test the majors.

There is also Brexit to factor in and the recent spike in new COVID-19 cases to consider. A continued rise in new cases could see a reintroduction of containment measures that would throw cold water over any sustainable economic recovery.

On the monetary policy front, Lagarde is due to speak late in the day. There are unlikely to be too many surprises, however, following the latest ECB press conference. That’s assuming that Lagarde holds back from talk of exchange rate risk to the Eurozone economic recovery…

The Futures

In the futures markets, at the time of writing, the Dow was up by 15 points, while the DAX was down by 32 points.

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

The Week Ahead – Private Sector PMIs, Powell, Geopolitics, and COVID-19 in Focus

On the Macro

It’s a particularly quiet week ahead on the economic calendar, with just 32 stats in focus in the week ending 25th September. In the week prior, 69 stats had been in focus.

For the Dollar:

It’s a relatively quiet week ahead on the economic data front.

Key stats include prelim private sector PMI numbers for September on Wednesday.

Expect the services PMI to have the greatest impact ahead of the all-important weekly jobless claims on Thursday.

Wrapping up the week, durable and core durable goods orders for August will also influence.

For the markets, it is all about momentum. Any weak numbers will test the demand for riskier assets.

On the monetary policy front, FED Chair Powell is also back in action, giving testimony on Capitol Hill. Following last week’s FOMC press conference, however, will there be any more surprises?

The Dollar Spot Index ended the week down by 0.44% to 92.926.

For the EUR:

It’s a busy week ahead on the economic data front.

In a quiet start to the week, Eurozone flash consumer confidence figures are due out on Tuesday. The EUR will likely respond to the numbers ahead of a busy Wednesday.

Consumer confidence and spending remain key to any economic recovery across the Eurozone. Any weak numbers would test support for the EUR.

The focus will then shift to the busy Wednesday.

September’s prelim private sector PMIs for France, Germany, and the Eurozone are due out. Alongside the figures, Spanish GDP and German consumer confidence figures are also in focus on Wednesday.

The focus will then shift to September’s Ifo Business Climate and sub-index figures due out on Thursday.

While we can expect the private sector PMIs to be the key drivers, both business and consumer confidence will need to improve.

Concerns over economic speed bumps will raise EUR sensitivity to the stats in the week.

On the monetary policy front, ECB President Lagarde is due to speak on Monday. Expect any references to inflation or exchange rates and the economic outlook to influence.

The EUR/USD ended the week down by 0.05% to $1.1840.

For the Pound:

It’s a quieter week ahead on the economic calendar. September’s prelim private sector PMIs, due out on Wednesday, will be the key driver.

Following last week’s BoE forward guidance and chatter on Brexit, the Pound will be sensitive to the numbers.

CBI Industrial Trend Orders are also due out but will likely have a muted impact, barring dire numbers.

On the monetary policy front, BoE Governor Bailey is scheduled to speak on Thursday. Any further chatter on negative rates and a gloomy economic outlook would weigh on the Pound.

The GBP/USD ended the week down by 0.95% to $1.2917.

For the Loonie:

It’s a quiet week ahead on the economic calendar.

House price figures for August are due out that will likely have a muted impact on the Loonie.

Expect the private sector PMIs from the Eurozone and the U.S and market risk sentiment to be key drivers.

Geopolitics and COVID-19 will influence market risk sentiment in the week.

The Loonie ended the week down by 0.19% to C$1.3204 against the U.S Dollar.

Out of Asia

For the Aussie Dollar:

It’s a particularly quiet week ahead on the economic calendar.

There are no material stats due out of Australia to provide the Aussie with direction.

That leaves the Aussie in the hands of geopolitics and the global economic outlook influenced by the PMIs.

The Aussie Dollar ended the week up by 0.07% to $0.7289.

For the Kiwi Dollar:

It’s a relatively quiet week ahead on the economic calendar but an important one for the Kiwi Dollar.

Key stats include August trade figures due out on Thursday. We’ve seen plenty of sensitivity to China numbers of late, so expect the devil to be in the details.

Earlier in the week, however, is the RBNZ monetary policy decision on Wednesday. There had been the talk of negative rates. Will there be action or just some more chatter? Economic indicators have yet to impress despite all of the support.

The Kiwi Dollar ended the week up by 1.40% to $0.6759.

For the Japanese Yen:

It is a quiet week ahead on the economic calendar.

Prelim private sector PMI numbers for September will be in focus mid-week. Other than that, there are no stats to consider, leaving the Yen in the hands of geopolitics and COVID-19 news.

On the monetary policy front, BoJ monetary policy meeting minutes will likely have a muted impact. The minutes are dated following last week’s monetary policy decision.

The Japanese Yen ended the week up by 1.50% to ¥104.57 against the U.S Dollar.

Out of China

It’s a particularly quiet week ahead on the economic data front.

There are no material stats due out of China, leaving geopolitics in focus in the week.

On the monetary policy front, the PBoC is in action on Monday. We don’t expect any further cuts in Loan Prime Rates, however. PBoC forward guidance and recent economic data support a hold.

The Chinese Yuan ended the week up 0.95% to CNY6.7692 against the U.S Dollar.

Geo-Politics

UK Politics

The Pound found much-needed support last week. Brexit will remain a key driver in the week ahead, however. We have the House of Lords vote on the Internal Market Bill that could throw Brexit negotiations into chaos. Last week, the British PM attempted to soften the impact of the internal market bill. An amendment to the bill was made to prevent ministers from using the bill to override the Brexit Withdrawal Agreement without a parliamentary vote.

It will get interesting as, while this may have placated some of Johnson’s critics, it may not satisfy the EU…

All in all, it spells for a choppy week ahead for the Pound.

U.S – China

Last week, Trump hit TikTok and WeChat. From the weekend, news hit the wires of Beijing taking retaliatory steps in response.

China issued a warning stating that if the U.S insists on going its own way, China would take the necessary steps to protect the rights and interests of Chinese firms.

We can expect more in the week ahead, particularly with Trump trailing Biden in the polls…

U.S Politics

Presidential Election fever should start to pick up and begin to have a greater influence on the global financial markets.

Trump has yet to claw back the deficit that Biden has enjoyed since COVID-19 reached U.S shores.

Expect Trump’s distraction tactics to draw plenty of attention.

The Weekly Wrap – Central Banks, COVID-19, and Geopolitics Tested the Markets

The Stats

It was a busier week on the economic calendar, in the week ending 18th September.

A total of 69 stats were monitored, following 41 stats from the week prior.

Of the 69 stats, 39 came in ahead forecasts, with 19 economic indicators came up short of forecasts. 11 stats were in line with forecasts in the week.

Looking at the numbers, 31 of the stats also reflected an upward trend from previous figures. Of the remaining 38, 32 stats reflected a deterioration from previous.

For the Greenback, it was back into the red, after 2 consecutive weeks in the green. In the week ending 18th September, the Dollar Spot Index fell by 0.44% to 92.926. In the week prior the Index had risen by 0.66% to 93.333.

Central bank chatter ultimately left the Dollar on the back foot as the FED delivered a more dovish than expected set of projections.

Out of the U.S

It was a busier week on the economic data front.

Early in the week, key stats included August industrial production, retail sales, and NY Empire State Manufacturing numbers for September.

It was a mixed bag for the Dollar, on the data front.

While the September manufacturing sector activity picked up in New York State, retail sales and industrial production disappointed.

In August, core retail sales rose by just 0.7%, following a 1.3% increase in July. Economists had forecast a 0.9% rise.

Industrial production rose by just 0.4%, following a 3% increase in July. The stats supported the view that the economic recovery had lost some of its vigor.

On Wednesday, however, it was the FOMC monetary policy decision and economic and interest rate projections that delivered the blow.

The FOMC projected that interest rates would be close to zero through to 2023, delivering a pessimistic outlook on the economic recovery.

A much-hoped-for V-shaped economic recovery would certainly not justify close to zero rates for such a length of time…

In the 2nd half of the week, the weekly jobless claims and Philly FED manufacturing numbers also failed to impress.

While claims eased back from 893k in the previous week to sit at 860k in the week ending 11th September, economists had been more hopeful.

Manufacturing sector activity also slowed marginally in Philly, which was an added negative on the day.

At the end of the week, prelim September consumer sentiment figures provided some comfort. The Michigan Consumer Sentiment Index rose from 74.1 to 78.9. While up in the month, however, sentiment remained well below pre-pandemic levels and a current year high 101.0.

In the equity markets, the NASDAQ and S&P500 fell by 0.56% and by 0.64% respectively. The Dow ended the week down by just 0.03%.

Out of the UK

It was another busy week on the economic calendar.

Employment and inflation figures drew attention in the 1st half of the week. It was a mixed set of numbers, however.

Claimant counts rose by 73.7k in August. While coming in below a forecasted 100k rise, it was up from a 69.9k rise in July.

The unemployment rate ticked up from 3.9% to 4.1% in July, with the claimant counts suggesting a further uptick ahead. For UK labor market conditions, an end to the and likely surge in unemployment remains a key risk to the Pound… With the government having to introduce containment measures, however, there are hopes of an extension to the scheme.

Inflation came in ahead of forecasts though also painted a grim picture. The annual rate of inflation softened from 1.0% to 0.2%, with consumer prices falling by 0.4% in August. In July consumer prices had risen by 0.4%.

On Thursday, the focus then shifted to the BoE and the MPC’s September monetary policy decision. A dovish monetary policy report and the chatter of negative rates sank the Pound on the day.

Wrapping things up on Friday were retail sales figures, which continued to rise in August. The monthly increase was well below July numbers, however, placing further question markets over the pace of the economic recovery.

In August, retail sales increased by 0.8%, month-on-month, following a 3.7% jump in July. Economists had forecast a 0.7% increase.

Away from the economic calendar, the Pound had found much-needed support after last week’s tumble. Resistance against Boris Johnson’s Internal Market Bill provided support in spite of the bill making it through the House of Commons.

In the week, the Pound rose by 0.95% to $1.2917. In the week prior, the Pound had tumbled by 3.64% to $1.2796

The FTSE100 ended the week down by 0.42%, following a 4.02% rally from the previous week.

Out of the Eurozone

It was also a busy week on the economic data front.

Key stats included industrial production and trade figures for the Eurozone and economic sentiment figures for Germany and the Eurozone.

The stats were skewed to the positive for the EUR.

Industrial production saw another solid rise in July, with the Eurozone’s trade surplus widening.

More importantly, however, was a pickup in economic sentiment in September.

Other stats included finalized inflation figures and wage growth for the Eurozone. The stats had a muted impact on the EUR, however.

For the week, the EUR fell by 0.05% to $1.1840. In the week prior, the EUR had risen by 0.07% to $1.1846.

For the European major indexes, it was a mixed week. The CAC40 and DAX30 fell by 1.11% and by 0.66% respectively, while the EuroStoxx600 rose by 0.22%.

For the Loonie

It was a relatively quiet week on the economic calendar.

Key stats included August inflation and July retail sales figures.

It was a mixed bag on the day front. While there was a pickup in core inflationary pressures in August, core consumer prices stalled in August. Consumer prices fell unexpectedly in the month, adding pressure on the Loonie.

At the end of the week, retail sales also failed to impress. In July, core retail sales fell by 0.4%, with retail sales rising by just 0.6%. In June, core retail sales had surged by 15.5% and retail sales by 22.7%.

The Loonie fell by 0.19% to end the week at C$1.3204. In the week prior, the Loonie had fallen by 0.90%.

Elsewhere

It was a bullish week for the Aussie Dollar and the Kiwi Dollar.

In the week ending 18th September, the Aussie Dollar rose by 0.07% to $0.7289, with the Kiwi Dollar rallying by 1.40% to $0.6759.

For the Aussie Dollar

It was another quiet week for the Aussie Dollar on the economic calendar.

Key stats including August employment figures that delivered the Aussie much-needed support.

Full-employment rose by 36.2k, with employment jumping by another 111.0k in August. Improving employment conditions is key for the RBA’s hope of a consumption-driven economic recovery.

On the monetary policy front, the RBA minutes early in the week failed to deliver the talk of further support, supporting a closeout at $0.73 levels on the day.

The risk-off sentiment at the end of the week left the Aussie Dollar flat, however.

For the Kiwi Dollar

It was also a quieter week on the economic calendar.

Key stats included 3rd quarter consumer sentiment figures and 2nd quarter GDP numbers.

It was a mixed set of numbers, in spite of GDP numbers coming in ahead of forecasts.

Consumer sentiment took a hit in the 3rd quarter, with the Westpac consumer sentiment index falling from 97.2 to 95.1.

In the 2nd quarter, the New Zealand economy contracted by a record 12.2%. Economists forecasted a contraction of 12.8%. In the 1st quarter, the economy had contracted by 1.4%.

In spite of the negative numbers, the Kiwi managed to claw back some of its recent losses in response to the FED’s projections.

For the Japanese Yen

It was another busy week on the economic calendar.

Key stats included August trade and inflation figures, which were skewed to the negative.

While Japan’s trade surplus unexpectedly widened from ¥10.9bn to ¥248.3bn, it was a larger slide in imports that cause the widening. Exports slid by 14.8%, with imports tumbling by 20.8%, delivering a grim view on trade terms.

At the end of the week inflation figures were also of little comfort. The annual rate of core inflation was down 0.4% after having stalled in July.

On the monetary policy front, the BoJ left policy unchanged in spite of some quite dire indicators out of Japan of late.

The Bank did state, however, that the Japanese economy was in a serious condition.

The Japanese Yen rose by 1.50% to ¥104.57 against the U.S Dollar. In the week prior, the Yen had risen by 0.08%.

Out of China

It was another relatively busy week on the economic data front.

Key stats included August’s industrial production, retail sales and unemployment figures.

The stats were skewed to the positive, supporting riskier assets before the FED’s fueled pull back.

Retail sales rose by 0.5%, partially reversing a 1.1% slide from July. Industrial production jumped by 5.6%, year-on-year, picking up from a 4.8% rise in July.

Supporting Beijing’s call for a home fueled economic recovery, the unemployment rate slipped from 5.7% to 5.6%.

In the week ending 18th September, the Chinese Yuan rose by 0.95% to CN6.7692. In the week prior, the Yuan had risen by 0.12%.

The CSI300 rose by 2.37%, while the Hang Seng fell by 0.20% to log a 3rd consecutive week in the red.

European Equities: A Week in Review – 18/09/20

The Majors

It was a mixed week for the European majors in the week ending 18th September. The CAC30 fell by 1.11% to lead the way down, with the DAX40 ending the week down by 0.66%. Bucking the trend for the week was the EuroStoxx600, which rose by 0.22%.

At the start of the week, the markets jumped into action in response to COVID-19 news from the previous weekend. Reports of Oxford University’s resuming trials of its COVID-19 vaccine supported riskier assets early on.

In the week prior, trials had been suspended due to a patient becoming ill.

On the geopolitical front, criticism over Boris Johnson’s Internal Market Bill failed to rile the markets. Hopes are that the House of Lords would reject the bill in its current form. Such an outcome could test support for Johnson and the Brexit hardliners.

A passing of the bill, however, would likely materially increase the chances of a no-deal Brexit, which would be viewed as a market negative.

In the 2nd half of the week, however, the FED and the BoE weighed on riskier assets. For the CAC40 and DAX30, it was a bearish end to the week that reversed gains from earlier in the week.

A spike in new COVID-19 cases also weighed on the European majors on Friday. On Thursday, the WHO had reportedly raised concerns over the jump in new COVID-19 cases in Europe.

A reintroduction of lockdown measures would materially impact the Eurozone’s economic recovery that has shown signs of waning.

The Stats

It was a relatively busy week on the Eurozone economic calendar.

In the 1st half of the week, industrial production and trade figures from the Eurozone delivered positive results.

Economic Sentiment figures for September also improved, delivering the majors with support in the 1st half of the week.

Later in the week, however, the focus shifted to monetary policy, which left the majors on the back foot.

Both the BoE and the FED delivered particularly dovish views on the economic outlook and monetary policy.

While lower for longer tends to be positive for riskier assets, FED talk of near to zero rates until 2023 was unexpected.

With the FED delivering warning signals, the BoE didn’t hold back on Thursday, with the talk of negative rates doing the rounds.

From the U.S

Key stats included the weekly jobless claims, industrial production, and retail sales figures for August and September manufacturing data.

The stats were skewed to the negative, adding downward pressure on the majors later in the week.

While manufacturing sector activity picked up in NY State, sector growth slowed in Philly.

Retail sales figures came up short of expectations questioning the market’s optimistic outlook on the economy.

With jobless claims figures also disappointing, there were few reasons for the markets to shake off the central bank doom and gloom.

Wrapping things up from the U.S were prelim consumer sentiment figures on Friday, which were positive but not enough to shift the mood.

From elsewhere, industrial production and retail sales figures out of China had provided the European majors with support early in the week.

The Market Movers

From the DAX, it was a bearish week for the auto sector. Continental and Volkswagen slid by 3.12% and by 4.91% to lead the way down. BMW and Daimler saw more modest losses of 0.87% and 1.825 respectively.

It was also a bearish week for the banking sector. Commerzbank slid by 7.36% following last week’s 6.06% tumble, with Deutsche Bank falling by 2.04%.

From the CAC, things were not much better for the banks. BNP Paribas and Credit Agricole slid by 5.36% and by 5.70% respectively, while Soc Gen saw a more modest 1.64% loss.

The French auto sector also struggled in the week. Peugeot and Renault slid by 3.61% and by 7.44% respectively.

Air France-KLM and Airbus saw relatively modest losses of 0.46% and 0.32% respectively, however.

On the VIX Index

It was a 2nd consecutive week in the red for the VIX. In the week ending 18th September, the VIX fell by 3.87%. Following on from a 12.62% slide from the previous week, the VIX ended the week at 25.83.

The weekly slide came in spite of the U.S equity markets ending the week in the red after a bearish end to the week.

For the week ending 18th September, the S&P500 and the NASDAQ ended the week down by 0.64% and by 0.56% respectively. The Dow saw a more modest 0.03% loss.

VIX 19/09/20 Weekly Chart

The Week Ahead

It’s a busy week ahead on the Eurozone economic calendar.

At the start of the week, key stats include Eurozone and German consumer confidence figures. With consumer consumption a must to support any economic recovery, sentiment will need to continue to improve.

Of greater significance, however, will be September’s prelim private sector PMIs for France, Germany, and the Eurozone.

Following disappointing numbers for August, another tick lower would be negative for the majors.

Wrapping things up will be Germany’s Ifo Business climate index numbers for September on Thursday.

The degree of influence, however, will depend on Wednesday’s PMIs.

From elsewhere, expect U.S private sector PMIs, weekly jobless claims, and core durable goods orders to also influence.

Away from the economic calendar, COVID-19 and geopolitics will also need monitoring.

European Equities: U.S Consumer Sentiment Figures and Geopolitics in Focus

Economic Calendar:

Friday, 18th September

German PPI (MoM) (Aug)

The Majors

It was bearish for the European majors on Thursday, with CAC40 and EuroStoxx600 seeing a run of 4 consecutive daily gains come to an end.

The CAC40 and the EuroStoxx600 fell by 0.69% and by 0.51% respectively, with the DAX30 ending the day down by 0.36%.

Central bank sentiment towards economic recoveries weighed on the markets on Thursday. The futures were already under pressure in response to the FED’s dovish signals. A projection for rates to hold near zero through to 2023 painted a grim picture of the FED’s sentiment towards the U.S economic outlook.

Things were not much better from Japan, with the Bank of Japan stressing that the economy was in a serious condition. Rounding things off on the day was the Bank of England, who highlighted that the economic outlook remained unusually uncertain.

On the economic data front, there was nothing from the numbers to change the somber mood.

The Stats

It was another quiet day on the Eurozone economic calendar. Key stats included August finalized inflation figures for the Eurozone.

The annual rate of core inflation softened from 1.2% to 0.4% in August, which was in line with prelim figures.

In August, consumer prices fell by 0.4%, following on from a 0.4% decline in July. As a result of the slide in consumer prices in August, the annual rate of inflation was down 0.2%, which was also in line with forecasts. In July, the annual rate of inflation had stood at 0.4%.

According to Eurostat,

  • The lowest annual rates were registered in Cyprus (-2.9%), Greece (-2.3%), and Estonia (-1.3%).
  • The highest contribution to the annual euro area inflation rate came from food, alcohol & tobacco (+0.33 pp).

From the U.S

Key stats included weekly jobless claims figures and September’s Philly FED Manufacturing Index numbers.

Other stats included August housing sector data that had a muted impact on the majors on the day.

For the week ending 11th September, initial jobless claims stood at 860k, down from 893k claims from the week prior. Economists had forecast claims of 850k, however.

In September, the Philly FED Manufacturing Index slipped from 17.2 to 15.0, which was in line with forecasts.

The Market Movers

For the DAX: It was another mixed day for the auto sector on Thursday. Daimler bucked the trend on Thursday, rising by 0.71%. Continental and Volkswagen saw losses of 0.72% and 0.26% respectively, with BMW slipping by 0.02%.

It was a bearish day for the banks, however. Deutsche Bank and Commerzbank fell by 1.03% and by 2.79% respectively.

From the CAC, it was a mixed day for the banks. Credit Agricole and BNP Paribas fell by 1.04% and by 0.80% respectively. Soc Gen ended the day up by 0.45%.

It was a bearish day for the French auto sector, however. Peugeot and Renault ended the day down by 1.16% and by 0.19% respectively.

Air France-KLM reversed a 0.87% loss from Wednesday, rallying by 2.78%, with Airbus SE gaining 0.47%.

On the VIX Index

It was a second consecutive day in the green for the VIX on Thursday. Following on from a 1.76% gain on Wednesday, the VIX rose by 1.61% to end the day at 26.46.

Continued market reaction to the FOMC projections and press conference from Wednesday left the majors in the red.

Disappointing Jobless claims and Philly FED Manufacturing numbers added further pressure on the day.

The NASDAQ and S&P500 fell by 1.27% and by 0.84% respectively, with the Dow seeing a loss of 0.47%.

VIX 18/09/20 Daily Chart

The Day Ahead

It’s a quiet day ahead on the Eurozone economic calendar. Key stats include German wholesale inflation figures for August.

With deflationary pressures hitting the Eurozone, a softening in wholesale inflationary pressures would add to the negative sentiment.

Later in the day, prelim U.S consumer sentiment figures for September will also influence.

Away from the economic calendar, Brexit will continue to be an area of focus as will be chatter from Capitol Hill.

The Futures

In the futures markets, at the time of writing, the Dow was down by 76 points, while the DAX was up by 8 points.

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

European Equities: FED and BoE Monetary Policy and U.S Jobless Claims in Focus

Economic Calendar:

Thursday, 17th September

Eurozone Core CPI (YoY) (Aug) Final

Eurozone CPI (YoY) (Aug) Final

Eurozone CPI (MoM) (Aug)

Friday, 18th September

German PPI (MoM) (Aug)

The Majors

It was another relatively bullish day for the European majors on Wednesday.

The CAC40 and the EuroStoxx600 rose by 0.13% and by 0.58% respectively to mark a 4th consecutive daily gain.

For the DAX30, a 0.29% rise delivered a 2nd consecutive day in the green, reversing 3 consecutive days in the red.

Economic data was mixed on the day. Trade data from the Eurozone and retail sales figures from the U.S both disappointed on Wednesday.

Upside on the day came as the markets looked ahead to the FOMC policy decision, projections, and press conference.

On the geopolitical front, there was little to shift the market’s mood on Brexit, while EU Commission President Ursula von der Leyen delivered her union address on Wednesday.

The EU Commission President talked of the rising chances of a no-deal Brexit, which was of little surprise. Of surprise, however, was talk of an ambition to build a new transatlantic agenda with the U.S, regardless of the election outcome.

All in all, the comments had a muted impact, with hopes of dovish interest rate projections propping up the majors.

The Stats

It was a quieter day on the Eurozone economic calendar. Key stats included July trade data for the Eurozone

The Eurozone’s trade surplus widened from €20.2bn to €27.9bn in July. Economists had forecast a narrowing to €12.6bn.

According to Eurostat,

  • Exports of goods to the rest of the world slid by 10.4% to €185.2bn compared with July 2019.
  • Imports of goods from the rest of the world tumbled by 14.3% to €157.3bn.
  • Intra-euro area trade fell by 8.6% to €153.7bn when compared with July 2019.
  • Year-to-date, the export of goods to the rest of the world fell by 12.4% to €1,199.6bn compared with January to July 2019.
  • Imports fell by 13.1% to €1,086.6bn delivering a Eurozone trade surplus of €113.0bn.
  • Intra-euro area trade fell by 13.0% to €1,021.8bn, when compared with January to July 2019.

Annual comparison by Member State:

  • In July 2020, compared with July 2019, the export of goods decreased for all member states except Malta (+16.1%), Slovenia (+10.6%), Estonia (+9.4%), and Slovakia (+8.8%).
  • Greece (-23.8%), Finland, (-19.6%), and France (-19.5%) resgisted the largest decreases in exports.

From the U.S

Key stats included August retail sales figures and July business inventory numbers. The stats preceded the FOMC monetary policy and economic and interest rate projections and the FOMC press conference.

In July, business inventories rose by 0.1%, following a 1.1% fall in June. Economists had forecast a 0.1% increase.

In August, retail sales figures fell short of forecasts. Core retail sales rose by 0.7%, following a 1.3% increase in July. Economists had forecast a 0.9% rise. Retail sales increased by 0.6%, following a 0.9% rise in July. Economists had forecast a 1% increase in sales.

The Market Movers

For the DAX: It was a mixed day for the auto sector on Wednesday. Continental and BMW rose by 0.51% and by 0.66% respectively, with Daimler up by 0.17%. Volkswagen saw red, however, falling by 0.05%.

It was also a bullish day for the banks. Deutsche Bank and Commerzbank rose by 2.16% and by 1.88% respectively.

From the CAC, it was another bearish day for the banks. Credit Agricole fell by 1.05% to lead the way down. BNP Paribas and Soc Gen saw more modest losses of 0.35% and 0.20% respectively.

It was also a mixed day for the French auto sector. Peugeot and Renault ended the day down by 0.94% and by 1.75% respectively.

Air France-KLM fell by a further 0.87%, while Airbus SE rose by 1.89%.

On the VIX Index

A run of 3 consecutive days in the red came to an end for the VIX on Wednesday. Reversing a 1.01% fall from Tuesday, the VIX rose by 1.76% to end the day at 26.04.

The upside on the day came as the U.S equity markets reversed gains in response to FED Chair Powell’s press conference. A more dovish than expected stance weighed on the majors late in the session.

The NASDAQ and S&P500 fell by 1.25% and by 0.46% respectively, while the Dow rose by 0.13%.

VIX 17/09/20 Daily Chart

The Day Ahead

It’s another relatively quiet day ahead on the Eurozone economic calendar. Key stats include finalized August inflation figures for the Eurozone.

Barring material deviation from prelim figures, however, the stats will likely have a muted impact on the majors.

Through the early part of the day, the markets will likely respond to the FOMC economic and interest rate projections and Powell press conference.

Later in the day, the markets will shift attention to the BoE monetary policy decision and economic data from the U.S.

Key stats include the weekly jobless claims and Philly FED Manufacturing Index numbers for September.

While both sets of numbers will influence, any disappointing jobless claims would likely overshadow a pickup in manufacturing sector activity.

Away from the economic calendar, Brexit will continue to be an area of focus along with U.S – China tensions.

The Futures

In the futures markets, at the time of writing, the DAX was down by 1.04 points, with the Dow down by 224 points.

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

European Equities: U.S Retail Sales, the FED, and Geopolitics in Focus

Economic Calendar:

Wednesday, 16th September

Eurozone Trade Balance (Jul)

Thursday, 17th September

Eurozone Core CPI (YoY) (Aug) Final

Eurozone CPI (YoY) (Aug) Final

Eurozone CPI (MoM) (Aug)

Friday, 18th September

German PPI (MoM) (Aug)

The Majors

It was a relatively bullish day for the European majors on Tuesday, following a couple of mixed sessions.

A run of 3 consecutive days in the red came to an end for the DAX30, which eked out a 0.18% gain on Tuesday. The CAC40 and EuroStoxx600 ended the day up by 0.32% and 0.66% respectively.

Economic data from China set the mood. In August, industrial production, retail sales, and unemployment figures reassured the markets of China’s continued economic recovery.

Away from the economic calendar, the majors also took their cues from the U.S futures, which were on the move early in the day.

The Stats

It was a busy day on the Eurozone economic calendar. Key stats included Germany and Eurozone ZEW economic sentiment figures for September.

2nd quarter wage growth for the Eurozone and finalized August inflation figures for France and Italy were also in focus.

In September, Germany’s ZEW Economic Sentiment indicator rose from 71.5 to 77.4. Economists had forecast a decline to 69.8.

The Eurozone’s Economic Sentiment indicator rose from 64.0 to 73.9 in September.

From the Eurozone, wage growth figures also impressed in the 2nd quarter, despite the COVID-19 pandemic’s influences. Wages rose by 5.2%, following on from an upwardly revised 3.9% rise in the 1st quarter.

On the inflation front, finalized numbers for France and Italy were in line with prelim, thus having a muted impact on the majors.

From the U.S

NY Empire State Manufacturing Index numbers for September and August industrial production figures were in focus late in the session.

In September, the NY Empire State Manufacturing Index increased from 3.7 to 17.0. Economists had forecast an increase to 6.0.

Industrial production disappointed, however. In August, production rose by 0.4%, coming up short of a forecasted 0.9% rise. In July, production had risen by 3.0%.

The Market Movers

For the DAX: It was yet another mixed day for the auto sector on Tuesday. BMW rose by 0.56% to buck the trend on the day. Volkswagen and Daimler fell by 0.12% and by 0.30% respectively, while Continental slid by 1.78%.

It was a bearish day for the banks, however. Deutsche Bank and Commerzbank saw heavier losses of 2.12% and 2.38% respectively.

From the CAC, it was a bearish day for the banks, after Monday’s gains. BNP Paribas slid by 2.01% to lead the way down. Credit Agricole and Soc Gen saw more modest losses of 1.20% and 1.56% respectively.

It was a mixed day for the French auto sector, however. Peugeot rose by 2.16%, while Renault ended the day down by 2.55%.

Air France-KLM fell by a further 0.22%, following Monday’s 0.16% loss, while Airbus SE slid by 2.58%.

On the VIX Index

It was a 3rd consecutive day in the red for the VIX on Tuesday. Following on from a 3.8% fall on Monday, the VIX slipped by 1.01% to end the day at 25.59.

Another bullish day for the U.S equity markets left the VIX in the red once more. Tech shares delivered the upside on the day, with positive economic data from China and M&A activity delivering the upside on the day.

While tech stocks found support, it was the financial sector that weighed ahead of today’s FOMC…

The NASDAQ rose by 1.21%, with the Dow and S&P500 seeing gains of 0.01% and 0.52% respectively.

VIX 16/09/20 Daily Chart

The Day Ahead

It’s a relatively quiet day ahead on the Eurozone economic calendar. Key stats include July trade data for the Eurozone.

Barring particularly dire numbers, however, the stats will likely have a muted impact on the majors.

The FOMC is in action after the European close, which will leave the majors in limbo. Following the revised monetary policy framework, the markets will be looking for a fresh set of economic and interest rate projections.

Based on plenty of dovish chatter, expectations are low for longer. Any deviation and expect the riskier assets to come under pressure. The European majors will lag the U.S majors and respond tomorrow.

From the U.S, August retail sales figures will influence ahead of the European close. A continued rise in retail sales is a must mid-way through the 3rd quarter.

Away from the economic calendar, Brexit and chatter from Beijing and Washington will also be in focus on the day.

The Futures

In the futures markets, at the time of writing, the Dow was up by 15 points.

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

European Equities: A Busy Economic Calendar and Geopolitics to Drive the Majors

Economic Calendar:

Tuesday, 15th September

French CPI (MoM) (Aug) Final

French HICP (MoM) (Aug) Final

Italian CPI (MoM) (Aug) Final

German ZEW Current Conditions (Sep)

German ZEW Economic Sentiment (Sep)

Eurozone Wages (YoY) (Q2)

Eurozone ZEW Economic Sentiment (Sep)

Wednesday, 16th September

Eurozone Trade Balance (Jul)

Thursday, 17th September

Eurozone Core CPI (YoY) (Aug) Final

Eurozone CPI (YoY) (Aug) Final

Eurozone CPI (MoM) (Aug)

Friday, 18th September

German PPI (MoM) (Aug)

The Majors

It was another mixed day for the European majors on Monday. While the DAX30 slipped by 0.07%, the CAC40 and EuroStoxx600 saw modest gains of 0.35% and 0.15% respectively.

Economic data was on the lighter side, leaving the markets to consider COVID-19 news updates and geopolitics on the day.

From the weekend, news of Oxford University and AstraZeneca’s resumption of COVID-19 vaccine clinical trials supported riskier assets. In the week prior, trials had been suspended due to a patient becoming ill.

The news came amidst another spike in new COVID-19 cases. On Monday, the WHO reported a record daily rise in new infections globally. According to the WHO, the largest increases were reported in India, the U.S, and Brazil.

Europe also reportedly recorded a rise in new cases, raising fears of another wave as the summer draws to a close.

On the geopolitical risk front, U.S and China tensions and Brexit jitters continued to pin back the majors.

As of midnight on Monday, Huawei suppliers were forced to stop supplying Huawei. The U.S administration’s latest move not only impacts U.S suppliers but also non-U.S suppliers that use U.S tech. This deadline had preceded today’s TikTok sale deadline.

The Stats

It was a relatively quiet day on the Eurozone economic calendar. Key stats included Eurozone industrial production figures for July.

Industrial production rose by 4.1% in July, following an upwardly revised 9.5% jump in June. Economists had forecast a 4.0% rise.

According to Eurostat,

  • Industrial production continued to rise as containment measures were relaxed further in the month.
  • Production of capital goods rose by 5.3%, with durable consumer goods up by 4.7%. Intermediate goods production rose by 4.2%, with non-durable consumer goods production rising by 3.9%
  • Energy production rose by a more modest 1.1%.
  • The highest increases were registered in Portugal (+11.9%), Spain (+9.4%), and Ireland (+8.3%).
  • There were decreases in production in Latvia (-0.8%) and Belgium (-0.5%).
  • In July 2020 compared with July 2019, industrial production decreased by 7.7%.

From the U.S

There were no material stats to provide the majors with direction late in the session.

The Market Movers

For the DAX: It was yet another mixed day for the auto sector on Monday. Continental rose by 2.61% to buck the trend on the day. Volkswagen fell by 1.23%, with BMW and Daimler seeing losses of 0.56% and 0.64% respectively.

It was also a mixed day for the banks. Deutsche Bank rose by 0.15%, while Commerzbank fell by 1.10%.

From the CAC, it was a bullish day for the banks, after Friday’s pullback. BNP Paribas and Credit Agricole rose by 1.27% and 1.38% respectively. Soc Gen led the way, however, rising by 2.80%.

It was also a bullish day for the French auto sector. Peugeot and Renault ended the day up by 0.75% and by 0.90% respectively.

Air France-KLM ended the day down by 0.22%, while Airbus SE rallied by 3.63%.

On the VIX Index

It was a 2nd consecutive day in the red for the VIX on Monday. Following on from a 9.56% fall on Friday, the VIX fell by 3.8% to end the day at 25.85.

A bullish day for the U.S equity markets left the VIX in the red. The upside came as the markets responded to the COVID-19 vaccine news from the weekend. Adding to the upside was news of Oracle pipping Microsoft to partner with ByteDance to keep TikTok operational in the U.S.

There were no stats from the U.S to influence on the day.

The NASDAQ rose by 1.87%, with the Dow and S&P500 seeing gains of 1.18% and 1.27% respectively.

VIX 15/09/20 Daily Chart

The Day Ahead

It’s a busy day ahead on the Eurozone economic calendar. Key stats include September’s ZEW Economic Sentiment figures for Germany and the Eurozone.

Finalized August inflation figures for France and Italy and Eurozone wage growth figures are also due out but will likely have a muted impact on the majors.

Ahead of the European open, industrial production, fixed-asset investment, and retail sales figures for China will set the tone.

Later in the day, industrial production and NY Empire State Manufacturing Index numbers will provide direction later in the day.

Away from the economic calendar, Brexit and chatter from Beijing and Washington will also be in focus on the day.

The Futures

In the futures markets, at the time of writing, the Dow was down by 8 points.

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

European Equities: Economic Data, COVID-19, and Brexit in Focus

Economic Calendar:

Monday, 14th September

Eurozone Industrial Production (MoM) (Jul)

Tuesday, 15th September

French CPI (MoM) (Aug) Final

French HICP (MoM) (Aug) Final

Italian CPI (MoM) (Aug) Final

German ZEW Current Conditions (Sep)

German ZEW Economic Sentiment (Sep)

Eurozone Wages (YoY) (Q2)

Eurozone ZEW Economic Sentiment (Sep)

Wednesday, 16th September

Eurozone Trade Balance (Jul)

Thursday, 17th September

Eurozone Core CPI (YoY) (Aug) Final

Eurozone CPI (YoY) (Aug) Final

Eurozone CPI (MoM) (Aug)

Friday, 18th September

German PPI (MoM) (Aug)

The Majors

It was a mixed day for the European majors on Friday, following Thursday’s choppy session that left the majors in the red.

The DAX30 slipped by 0.05%, while the CAC40 and EuroStoxx600 saw gains of 0.20% and 0.13% respectively.

Major stats from the Eurozone failed to provide direction on the day. Brexit woes and the ECB’s upward revision to 2020 growth forecasts from the day prior continued to pin the majors back.

Adding pressure on the majors on the day was a pickup in the EUR, though not enough to sink the CAC40 and the EuroStoxx600.

The Stats

It was a relatively busy day on the Eurozone economic calendar. Key stats included finalized inflation figures from Spain and Germany.

With the markets having responded to prelim figures and concerns over deflationary pressure, the stats had a muted impact.

Finalized figures were in line with prelim figures for August.

In Germany, consumer prices fell by 0.1%, following a 0.5% slide in July, with the harmonized consumer price index falling by 0.2%. In July, the HICP had fallen by 0.5%.

From Spain, consumer prices fell by 0.5% year-on-year, following a 0.6% decline in July. The harmonized consumer price index fell by 0.6%, following a 0.7% decline in July.

From the U.S

Economic data was on the lighter side once more. August inflation figures were in focus.

In August, core consumer prices rose by 0.4%, following a 0.6% increase in July. Economists had forecast a 0.2% rise. The rise in core consumer prices supported a pickup in core inflationary pressures. In August, the annual rate of core inflation picked up from 1.6% to 1.7%.

The annual rate of inflation also picked up in August, rising from 1.0% to 1.3%. Consumer prices rose by 0.4% in the month, following a 0.6% increase in July. Economists had forecast a 0.3% rise.

The Market Movers

For the DAX: It was another mixed day for the auto sector on Friday. Continental and Volkswagen fell by 1.23% and by 0.08%, while BMW and Daimler rose by 2.20% and by 0.46% respectively.

It was a bearish day for the banks, however. Deutsche Bank fell by 1.05%, with Commerzbank sliding by 2.32%.

From the CAC, it wasn’t much better for the banks. BNP Paribas and Credit Agricole saw losses of 2.42% and 1.87% respectively. Soc Gen led the way down, however, sliding by 3.11%.

It was yet another mixed day for the French auto sector. Peugeot ended the day up by 0.69%, while Renault slid by 1.77%.

Air France-KLM ended the day down by 1.13%, with Airbus SE falling by 0.89%.

On the VIX Index

It was back into the red for the VIX on Friday. for the VIX on Thursday. Reversing a 3.12% rise from Thursday, the VIX fell by 9.56% to end the day at 26.87.

It was a mixed day for the U.S majors on Friday, as concerns over the sustainability of the economic recovery weighed. Tech stocks struggled once more, leaving the NASDAQ in the red while pinning back the Dow and S&P500.

The NASDAQ fell by 0.60% following Thursday’s 1.99% slide, while the Dow and S&P500 rose by 0.48% and by 0.05% respectively.

VIX 14/09/20 Daily Chart

The Day Ahead

It’s a relatively quiet day ahead on the Eurozone economic calendar. Key stats include July industrial production figures for the Eurozone.

The markets will be looking for some positive numbers to support the ECB’s upward revision to growth forecasts.

With no stats from the U.S to consider on the day, geopolitics will likely be a key driver.

The markets will need to continue monitoring Brexit chatter and any further updates on TikTok’s fate. Trump’s 20th September deadline is now just around the corner and the U.S President has stated that no extension would be offered.

On the positive for the markets going into the week, however, is news from the weekend that Oxford University has resumed its COVID-19 vaccine trials.

The Futures

In the futures markets, at the time of writing, the Dow was up by 187 points.

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

European Equities: A Week in Review – 11/09/20

The Majors

It was a bullish week for the European majors in the week ending 11th September. The DAX40 rallied by 2.80%, with the CAC40 and EuroStoxx600 and rising by 1.39% and by 1.67% respectively

The upside in the week came in spite of tech stocks continuing to slide in the U.S and the U.S majors seeing deep red.

In the early part of the week, a sharp tumble on Tuesday limited the upside, however. Negative chatter on Brexit and another rise in tensions between the U.S and China had tested risk appetite.

Adding to the downside, was news of AstraZeneca suspending its coronavirus vaccine.

AstraZeneca has been working with Oxford University on a coronavirus vaccine that Trump was looking to fast track for the U.S.

While there were plenty of negatives, the negatives were not enough to reverse a bullish start to the week.

The Stats

It was a quieter week on the Eurozone economic calendar.

In the 1st half of the week, industrial production and trade figures from Germany delivered mixed results.

While industrial production rose by 1.2%, economists had forecast a 4.7% rise off the back of a 9.3% jump in June.

Trade figures were more upbeat, however, with Germany’s trade surplus widening from €14.5bn to €18.0bn in July.

According to Destatis,

  • Exports rose by 4.7% from the previous month, while down by 11% on the same month a year earlier.
  • Imports rose by 1.1% from the previous month and were down by 11.3% from the same month a year earlier.
  • In July 2020, Germany exported goods to the value of €52.4bn to EU member states, while importing goods to the value of €44.4bn.
  • Goods to the value of €36.8bn (-10.7%) were exported to the euro area countries, while goods imported fell by 13.1% to €30.1bn.
  • Exports to EU countries outside of the EU fell 7% to €15.6bn, while imports fell 4.2% to €14.3bn.
  • To countries outside of the EU, exports fell 12.5% to €49.9bn, with imports falling by 1.2% to €38.7bn.

From the Eurozone, an upward revision to 2nd quarter GDP numbers was not enough to prevent a U.S driven sell-off on the day.

The focus then shifted to ECB monetary policy decision and press conference on Thursday.

With the ECB holding monetary policy unchanged, the majors came under pressure on Thursday. An upward revision to growth forecasts suggested that there would unlikely be any further easing near-term.

There was also a spike in the EUR, during the press conference that also added downward pressure on the majors.

From the U.S

It was a relatively positive week on the economic data front.

Wholesale inflationary pressures softened less than had been anticipated in August. The core annual rate of inflation picked up from 1.6% to 1.7%, with consumer prices rising by more than expected in August.

On the negative, however, were the initial jobless claims figures. In the week ending 4th September, jobless claims stood at 884k. While unchanged from the previous week, economists had forecast claims to come in at 846k.

The Market Movers

From the DAX, it was a mixed week for the auto sector. Continental fell by 2.46% to buck the trend for the week. BMW and Volkswagen rose by 3.63% and by 3.89% respectively, with Daimler rallying by 5.50%.

It was a bearish week for the banking sector, however. Commerzbank slid by 6.06%, with Deutsche Bank falling by 4.74%.

From the CAC, it was a bearish week for the banks. Continental slid by 6.07% to lead the way down. BNP Paribas and Credit Agricole saw more modest losses of 2.98% and 1.73% respectively.

The French auto sector found further support in the week. Peugeot and Renault rose by 6.07% and by 0.04% respectively.

Air France-KLM and Airbus saw red, however, with the pair falling by 3.31% and by 1.38% respectively.

On the VIX Index

A run of 3 consecutive weeks in the green came to an end for the VIX in the week ending 11th September. Partially reversing a 33.93% jump from the previous week, the VIX fell by 12.62% to end the week at 26.87.

The weekly slide came in spite of the U.S equity market seeing deep red off the back of a tech stock rout.

For the week ending 11th September, the S&P500 and the NASDAQ ended the week down by 2.51% and by 4.06% respectively. The Dow saw a more modest 1.66% loss.

The Week Ahead

It’s a relatively busy week ahead on the Eurozone economic calendar.

Industrial production, inflation, wage growth, and trade data are due out for the Eurozone. September’s ZEW Economic Sentiment figures for Germany and Eurozone and the Eurozone will also be in focus.

We would expect the ZEW numbers and the Eurozone’s inflation and industrial production figures to have the greatest influence.

We can also expect the EUR to provide direction in the week. Any move back towards $1.19 levels would likely test support.

From elsewhere, industrial production figures out of the U.S and China, U.S retail sales, and the weekly jobless claims will also be in focus.

On the monetary policy front, expect the FED’s economic projections to have a material impact later in the week, however.

In what is likely to be another choppy week, geopolitics will also remain in focus, with Brexit and U.S and China to test the markets.

European Equities: A Quiet Calendar Leaves the Majors in the Hands of the U.S…

Economic Calendar:

 Friday, 11th September

German CPI (MoM) (Aug) Final

Spanish CPI (YoY) (Aug) Final

Spanish HICP (YoY) (Aug) Final

The Majors

It was a back into the red for the European majors on Thursday. A choppier session than normal left the EuroStoxx600 down by 0.59% to lead the way down.

The DAX30 and CAC40 saw more modest losses of 0.21% and 0.38% respectively.

For the European majors, a gloomier economic outlook from the ECB weighed, in spite of an upward revision to growth forecasts.

While upwardly revising its GDP projection from an 8.7% contraction to an 8% contraction for 2020, the ECB noted that the recovery would likely be a slower one.

The Bank also noted that inflation will likely fall short of the ECB’s target for the foreseeable future. For the majors, the EUR’s brief return to $1.19 levels would not have helped.

On the economic data front, U.S jobless claims figures failed to impress adding to the market angst.

The Stats

It was a particularly quiet day on the Eurozone economic calendar. There were no material stats to provide the majors with direction on Thursday.

While there were no stats to consider, the ECB’s monetary policy and press conference were of influence.

The ECB left monetary policy unchanged, which was in line with expectations that had provided some early support to the EUR.

By contrast, the European majors struggled ahead of the policy decision. A sharp pickup in the EUR and uncertainty over the ECB’s economic outlook contributed to the downside.

Key comments from the Lagarde press conference included:

  • Euro-area domestic demand has rebounded strongly, though heightened economic uncertainty persists. This uncertainty continues to weigh on both business investments and consumer spending.
  • The ECB sees the economy contracting by 8.0% for 2020, revised up from 8.7%. For 2021, the economy is projected to contract by 5% and then by 3.2% in 2022.
  • EUR strength was discussed but from a price pressure perspective. The ECB looks for price stability rather than directly targeting currency exchange rates.
  • EUR appreciation delivers negative price pressures. Such an eventuality would require a move by the ECB to ease any negative price pressures.
  • Members discussed the current policy framework but would not make any changes.
  • The ECB will use all tools available to deliver price stability.
  • Divergence is seen across the EU, with fiscal space, fiscal position, and banking strength creating the divergence. The ECB expects the EU Recovery Fund to address this divergence. The flexibility of the ECB’s PEP is also there to address divergence.

From the U.S

Economic data was on the lighter side once more. August wholesale inflation figures and the weekly jobless claims were in focus.

The stats coincided with the ECB press conference, contributing to the spike in the EUR.

In the week ending 4th September, U.S initial jobless claims stood at 884k, which was worse than a forecasted 846k. In the week prior, claims had also stood at 884k.

Inflation numbers were also disappointing, with the producer price index rising by just 0.3% in August. While better than a forecasted 0.2% rise, the index had risen by 0.6% in July. The core producer price index rose by 0.4% following a 0.5% rise in July. Economists had also forecast a 0.2% rise.

The Market Movers

For the DAX: It was a mixed day for the auto sector on Thursday. Continental rose by 0.45% to buck the trend on the day, while BMW slid by 1.60%. Daimler and Volkswagen saw more modest losses of 0.82% and 0.89% respectively.

It was also a mixed day for the banks. Deutsche Bank fell by 0.98%, while Commerzbank rose by 0.83%.

From the CAC, it was a bullish day for the banks. BNP Paribas and Soc Gen saw gains of 0.58% and 0.55% respectively. Credit Agricole trailed, with a 0.32% rise on the day.

It was yet another mixed day for the French auto sector. Peugeot ended the day up by 3.13%, while Renault slid by 1.46%.

Air France-KLM ended the day down by 0.08%, while Airbus SE eked out a 0.07% gain.

On the VIX Index

It was back into the green for the VIX on Thursday. Partially reversing an 8.42% fall from Wednesday, the VIX rose by 3.12% to end the day at 29.71.

It was a bearish day for the U.S majors that coughed up early gains as the tech recovery faltered on the day.

The NASDAQ slid by 1.99%, with the Dow and S&P500 ending the day down by 1.45% and by 1.76% respectively.

VIX 11/09/20 Daily Chart

The Day Ahead

It’s a relatively quiet day ahead on the Eurozone economic calendar. Key stats include August’s finalized inflation figures for Germany and Spain.

Barring downward revisions, we don’t expect the stats to influence. The markets had already responded to disappointing inflation numbers last week.

From the U.S, August inflation figures are due out and will influence.

With economic data on the lighter side, we can expect the European majors to continue to take their cues from the U.S. markets late in the day.

On the geopolitical front, there are also Brexit and U.S-China tensions to also consider on the day.

The Futures

In the futures markets, at the time of writing, the Dow was up by 59 points.

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