European Equities: A Light Economic Calendar to Test Support ahead of the U.S Open

Economic Calendar

Friday, 10th September

German CPI (MoM) (Aug) Final

The Majors

It was a mixed day for the European majors on Thursday.

The DAX30 and the CAC40 saw modest gains of 0.08% and 0.24% respectively, while the EuroStoxx600 slipped by 0.04%.

Economic data had a limited impact on the majors, in spite of positive numbers from Germany and the U.S.

The ECB’s monetary policy decision and press conference delivered much-needed support to the majors, however.

Through the early part of the sessions, concerns over a more hawkish shift on monetary policy had weighed on the majors.

Plans to modestly cut the pandemic’s emergency bond purchasing program was good enough to leave the majors relatively flat.

The Stats

German trade data was in focus going into the European open.

In July, Germany’s trade surplus widened from €13.6bn to €17.9bn. Economists had forecast a narrowing to €13.0bn

According to Destatis,

  • Exports were up 0.5% on the previous month and up by 12.4% on the same month a year earlier.
  • Imports were down 3.8% on the previous month, while up 16.6% on the same month a year earlier.

Trade with EU Countries:

  • Goods exports to EU member states rose by 17.7%, year-on-year, with imports up 18.7%.
  • To euro area countries, exports rose by 17.4%, with imports from euro area countries up 22.4%.
  • Exports to EU countries not belonging to the euro area increased by 18.4%, while imports were up by 11.0%.

Trade with non-EU Countries:

  • Exports to third countries increased by 6.8%, with imports from third countries up 14.2%.

Trade with the UK:

  • Compared with the same month last year, exports were up 7.2% to the UK. Imports from the UK increased by 15.6%.

Elsewhere:

Exports to China fell by 4.3%, year-on-year, while exports to the U.S were up 15.7%.

From the U.S

Jobless claim figures were in focus, though the stats had a muted impact, with the release coinciding with the ECB press conference.

In the week ending 3rd September, initial jobless claims fell from 345k to a post-pandemic low 310k. Economists had forecast a decline to 335k.

The Market Movers

For the DAX: It was a mixed day for the auto sector on Thursday. Volkswagen and BMW ended the day up by 0.84% and by 0.03% respectively. Daimler and Continental fell by 0.15% and by 0.55% respectively, however.

It was also a mixed day for the banks. Deutsche Bank rose by 0.14%, while Commerzbank slid by 2.10%.

From the CAC, it was a relatively bullish day for the banks. BNP Paribas and Credit Agricole rose by 0.45% and by 0.17% respectively, with Soc Gen ending the day up by 0.57%.

It was a mixed day for the French auto sector, however. Stellantis NV rose by 0.40%, while Renault fell by 0.47%.

Air France-KLM joined airline stocks in the red, falling by 0.97%, while Airbus SE rose by 1.30%.

On the VIX Index

It was back into the green the VIX on Thursday.

Reversing a 0.99% fall from Wednesday, the VIX rose by 4.68% to end the day at 18.80.

On Thursday, the NASDAQ fell by 0.25%, with the Dow and S&P500 ending the day down by 0.43% and by 0.46% respectively.

VIX 100921 Daily Chart

The Day Ahead

It’s a quieter day ahead on the Eurozone’s economic calendar.

Finalized August inflation figures for Germany are due out going into the European open.

Barring a marked revision from prelim figures, however, the numbers should have a muted impact on the majors. On Thursday, the ECB stood by its transitory view on inflation. That should limit the impact of any marginal upward revision.

From the U.S, wholesale inflation figures will likely have a greater impact, however. A spike in wholesale inflation could give the FOMC hawks firmer footing for a near-term shift in policy, albeit a tapering to the asset purchasing program.

Following a pullback in the U.S markets on Thursday, concerns over the economic outlook will likely remain a factor with little on the economic calendar for the markets to consider.

The Futures

In the futures markets, at the time of writing, the Dow Mini was down by 9 points.

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

U.S. Shares Retreat, European Shares end Little-Changed

Major U.S. indexes were lower, pulling back from earlier gains but still close to all-time highs.

The Dow Jones Industrial Average fell 133.74 points, or 0.38%, to 34,897.33, the S&P 500 lost 14.45 points, or 0.32%, to 4,499.62 and the Nasdaq Composite dropped 4.28 points, or 0.03%, to 15,282.36 by mid afternoon.

Federal Reserve Bank Governor Michelle Bowman added her voice Wednesday to the growing number of policymakers who say the weak August jobs report likely won’t throw off the central bank’s plan to trim its $120 billion in monthly bond purchases later this year.

Earlier in the day, U.S. data showed the number of Americans filing new claims for jobless benefits fell to the lowest level in nearly 18 months last week, offering more evidence that job growth was being hindered by labor shortages rather than cooling demand for workers.

After falling as much as 0.9% in morning trade, the pan-European STOXX 600 index ended largely unchanged around 467.57 points. The index had shed 1.5% over the past two days on fears of a more-hawkish-than-expected ECB.

Euro zone bonds yields tumbled as the European Central Bank took its first tentative step in withdrawing COVID-era stimulus. Southern Europe led a fall in euro zone sovereign bond yields.

The euro rose 0.15% against the dollar, climbing for the first time in four sessions, while bond markets cheered by sending French 10-yields negative again.

“We’re seeing some modest weakness mainly because the market is just in flux. There is no real clarity on when we will start to see the Fed and ECB start to pull back stimulus,” said Edward Moya, a senior market analyst with OANDA in New York.

Instead of hinting at any potential end date for its pandemic-era purchase programme, European Central Bank President Christine Lagarde instead channelled the spirit of former British Prime Minister Margaret Thatcher, saying: “The lady isn’t tapering.”

Germany’s 10-year yield, the benchmark for the bloc, fell. [GVD/EUR]

FRAGILE CHINA

MSCI’s benchmark for global equity markets fell 0.33% to 740.33. Emerging markets stocks fell 1.18%.

The UK’s FTSE 100 dropped 1% with low-cost airline easyJet tumbling over 10% as it tapped shareholders for 1.2 billion pounds ($1.7 billion). [.EU]

MSCI’s broadest index of Asia-Pacific shares ended down 1%, which was its worst daily performance since Aug. 19, the last time markets decided they were worried about the U.S. Federal Reserve tapering its massive asset purchase programme.

Chinese tech giants Tencent, NetEase and Alibaba had slumped 8.5%, 11% and 6% respectively after online gaming chiefs were summoned by authorities to check they are sticking to strict new rules for the sector.

“The global story is looking soft and it’s being hit by the Delta variant plus concern about potentially the Fed still moving towards a taper,” said Rob Carnell, Asia head of research at ING. “It’s an unsettling combination of things.”

The China angst had meant Hong Kong, where many heavyweight Chinese firms are also listed, shed 2.3%.

News that Chinese authorities had told gaming firms to resolutely curb incorrect tendencies such as focusing “only on money” and “only on traffic” had hurt companies with large gaming operations. Tencent fell 8.5%, Bilibili lost nearly 9% and NetEase slumped 11%.

There was more turbulence too for the country’s most indebted property giant, Evergrande.

Media reports the company would suspend some interest payments on loans and payments to its wealth management products sent its shares down more than 10% at one point, although they recovered almost half of the drop on news that some creditors had agreed to loan payment extensions.

Korea’s Kospi fell 1.5%, also under pressure from regulatory scrutiny of local tech players. In Korea’s case, fintech names such as Kakao Corp , which sank 7.2%, and Naver Corp, down 6.9%, were in the spotlight.

Australian stocks lost nearly 2% after payrolls data showed a sharp drop in jobs in the first half of August.

Gold steadied in choppy trading, buoyed by a slight retreat in the dollar. Spot bullion prices were up 0.4%.

Oil prices fell on China’s plan to tap state reserves and a smaller-than-expected drawdown in U.S. crude supplies.

Brent crude was last down $1.14, or down 1.57%, at $71.46 a barrel. U.S. crude was last down $1.16, or down 1.66% at %68.15.

($1 = 0.7246 pounds)

(Additional reporting by Alun John in Hong Kong; Editing by Carmel Crimmins and Nick Zieminski)

European Stocks Slide Ahead of ECB Meeting, EasyJet Tumbles

The continent-wide STOXX 600 index was down 0.8%, hitting a three-week low, with UK’s FTSE 100 leading losses with a 1.1% drop and Germany’s DAX touching over a one-month low.

British airline easyJet tumbled 13.8% after it revealed plans to raise 1.2 billion pounds ($1.7 billion) and said it had rejected a takeover offer.

Travel stocks, down 1.8%, fell the most among sectors, while miners, technology and automakers dropped between 1.0% and 1.4%.

The ECB is expected to slow its bond buying via its Pandemic Emergency Purchase Programme (PEPP), according to a Reuters poll, but also reassure markets that this is not the start of a gradual exit from easy policy.

Asian shares dropped more than a percent, with Chinese gaming stocks coming under pressure from fresh regulatory scrutiny, while data showed China’s factory gate inflation hit a 13-year high in August.

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

(Reporting by Sruthi Shankar in Bengaluru; Editing by Saumyadeb Chakrabarty and Shounak Dasgupta)

European Equities: Economic Data and the ECB in Focus

Economic Calendar

Thursday, 9th September

German Trade Balance (Jul)

ECB Interest Rate Decision (Aug)

ECB Press Conference

Friday, 10th September

German CPI (MoM) (Aug) Final

The Majors

It was another bearish day for the European majors on Wednesday.

The DAX30 and the EuroStoxx600 fell by 1.47% and by 1.06% respectively, with the CAC40 ending the day down by 0.85%.

Economic data from the Eurozone was on the lighter side, leaving the negative sentiment from Tuesday to linger.

Concerns over the resilience of the economic recovery weighed on the majors ahead of today’s ECB monetary policy decision.

How the ECB responds to inflationary pressures, previously considered transitory, has also left the markets on unsteady ground.

According to prelim figures, the Eurozone’s annual rate of inflation accelerated from 2.2% to 3.0% in August…

The Stats

French non-farm payrolls were in focus early in the session.

In the 2nd quarter, non-farm payrolls increased by 1.1% quarter-on-quarter. In the previous quarter, payrolls had risen by 1.2%.

From the U.S

JOLT’s job openings were in focus late in the European session.

In July, job openings jumped from 10.185m to 10.934m in July, coming in well ahead of a forecasted 10.000m.

The numbers failed to change the mood, however.

The Market Movers

For the DAX: It was a bearish day for the auto sector on Wednesday. Volkswagen slid by 3.05% to lead the way, with Daimler ending the day down by 2.44%. BMW and Continental both fell by 2.35% respectively.

It was also a bearish day for the banks. Deutsche Bank and Commerzbank saw losses of 0.46% and 2.35% respectively.

From the CAC, it was a bearish day for the banks. BNP Paribas and Credit Agricole fell by 1.53% and by 1.29% respectively, with Soc Gen ending the day down by 2.11%.

Things were not much better for the French auto sector. Stellantis NV slid by 2.86%, with Renault falling by 0.82%.

Air France-KLM bucked the trend, rising by 0.64%, while Airbus SE fell by 0.33%.

On the VIX Index

It was back into the red the VIX on Wednesday.

Following a 10.54% jump on Tuesday, the VIX fell by 0.99% to end the day at 17.96.

On Tuesday, the NASDAQ declined by 0.57%, with the Dow and S&P500 ending the day down by 0.20% and by 0.13% respectively.

VIX 090921 Daily Chart

The Day Ahead

It’s a busier day ahead on the Eurozone’s economic calendar.

Trade data from Germany will draw interest in the early part of the session. While we can expect market sensitivity to the numbers, the ECB will be the main area of focus on the day.

Later in the day, the ECB will deliver its 1st policy decision of the final quarter of the year. While the markets are expecting tapering to the asset purchasing program, there is some uncertainty over other policy measures.

There’s been plenty of hawkish chatter amidst persistent inflationary pressure. Economic uncertainty remains as a result of the Delta variant, however.

From the U.S, jobless claims will also influence, though the release coincides with Lagarde’s press conference.

The Futures

In the futures markets, at the time of writing, the Dow Mini was down by 12 points.

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

Worries Over Economic Recovery Shake World Stocks, Wall Street

Accommodative central bank policies and optimism about reopening economies have pushed equities to record levels but concerns are growing about the impact of rising coronavirus infections due to the Delta variant.

Markets are also still assessing data from last week which showed the U.S. economy created the fewest jobs in seven months in August, and wondering how the U.S. central bank will respond.

The Fed should move forward with a plan to taper its massive asset purchase programme despite the slowdown in job growth, St. Louis Federal Reserve Bank President James Bullard said in an interview with the Financial Times on Wednesday.

“Everything is tapering, tapering, tapering. We are looking at every single central bank – when is the next one?” said Eddie Cheng, head of international multi-asset portfolio management at Wells Fargo Asset Management, though he added: “The Delta variant impact is still running like a wild card”.

The Dow Jones Industrial Average fell 76.74 points, or 0.22 percent, to 35,023.26, the S&P 500 lost 7.8 points, or 0.17 percent, to 4,512.23 and the Nasdaq Composite dropped 87.96 points, or 0.57 percent, to 15,286.37 by 2:17 p.m. EST (18:17 GMT).

MSCI’s world equity index fell 0.41% by after seven consecutive days of gains.

European stocks fell 1% and hit their lowest in nearly three weeks. Britain’s FTSE 100 struck two-week lows, down 0.75%.

“September is the month investors confront reality,” said Peter Tuz, president of Chase Investment Counsel in Charlottesville, Virginia, pointing to uncertainty over the Fed’s tapering plans and inflation fears as a reason investors are taking profits or reallocating funds.

The coronavirus Delta variant and concerns over the economic recovery were also weighing.

“What is likely ahead of us is a continued but temporary deceleration of economic activity of one to three months which likely started in August,” said Sebastien Galy, senior macro strategist at Nordea Asset Management.

Federal official Robert Kaplan was due to speak later on Wednesday.

In Europe, markets are focused on whether the European Central Bank will this week begin to scale back its bond purchase programme.

The dollar paired some gains after jumping to a one-week high against a basket of other major currencies. It also hit a one-week peak against the the single currency and was trading at $1.1826.

The dollar’s strength offset investors’ risk aversion to pressure bullion to a two-week low. Spot gold prices fell 0.1%.

Longer-dated U.S. government bond yields slipped on Wednesday coming off a two-day climb after labor market data and ahead of an auction by the Treasury in 10-year notes. Yields on 10-year Treasury notes fell to 1.3495%, retreating from this week’s eight-week highs.

Germany’s 10-year Bund yield also hit eight-week highs before edging lower to -0.32% .

“Fears that central banks might start to taper their asset purchases seems to have knocked away a little confidence, particularly given tomorrow’s ECB decision where many expect we’ll begin to see the start of that process, not least with inflation there running at its highest levels in almost a decade,” Deutsche Bank analysts said in a note.

MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.77%, stemming an eight-session string of gains.

Chinese blue chips dropped 0.41%, weighed down by recent soft data in the world’s second-biggest economy.

But Japan’s Nikkei jumped 0.89% and hit a five-month high, helped by revised gross domestic product growth figures beating expectations.

Bitcoin continued its rout, down 1.1%.

Shares of Coinbase Global Inc dropped over 2% after the firm revealed it has received a legal notice from the top U.S. markets regulator.

U.S. crude oil jumped 1.39% to $69.32 a barrel and Brent crude rose 1.4% to $72.69 per barrel, with prices supported by a slow restart to production in the Gulf of Mexico after Hurricane Ida hit the region.

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

(Additional reporting by Alun John in Hong Kong; Editing by Kenneth Maxwell & Shri Navaratnam, Editing by William Maclean and Nick Tattersall)

European Stocks Fall 1% on Growth Worries

The Europe-focussed STOXX 600 index fell 1% by 07:12 GMT – on course for its biggest daily decline in three weeks – after losses overnight on Wall Street’s benchmark S&P 500 and Asian stocks.

Swedish investment company EQT fell 5.9% after a share placing deal, while Stellantis dropped 2.5% after Dongfeng Motor Hong Kong said it had sold shares in the carmaker for about 600 million euros ($710 million).

French drugmaker Sanofi slipped 1.4% after it agreed to buy U.S. biopharmaceutical company Kadmon Holdings Inc in a $1.9 billion deal.

British industrial technology company Smiths Group rose 3.8% after it agreed to sell its medical unit to U.S.-based ICU Medical Inc for $2.4 billion.

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

(Reporting by Sruthi Shankar in Bengaluru; Editing by Saumyadeb Chakrabarty)

 

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

Economic Calendar

Wednesday, 8th September

French Non-Farm Payrolls (QoQ) (Q2)

Thursday, 9th September

German Trade Balance (Jul)

ECB Interest Rate Decision (Aug)

ECB Press Conference

Friday, 10th September

German CPI (MoM) (Aug) Final

The Majors

It was a bearish day for the European majors on Tuesday.

The DAX30 and the EuroStoxx600 fell by 0.56% and by 0.45% respectively, with the CAC40 ending the day down by 0.26%.

Economic data for the Eurozone failed to give the majors a boost, in spite of upbeat GDP numbers. Better than expected industrial production figures from Germany were also not enough as economic sentiment took an unexpected tumble.

From China, trade data had provided some support ahead of the European open.

In August, China’s trade surplus widened from US$56.56bn to US$58.35bn versus a forecasted narrowing to US$51.05bn. Exports were up 25.6%, year-on-year, with imports up 33.1%. In July, exports had been up by 19.3% and imports up by 28.1%. Both sets of figures came in ahead of forecasts.

The Stats

German industrial production and Eurozone 2nd quarter GDP numbers were in focus. ZEW Economic Sentiment figures for Germany and the Eurozone also influenced, however.

Industrial Production

In July, industrial production rose by 1.0%, reversing a 1.0% fall from June. Economists had forecast a 0.9% increase.

According to Destatis,

  • Production in industry excl. energy and construction was up 1.3%.
  • Within industry, the production of capital goods increased 3.2%, with the production of consumer goods up 0.9%.
  • By contrast, the production of intermediate goods fell by 0.5%.
  • Outside industry, energy production was down 3.2%, while production in construction increased 1.1%.

The Eurozone Economy

In the 2nd quarter, the Eurozone economy grew by 2.2%, quarter-on-quarter, which was up from 2nd estimate 2.0%. The economy had contracted by 0.3% in the previous quarter.

Year-on-year, the economy grew by 14.3%, which was up from a 2nd estimate 13.6%. In the 1st quarter, the economy had contracted by 1.3%.

Economic Sentiment

In August, the Germany’s ZEW Economic Sentiment Index slid from 40.4 to 26.5, with the Eurozone’s falling from 42.7 to 31.1. The numbers were enough to weigh on the majors as the continued spread of the Delta variant added further uncertainty.

From the U.S

There were no stats to influence the majors later in the session.

The Market Movers

For the DAX: It was a mixed day for the auto sector on Tuesday. Volkswagen slid by 1.11% to buck the trend on the day. BMW and Continental both rose by 0.68% respectively, with Daimler ending the day up by 0.41%.

It was a bullish day for the banks, however. Deutsche Bank and Commerzbank saw gains of 0.74% and 3.44% respectively.

From the CAC, it was a relatively bullish day for the banks. BNP Paribas and Credit Agricole rose by 0.39% and by 0.21% respectively, with Soc Gen ending the day up by 0.62%.

It was a bearish day for the French auto sector, however. Stellantis NV slid by 2.46%, with Renault down by 1.39%.

Air France-KLM slipped by 0.28%, with Airbus SE falling by 1.54%.

On the VIX Index

After having ended the day flat on Friday, the VIX rose by 10.54% on Tuesday to end the day at 18.14. The U.S markets were closed on Monday.

On Tuesday, the NASDAQ rose by 0.07%, while the Dow and S&P500 fell by 0.76% and by 0.34% respectively.

VIX 080921 Daily Chart

The Day Ahead

It’s a quieter day ahead on the Eurozone’s economic calendar.

French nonfarm payrolls are due out ahead of the European open. We don’t expect too much influence from the numbers, however.

With stats on the lighter side, expect the majors to take their cues from the U.S markets ahead of tomorrow’s ECB policy decision.

From the U.S, it’s another quiet day ahead on the economic calendar. JOLT’s job openings, due out late in the session, will draw some interest, however.

The Futures

In the futures markets, at the time of writing, the Dow Mini was down by 2 points.

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

European Shares Hover Below Record High, Telecom Stocks Jump

The pan-European STOXX 600 index slipped 0.1% by 07:19 GMT, after coming just a point below its record high in the previous session.

Media and utilities fell the most among sectors, while telecoms gained 0.8%.

Deutsche Telekom rose 2.5% after it struck a share-swap deal with Softbank Group to increase its stake in U.S. unit T-Mobile and sold its Dutch unit.

Shares in Sweden’s Tele2 rose 1%, while KPN gained almost 4%.

Germany’s Allianz slipped 0.5% after Reuters reported that regulators have launched an investigation into the company after the demise of some of its U.S. investment funds last year.

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

(Reporting by Sruthi Shankar in Bengaluru; Editing by Shounak Dasgupta)

 

European Equities: Economic Data for Germany and the Eurozone in Focus

Economic Calendar

Tuesday, 7th September

German Industrial Production (MoM) (Jul)

German ZEW Current Conditions (Sep)

German ZEW Economic Sentiment (Sep)

Eurozone GDP (QoQ) (Q2)

Eurozone GDP (YoY) (Q2)

Eurozone ZEW Economic Sentiment (Sep)

Wednesday, 8th September

French Non-Farm Payrolls (QoQ) (Q2)

Thursday, 9th September

German Trade Balance (Jul)

ECB Interest Rate Decision (Aug)

ECB Press Conference

Friday, 10th September

German CPI (MoM) (Aug) Final

The Majors

It was a bullish day for the European majors on Monday.

The DAX30 led the way, rising by 0.96%, with the the CAC40 and the EuroStoxx600 ending the day up by 0.80% and by 0.70% respectively.

With the U.S markets closed, the market focus was on economic data from the Eurozone at the start of the week. Economic data from Germany impressed, delivering support to the majors ahead of the ECB policy decision on Thursday.

Away from the economic calendar, rising COVID-19 cases continued to cause concern.

The Stats

German factory orders and construction PMI figures were in focus early in the European session.

In July, factory orders rose by 3.4%, month-on-month, versus a forecasted 1.00% decline. In June, orders had jumped by 4.6%.

According to Destatis,

  • Domestic orders fell by 2.5%, while foreign orders surged by 8.0% in July.
  • New orders from the euro area decreased 4.1%, while new orders from other countries jumped by 15.7% compared with June 2021.
  • Manufacturers of intermediate goods saw new orders slip 0.5%.
  • By contrast, new orders of capital goods rose by 5.4%, with capital goods orders up 7.5%.
  • Consumer goods orders also impressed, increasing by 7.5% in July.

In August, the HIS Markit Construction PMI fell from 47.1 to 44.6. The numbers had a muted impact on the European majors, however.

From the U.S

There were no stats to influence the majors later in the session, with the U.S markets closed for Labor Day.

The Market Movers

For the DAX: It was a mixed day for the auto sector on Monday. Volkswagen and BMW rose by 0.25% and 0.80% respectively. Continental and Daimler ended the day down by 1.40% and by 0.03% respectively.

It was a bullish day for the banks, however. Deutsche Bank and Commerzbank saw gains of 2.13% and 1.87% respectively.

From the CAC, it was a relatively bullish day for the banks. BNP Paribas and Soc Gen rose by 0.46% and by 0.40% respectively, with Credit Agricole ending the day up by 0.83%.

It was also a relatively bullish day for the French auto sector. Stellantis NV and Renault rose by 0.65% and by 0.15% respectively.

Air France-KLM ended the day down by 0.56%, while Airbus SE rallied by 1.22%.

On the VIX Index

The U.S markets were closed for Labor Day on Monday. On Friday, the VIX had ended the day flat after having risen by 1.86% on Thursday.

VIX 060921 Daily Chart

The Day Ahead

It’s a busier day ahead on the Eurozone’s economic calendar.

The German economy is back in focus, with industrial trend orders and ZEW Economic Sentiment figures due out.

For the Eurozone, 2nd quarter GDP and ZEW Economic Sentiment figures will also draw interest.

From the U.S, it’s another quiet day ahead on the economic calendar. There are no major stats to provide direction late in the European session.

Ahead of the European open, however, trade data from China set the tone.

The Futures

In the futures markets, at the time of writing, the Dow Mini was up by 63 points.

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

European Equities: German Factory Orders in Focus

Economic Calendar

Monday, 6th September

German Factory Orders (MoM) (Jul)

Germany IHS Markit Construction PMI (Aug)

Tuesday, 7th September

German Industrial Production (MoM) (Jul)

German ZEW Current Conditions (Sep)

German ZEW Economic Sentiment (Sep)

Eurozone GDP (QoQ) (Q2)

Eurozone GDP (YoY) (Q2)

Eurozone ZEW Economic Sentiment (Sep)

Wednesday, 8th September

French Non-Farm Payrolls (QoQ) (Q2)

Thursday, 9th September

German Trade Balance (Jul)

ECB Interest Rate Decision (Aug)

ECB Press Conference

Friday, 10th September

German CPI (MoM) (Aug) Final

The Majors

It was a bearish day for the European majors on Friday.

The CAC40 slid by 1.08% to lead the way down, with the the DAX30 and the EuroStoxx600 ending the day down by 0.37% and by 0.56% respectively.

Disappointing economic data from China, the Eurozone, and the U.S weighed on the European majors on Friday.

From China, the Caixin Services PMI slid from 54.9 to 46.7 in August. The numbers followed manufacturing PMI figures from Wednesday, which had shown that the manufacturing sector had contracted in August.

Concerns over the impact of the Delta variant on the economic recovery were validated following the stats in the week.

The Stats

It was a particularly busy day on the Eurozone economic calendar ahead of key stats from the U.S late today.

Service sector PMI numbers for August were in focus along with Eurozone retail sales figures this morning. While the stats were of influence, the markets were holding out for August nonfarm payroll figures from the U.S, however, muting the impact of the numbers on the European majors.

Member State Services

For Spain, the services PMI fell from 61.9 to 60.1 versus a forecasted fall to 61.5.

Italy’s services sector PMI held steady at 58.8, however, versus a forecasted 58.5.

France’s services PMI fell from 56.8 to 56.3, which was down from a prelim 56.4

Numbers from Germany also failed to impress. In August, the PMI fell from 61.8 to 60.8 versus a prelim 61.5.

The Eurozone

In August, the Eurozone’s services PMI fell from 59.8 to 59.0, which was down from a prelim 59.7.

As a result, the Eurozone’s composite PMI fell from 60.2 to 59.0, which was down from a prelim 59.5.

According to the August composite survey,

  • Economic momentum only faded marginally from July’s 15-year peak.
  • Job growth was at the fastest rate seen in over 2-decades as firms look to respond to demand.
  • In August, Italy bucked the trend, registering the fastest output growth for over 15-years.
  • The Euro area saw a strong intake in new work in spite of easing from July levels.
  • Demand was strong, with new manufacturing sector orders leading the way.

Retail Sales

In July, Eurozone retail sales slid 2.3%, month-on-month, reversing a 1.5% increase from June.

From the U.S

Key stats included non-manufacturing PMI and nonfarm payroll figures, both of which were negative for riskier assets.

In August, the ISM Non-Manufacturing PMI fell from 64.1 to 61.7 versus a forecasted decline to 61.5.

Of greater influence, however, were the nonfarm payroll figures. In August, nonfarm payrolls rose by 235k, falling well short of a forecasted 750k. Nonfarm payrolls had jumped by 1,053k in July.

With the FED debate over tapering ongoing, the numbers may have caught a number of the hawks by surprise.

In spite of the weak headline number, unemployment fell from 5.4% to 5.2%, with average hourly wages up 4.3%, year-on-year.  Both beat forecasts.

The Market Movers

For the DAX: It was a bearish day for the auto sector on Friday. Volkswagen and BMW fell by 0.30% and 0.28% respectively. Continental and Daimler ended the day down by 0.39% and by 0.55% respectively.

It was a mixed day for the banks, however. Deutsche Bank fell by 0.24%, while Commerzbank rose by 0.74%.

From the CAC, it was a bearish day for the banks. BNP Paribas and Credit Agricole slid 1.70% and by 1.93% respectively, with Soc Gen falling by 1.54%.

It was a mixed day for the French auto sector. While Stellantis NV rose by 0.04%, Renault fell by 1.84%.

Air France-KLM and Airbus SE ended the day down by 1.82% and by 1.97% respectively.

On the VIX Index

It was a flat end to the week for the VIX on Friday.

After having risen by 1.86% on Thursday, the VIX gave up gains from earlier in the day to end the day unchanged at 16.41.

The NASDAQ rose by 0.21%, while the Dow and the S&P500 ended the day down by 0.21% and by 0.03% respectively.

VIX 060921 Daily Chart

The Day Ahead

It’s a relatively quiet day ahead on the Eurozone’s economic calendar.

The German economy is in focus, with factory orders and construction PMI numbers due out.

Expect factory orders for July to have a greater impact.

From the U.S, there are no stats due out, with the U.S markets closed for Labor Day.

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

The Week Ahead – Monetary Policy Decisions Put the EUR, the Loonie, and the Aussie Dollar in Focus

On the Macro

It’s a quieter week ahead on the economic calendar, with 38 stats in focus in the week ending 10th September. In the week prior, 80 stats had also been in focus.

For the Dollar:

It’s a quiet week ahead and a quiet start to the week, with the U.S markets closed for Labor Day on Monday.

On Tuesday, JOLT’s job openings will draw interest, with little else for the markets to consider.

The focus will then shift to the weekly jobless claim figures on Thursday.

Wholesale inflation numbers wrap things up at the end of the week.

In the week ending 3rd September, the Dollar Spot Index fell by 0.70% to 92.035.

For the EUR:

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

The German economy will be back in the spotlight in the week ahead.

German factory orders and industrial production figures will be in focus on Monday and Tuesday.

On Thursday, German trade data will also draw plenty of attention.

ZEW Economic Sentiment figures for Germany and the Eurozone will also influence on Tuesday.

The main event of the week, however, will be the ECB monetary policy decision.

With the markets expecting the ECB to stand pat on policy, the focus will be on the ECB Press Conference. Will the ECB continue to see reflation as transitory?

For the week, the EUR rose by 0.72% to $1.1880.

For the Pound:

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

BRC Retail sales figures will be in focus early in the week. With the markets looking to see how the UK economy is faring, the numbers should have more influence than usual.

A lack of stats mid-week will leave the Pound in the hands of market risk sentiment ahead of a busy Friday.

Industrial and manufacturing production and trade data due out on Friday will be the key stats of the week.

The Pound ended the week up by 0.78% to $1.3871.

For the Loonie:

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

Ivey PMI numbers will be in focus on Wednesday ahead of employment figures on Friday.

While the employment numbers will be key, the BoC policy decision on Wednesday will be the main event.

BoC forward guidance will be the key area of focus on the day.

The Loonie ended the week up 0.76% to C$1.2524 against the U.S Dollar.

Out of Asia

For the Aussie Dollar:

There are no material stats to consider in the week.

While it’s a quiet week on the economic data front, the RBA is in action on Tuesday.

Have the latest lockdown measures left the RBA in a lengthier holding pattern on policy?

The Aussie Dollar ended the week up by 2.02% to $0.7460.

For the Kiwi Dollar:

It’s a quiet week ahead.

Electronic card retail sales figures on Friday will be the only key stat of the week.

From elsewhere, economic data from China will also influence, as will COVID-19 news updates.

The Kiwi Dollar ended the week up by 2.10% to $0.7158.

For the Japanese Yen:

Household spending will be in focus on Tuesday. On Wednesday, 2nd quarter GDP numbers will also draw interest. The markets will be looking for any revisions from the 1st estimates.

The Japanese Yen rose by 0.12% to ¥109.71 against the U.S Dollar.

Out of China

Trade data will have a material impact on market risk sentiment on Tuesday.

Private sector PMIs for July and August disappointed. Weak trade data will raise further question marks over the economic recovery.

With inflation still a hot topic, Inflation numbers on Thursday will also be key.

The Chinese Yuan ended the week up by 0.25% to CNY6.4560 against the U.S Dollar.

Geo-Politics

Iran, China, and Russia will continue to be the main areas of interest for the markets. News updates from the Middle East, in particular, will need monitoring following recent events in Afghanistan.

The Weekly Wrap – A Particularly Busy Economic Calendar Left the Greenback in the Red

The Stats

It was a particularly busy week on the economic calendar, in the week ending 3rd September.

A total of 80 stats were monitored, which was up from 49 stats in the week prior.

Of the 81 stats, 34 came in ahead forecasts, with 41 economic indicators coming up short of forecasts. There were 5 stats that were in line with forecasts in the week.

Looking at the numbers, 34 of the stats reflected an upward trend from previous figures. Of the remaining 46 stats, 41 reflected a deterioration from previous.

For the Greenback, FED monetary policy and economic data delivered Dollar weakness. In the week ending 3rd September, the Dollar Spot Index fell by 0.70% to 92.035. In the previous week, the Dollar had fallen by 0.88% to 92.653.

Out of the U.S

Early in the week, consumer confidence figures delivered yet more bad news. In August, the CB Consumer Confidence Index fell from 129.1 to 113.8, as the Delta variant continued to spread.

ADP nonfarm employment change figures on Wednesday also failed to impress. Nonfarm payrolls increased by 374k in August following a modest 326k rise in July.

On Thursday, jobless claim figures were somewhat better, with claims falling from 354k to 340k in the week ending 27th September.

At the end of the week, however, it was official nonfarm payroll figures that were key.

Falling well short of a forecasted 665k increase, payrolls rose by just 243k in August. In July, payrolls had jumped by 1,053k.

In spite of the weak number, the unemployment rate fell from 5.4% to 5.2% to further muddy the waters on FED policy.

From the private sector, the numbers were mixed. The ISM Manufacturing PMI rose from 59.5 to 59.9, while the all-important Non-Manufacturing PMI fell from 64.1 to 61.7.

Out of the UK

Economic data was on the lighter side once more. Finalized private sector PMIs for August disappointed in the week.

The all-important services PMI fell from 59.6 to 55.0, which was down from a prelim 55.5. Of less significance was a fall in the manufacturing PMI from 60.4 to 60.3, which was up from a prelim 60.1.

In the week, the Pound rose by 0.78% to end the week at $1.3871. In the week prior, the Pound had risen by 1.04% to $1.3764.

The FTSE100 ended the week down by 0.14%, partially reversing a 0.85% loss gain the previous week.

Out of the Eurozone

Private sector PMIs for August, French GDP, German unemployment, and prelim August inflation figures were in focus.

While inflationary pressures picked up once more in August, private sector PMIs delivered mixed results in the week.

According to prelim figures, the Eurozone’s annual rate of inflation accelerated from 2.2% to 3.0% in August. The core annual rate of inflation picked up from 0.7% to 1.6%.

French GDP numbers for the 2nd quarter were also upbeat, with the French economy expanding by 1.1% in Q2.  In the previous quarter, the French economy had stagnated.

While Germany’s unemployment rate fell from 5.6% to 5.5% in July, retail sales slid by 5.1%, reversing a 4.5% increase from June. French consumer spending was also woeful, falling by 2.2%. In June, consumer spending had risen by just 0.3%.

Private sector PMIs were weaker but not weak enough to cause a stir.

The Eurozone’s composite PMI fell from 60.2 to 59.0, which was down from a prelim 59.5. In August, the Eurozone’s services PMI fell from 59.8 to 59.0, with the manufacturing PMI declining from 62.8 to 61.4.

For the week, the EUR rose by 0.83% to $1.1795. In the week prior, the EUR had fallen by 0.84% to $1.1698.

The CAC40 rose by 0.12%, while the DAX30 and the EuroStoxx600 ended the week with losses of 0.45% and 0.09% respectively.

For the Loonie

GDP and trade data were the key stats of the week.

In the 2nd quarter, the Canadian economy contracted by 0.3%, quarter-on-quarter. The economy had expanded by 0.3% in the previous quarter.

On an annualized basis, the economy contracted by 1.1% after having expanded by 5.5% in the quarter prior.

Trade figures were also weak, with the trade surplus narrowing from C$2.56bn to C$0.78bn.

While the stats were disappointing, crude oil prices held relatively steady following the previous week’s rebound, to deliver support.

In the week ending 3rd September, the Loonie rose by 0.76% to C$1.2524. In the week prior, the Loonie had rallied by 1.57% to C$1.2620.

Elsewhere

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

The Aussie Dollar rallied by 2.02% to $0.7460, with the Kiwi Dollar ending the week up by 2.10% to $0.7158.

For the Aussie Dollar

Company gross operating profits were upbeat for the 2nd quarter, surging by 7.1%. In the previous quarter, profits had fallen by 0.3%.

Private sector credit rose by 0.7% off the back of a 0.9% increase in June.

Also positive were GDP numbers for the 2nd quarter. Year-on-year, the economy grew by 9.6% compared with 1.1% in the previous quarter. Quarter-on-quarter, the economy expanded by 0.7% after having expanded by 1.8% in the quarter prior.

Trade data on Thursday were upbeat, with the trade surplus widening from A$10.496bn to A$12.117bn.

Retail sales figures were negative, however. In July, retail sales fell by 2.7%, which was in line with prelim figures. Lockdown measures weighed, with sales having fallen by 1.8% in June.

For the Kiwi Dollar

It was a relatively quiet week, with business confidence in focus.

In August, the ANZ Business Confidence Index slid from -3.8 to -14.2. While negative for the Kiwi, the markets were in forgiving mood, however. Expectations of a rebound in confidence limited the damage.

For the Japanese Yen

It was a relatively busy week, with the numbers skewed to the positive.

Retail sales rose by 2.4% in July, which followed a more modest 0.1% increase in June.

Capital spending was also on the rise. In the 2nd quarter, capital spending rose by 5.3%, year-on-year, partially reversing a 7.8% slide from the previous quarter.

Industrial production fell by a relatively modest 1.5%, however, partially reversing a 6.5% jump from June.

Service sector PMI numbers also disappointed in August, falling from 47.4 to 42.9.

The Japanese Yen rose by 0.12% to ¥109.71 against the U.S Dollar. In the week prior, the Yen had fallen by 0.05% to ¥109.84.

Out of China

Private sector PMIs were key stats in the week and were skewed to the negative.

Both the NBS and the Markit Caixin figures disappointed.

According to the NBS, the manufacturing PMI fell from 50.4 to 50.1, with the non-manufacturing PMI falling from 53.3 to 47.5.

Of greater significance, however, was a fall in the Caixin Manufacturing PMI from 50.3 to 49.2.

According to the Markit Caixin survey, things were not much better for the services sector. The Caixin Services PMI slid from 54.9 to 46.7 in August.

In the week ending 3rd September, the Chinese Yuan rose by 0.25% to CNY6.4560. In the week prior, the Yuan had ended the week up by 0.45% to CNY6.4720.

The CSI300 and the Hang Seng ended the week up by 0.33% and by 1.94% respectively.

European Equities: A Week in Review – 03/09/21

The Majors

It was a mixed week for the majors in the week ending 3rd September. Following modest gains from the week, prior, the DAX30 and the EuroStoxx600 fell by 0.45% and by 0.09% respectively. The CAC40 avoided the red, however, in spite of a 1.08% slide on Friday, with a modest 0.12% gain.

A particularly busy week on the economic calendar left the European majors on the defensive.

Weak data from China was of concern, with China’s private sector contracting in August, according the market’s preferred Markit survey.

Data from the U.S was also on the weaker side, adding to the negative mood as the Delta variant continued to impact.

The Stats

Private sector PMIs for August, French GDP, German unemployment, and prelim August inflation figures were in focus.

While inflationary pressures picked up once more in August, private sector PMIs delivered mixed results in the week.

According to prelim figures, the Eurozone’s annual rate of inflation accelerated from 2.2% to 3.0% in August. The core annual rate of inflation picked up from 0.7% to 1.6%.

French GDP numbers for the 2nd quarter were also upbeat, with the French economy expanding by 1.1% in Q2.  In the previous quarter, the French economy had stagnated.

While Germany’s unemployment rate fell from 5.6% to 5.5% in July, retail sales slid by 5.1%, reversing a 4.5% increase from June. French consumer spending was also woeful, falling by 2.2%. In June, consumer spending had risen by just 0.3%.

Private sector PMIs were weaker but not weak enough to cause a stir.

The Eurozone’s composite PMI fell from 60.2 to 59.0, which was down from a prelim 59.5. In August, the Eurozone’s services PMI fell from 59.8 to 59.0, with the manufacturing PMI declining from 62.8 to 61.4.

From the U.S

Early in the week, consumer confidence figures delivered yet more bad news. In August, the CB Consumer Confidence Index fell from 129.1 to 113.8, as the Delta variant continued to spread.

ADP nonfarm employment change figures on Wednesday also failed to impress. Nonfarm payrolls increased by 374k in August following a modest 326k rise in July.

On Thursday, jobless claim figures were somewhat better, with claims falling from 354k to 340k in the week ending 27th September.

At the end of the week, however, it was official nonfarm payroll figures that were key.

Falling well short of a forecasted 665k increase, payrolls rose by just 243k in August. In July, payrolls had jumped by 1,053k.

In spite of the weak number, the unemployment rate fell from 5.4% to 5.2% to further muddy the waters on FED policy.

From the private sector, the numbers were mixed. The ISM Manufacturing PMI rose from 59.5 to 59.9, while the all-important Non-Manufacturing PMI fell from 64.1 to 61.7.

The Market Movers

From the DAX, it was a mixed week for the auto sector. BMW and Volkswagen saw gains of 1.43% and 0.90% respectively, while Continental and Daimler ended the week down by 3.16% and by 1.54% respectively.

It was a bullish week for the banking sector, however. Deutsche Bank rose by 0.38%, with Commerzbank rallying by 3.42%.

From the CAC, it was a mixed week for the banks. BNP Paribas and Credit Agricole rose by 0.77% and by 0.08% respectively, while Soc Gen slipped by 0.41%.

It was a bearish week for the French auto sector, however. Stellantis NV fell by 0.49%, with Renault sliding by 3.40%.

Air France-KLM and Airbus ended the week down by 2.68% and by 0.47% respectively.

On the VIX Index

It was a back into the green for the VIX in the week ending 3rd September, marking just the 3rd weekly gain in 7-weeks.

Following an 11.69% fall from the previous week, the VIX rose by a modest 0.12% to end the week at 16.41.

2-days in the green from 5 sessions, which included a 1.79% gain on Tuesday delivered the upside.

For the week, the NASDAQ rallied by 1.55%, with the S&P500 gaining 0.58%. The Dow fell by 0.24%, however.

VIX 040921 Weekly Chart

The Week Ahead

It’s another busy week ahead on the economic calendar, with the German economy in focus.

German factory orders and industrial production figures will be in focus on Monday and Tuesday.

On Thursday, German trade data will also draw plenty of attention.

ZEW Economic Sentiment figures for Germany and the Eurozone will also influence on Tuesday.

The main event of the week, however, will be the ECB monetary policy decision.

With the markets expecting the ECB to stand pat on policy, the focus will be on the ECB Press Conference. Will the ECB continue to see reflation as transitory?

From the U.S, it’s a quieter week, however, with JOLTs job openings and weekly jobless claims the key stats. At the end of the week, wholesale inflation figures will also draw interest, however.

Economic data from China will also provide direction following the weak PMI numbers from the week prior.

Inflation and trade data for July are due out in the week.

European Stocks Mark Worst Fall in 2 Weeks on U.S. Job Jitters

The pan-European STOXX 600 index slipped 0.6%, marking its worst fall in two weeks after data showed the U.S. economy created the fewest jobs in seven month in August. Global equities also tumbled after the data.

Retail stocks were among the worst performers for the day, dropping 0.9%. Bookseller WH Smith, which makes at least a quarter of its earnings from U.S. customers, was the worst performer in the sector, down 3.4%.

Travel stocks sank 1%.

The laggard U.S. data was attributed to a rise in the highly contagious Delta variant of the coronavirus. But analysts saw a bright side in the reading, specifically that weakness in the job market would give less impetus to the Federal Reserve to rein in liquidity measures.

“Friday’s weaker-than-expected jobs puts less pressure on the Fed to taper its stimulus, which is likely to provide a short-term boost for stocks. The stock market loves stimulus and any indication that the Fed will remain fully accommodative is good news for investors,” said Jay Pestrichelli, CEO of ZEGA Financial.

European technology stocks were the best performers for the week, up nearly 2% as investors fled to sectors most resilient to disruptions caused by the pandemic.

A private survey also showed activity in China’s services sector contracted sharply in August as restrictions to curb the COVID-19 Delta variant threatened to derail the recovery.

But euro zone business activity remained strong last month, IHS Markit’s survey showed, suggesting the bloc’s economy could be back to pre-COVID-19 levels by year-end despite fears about the Delta variant of the coronavirus and widespread supply chain issue.

The European Central Bank will meet next week amid calls from several hawkish members to slow down its pandemic-era purchases programme. A Reuters poll sees the bank announcing a cut to its asset purchases, given a recent spike in inflation.

Payments company Nexi slipped 0.8% after Italy’s competition watchdog said it had opened an investigation into the company’s planned merger with domestic rival SIA.

Spanish fund distribution firm Allfunds jumped 11.7%, and was the best performer on the STOXX 600 after its maiden first-half results beat expectations.

German exchange operator Deutsche Boerse is expected to announce new entrants to the blue-chip DAX index on Friday, part of the index’s biggest ever overhaul.

(Reporting by Sruthi Shankar in Bengaluru; Editing by Saumyadeb Chakrabarty and Angus MacSwan)

Marketmind: Jobs and Japan

That was until Japanese Prime Minister Yoshihide Suga announced he would step down after failing to control the COVID-19 outbreak, setting the stage for a new premier.

And then there’s China data, showing the services sector slumping into sharp contraction in August as restrictions to curb the Delta variant threatened to derail the recovery in the world’s second-biggest economy.

However, change can be a good thing and bad data can spur hopes of more stimulus.

Japanese stocks soared 1.5% to a three-decade peak, as Suga’s departure reduces risks of a big loss for his party at elections later this month.

Equities in Europe and the U.S. look on track to end the week on a high, though Chinese shares slipped almost 1%.

All that optimism has knocked the dollar to one-month lows, and kept a lid on global yields while commodities continued their rebound.

But back to payrolls: the United States is expected to have added 728,000 jobs in August, after weekly data on Thursday showed layoffs at their lowest level in almost a quarter of a century.

Nearly 1.9 million jobs were created in June and July, and economists gradually trimmed their forecasts for August in recent days. Elsewhere though, the day looks thin on data with final PMIs and retail sales due for the euro zone.

On the corporate front, UK homebuilder Berkeley is the latest to flag construction cost inflation due to the usual labour and supply chain bottlenecks

Key developments that should provide more direction to markets on Friday:

Struggling Japan PM Suga steps down

China’s August services activity slumps into contraction

Emerging markets-focused investment firm Ashmore says pre-tax profit rose 28% in H1 ; French investment firm Antin plans IPO

Composite final PMIs

Euro zone retail sales

U.S. non-farm payrolls

Moody’s reviews Spain’s credit rating

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

(Reporting by Karin Strohecker)

 

European Equities: Service Sector PMIs and U.S NFP numbers in Focus

Economic Calendar

Friday, 3rd September

Spanish Services PMI (Aug)

Italian Services PMI (Aug)

French Services PMI (Aug) Final

German Services PMI (Aug) Final

Eurozone Markit Composite PMI (Aug) Final

Eurozone Services PMI (Aug) Final

Eurozone Retail Sales (MoM) (Jul)

The Majors

It was a relatively bullish day for the European majors on Thursday.

The EuroStoxx600 rose by 0.35%, with the CAC40 and the DAX40 ending the day up by 0.06% and by 0.10% respectively.

There were no major stats from the Eurozone to provide the majors with direction on the day.

Economic data from the U.S did provide support late in the session, however.

While the stats were market friendly, the focus remained on today’s nonfarm payrolls and ISM Non-Manufacturing numbers from the U.S.

The Stats

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

From the U.S

Key stats included weekly jobless claims and factory orders.

In the week ending 30th August, initial jobless claims fell from 354k to 340k. Economists had forecast a decline to 345k.

Factory orders rose by 0.40% in July following a 1.50% increase in June. Economists had forecast a 0.3% increase.

Other stats included nonfarm productivity and unit labor costs for the 2nd quarter, which had a muted impact on the majors.

The Market Movers

For the DAX: It was a mixed day for the auto sector on Thursday. Volkswagen and BMW saw gains of 0.77% and 0.01% respectively. Continental and Daimler ended the day down by 0.15% and by 0.75% respectively.

It was a bullish day for the banks, however. Deutsche Bank and Commerzbank rose by 0.24% and by 0.80% respectively.

From the CAC, it was a mixed day for the banks. BNP Paribas ended the day flat, with Soc Gen falling by 0.11%. Credit Agricole rose by 0.23%, however.

It was also a mixed day for the French auto sector. Stellantis NV rose by 1.19%, while Renault fell by 0.89%.

Air France-KLM rose by 0.35%, while Airbus SE ended the day down by 1.03%.

On the VIX Index

It was a back into the green for the VIX on Thursday.

Partially reversing a 2.25% fall from Wednesday, the VIX rose by 1.86% to end the day at 16.41.

The Dow rose by 0.37%, with the NASDAQ and the S&P500 ending the day up by 0.14% and by 0.28% respectively.

VIX 030921 Daily Chart

The Day Ahead

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

Service sector PMIs for Italy and Spain and retail sales figures for the Eurozone are due out later today. Finalized service and composite PMIs for France, Germany, and the Eurozone are also due out.

Barring marked revisions to prelim figures, Italy and the Eurozone’s PMIs and Eurozone retail sales figures will be key.

From the U.S, nonfarm payroll and ISM Non-Manufacturing PMI numbers for August are due out. Expect a plenty of influence from the numbers. While the FED has talked of tapering, a continued surge in hiring and a marked pickup in service sector activity could shift the FED’s timelines vis-à-vis interest rates.

The Futures

In the futures markets, at the time of writing, the Dow Mini was up by 4 points.

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

European Equities: A Quiet Calendar Leaves U.S Jobless Claims in Focus

Economic Calendar

Friday, 3rd September

Spanish Services PMI (Aug)

Italian Services PMI (Aug)

French Services PMI (Aug) Final

German Services PMI (Aug) Final

Eurozone Markit Composite PMI (Aug) Final

Eurozone Services PMI (Aug) Final

Eurozone Retail Sales (MoM) (Jul)

The Majors

It was a mixed day for the European majors on Wednesday.

The DAX30 slipped by 0.07%, while the CAC40 and the EuroStoxx600 ended the day up by 1.18% and by 0.48% respectively.

Economic data from Germany weighed on the DAX30, while other member state and Eurozone manufacturing PMIs delivered support.

Disappointing manufacturing PMI numbers from China failed to sink the majors in spite of the a contraction in August. The all-important Caixin Manufacturing PMI fell from 50.3 to 49.2…

Stats from the U.S were market friendly, however, with weak ADP employment figures suggesting more time needed on the policy front.

The Stats

It was a busy day on the European economic calendar. German retail sales and manufacturing sector PMIs for Italy and Spain were in focus. Finalized PMIs from France, Germany, and the Eurozone also drew interest, however.

German Retail Sales

In July, retail sales slid by 5.1%, month-on-month, versus a forecasted 0.9% decline. Retail sales had rise by 4.5% in June.

Manufacturing Sector Activity

In August, Spain’s manufacturing PMI increased from 59.0 to 59.5 versus a forecasted decline to 58.9.

Italy’s manufacturing PMI rose from 60.3 to 60.9. Economists had forecasted a fall to 60.1.

From France, the manufacturing PMI fell from 58.0 to 57.5, which was up from a prelim 57.3.

German’s manufacturing PMI declined from 65.9 to 62.6, which was also down from a prelim 62.7.

As a result, the Eurozone’s manufacturing PMI fell from 62.8 to 61.4, which was down from a prelim 61.5.

From the U.S

Key stats included ISM Manufacturing PMI and ADP nonfarm employment change figures.

In August, the ISM Manufacturing PMI rose from 59.5 to 59.9. Economists had forecast a decline to 58.6. More significant for the markets was the employment sub-index, which fell from 52.9 to 49.0.

ADP numbers disappointed, however. For August, the ADP reported an 374k increase in nonfarm payrolls versus a forecasted 613k increase. In July, nonfarm employment had risen by 326k.

The Market Movers

For the DAX: It was a mixed day for the auto sector on Wednesday. Volkswagen bucked the trend, rising by 0.19%.  BMW and Continental ended the day down by 1.09% and by 1.81% respectively, with and Daimler  falling by 0.11%.

It was a bullish day for the banks, however. Deutsche Bank and Commerzbank rose by 0.57% and by 1.07% respectively.

From the CAC, it was a bullish day for the banks. BNP Paribas and Soc Gen saw gains of 1.99% and 1.35% respectively, with Credit Agricole rising by 0.97%.

It was a bearish day for the French auto sector, however. Stellantis NV and Renault fell by 0.54% and 1.59% respectively.

Air France-KLM and Airbus SE ended the day up by 1.09% and by 1.99% respectively.

On the VIX Index

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

Reversing a 1.79% gain from Tuesday, the VIX fell by 2.25% to end the day at 16.11.

The Dow fell by 0.14%, while the NASDAQ and the S&P500 ended the day up by 0.33% and by 0.03% respectively.

VIX 020921 Daily Chart

The Day Ahead

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

There are no material stats due out of the Eurozone to provide the majors with direction. The lack of stats will leave the focus on the U.S economic calendar.

As the markets look ahead to NFP numbers on Friday, today’s initial jobless claims will draw plenty of interest. We’ve yet to see initial jobless claims fall to sub-300k levels. A marked decline would place greater expectation on Friday’s NFP numbers. ADP numbers from Wednesday have added to the confusion, however…

The Futures

In the futures markets, at the time of writing, the Dow Mini was down by 5 points.

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

European Stocks Make Strong Start to September, Record High in Sight

After seven straight months of gains, the pan-European STOXX 600 rose 0.5% to end at 473.12 points, and was within striking distance of its record high of 476.16.

Retail and travel & leisure stocks were the top sectoral gainers, rising 1.8% each.

Airline SAS gained 2.4% after reporting a smaller quarterly loss as air travel gradually picked up.

Consumer-exposed sectors benefited from data that showed euro zone unemployment fell as expected in July.

Spain’s Inditex, which owns fashion brand Zara, was among the best performing retail stocks after JP Morgan forecast strong second-quarter results for the firm. The stock rose 3.1%.

A survey also showed euro zone manufacturing growth remained strong in August, but supply chain issues drove up prices and fed into inflation, which could affect monetary policy in the near term.

Investors were unsettled after data on Tuesday showed euro zone inflation surged to a 10-year-high in August, while an European Central Bank policymaker called on the bank to reduce its emergency bond purchases as soon as the next quarter.

The bloc’s banks continued to benefit from rising government bond yields.

“Elevated inflation in the U.S. and Europe, weak retail sales in Germany and a slowdown in China all suggest that the market should be factoring in a temporary slowdown in economic activity,” Sebastien Galy, senior macro strategist at Nordea Asset Management, said.

“What the market is focused on instead is that liquidity should remain very ample from the People’s Bank of China to a slow pace of tapering from the Fed and eventually one from the ECB.”

Supermarket group Carrefour was the worst performer on the STOXX 600, down 5.5% as luxury goods billionaire Bernard Arnault sold the 5.7% stake he owned in the company.

French spirits maker Pernod Ricard rose 3.7% after it posted a stronger-than-expected rise in full-year operating profit, driven by a strong rebound in demand in China and the United States.

French diagnostics specialist BioMerieux climbed 4.0% after it confirmed its full-year earnings target.

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

(Reporting by Sruthi Shankar in Bengaluru; Editing by Shounak Dasgupta and Mark Potter)

European Equities: A Busy Economic Calendar to Test the Majors

Economic Calendar

Wednesday, 1st September

German Retail Sales (MoM) (Jul)

Spanish Manufacturing PMI (Aug)

Italian Manufacturing PMI (Aug)

French Manufacturing PMI (Aug) Final

German Manufacturing PMI (Aug) Final

Eurozone Manufacturing PMI (Aug) Final

Eurozone Unemployment Rate (Jul)

Friday, 3rd September

Spanish Services PMI (Aug)

Italian Services PMI (Aug)

French Services PMI (Aug) Final

German Services PMI (Aug) Final

Eurozone Markit Composite PMI (Aug) Final

Eurozone Services PMI (Aug) Final

Eurozone Retail Sales (MoM) (Jul)

The Majors

It was a bearish day for the European majors on Tuesday.

The EuroStoxx600 fell by 0.38%, with the CAC40 and the DAX30 ending the day down by 0.11% and by 0.33% respectively.

Disappointing economic data from China failed to spoil the mood as dovish FOMC member chatter drove demand for riskier assets.

In August, China’s NBS Manufacturing PMI slipped from 50.4 to 50.1. More significantly was a slide in the Non-Manufacturing PMI from 53.3 to 47.5.

From the U.S, consumer confidence figures also influenced late in the session, while economic data from the Eurozone drew plenty of attention early in the session.

The Stats

French GDP and consumer spending figures, along with German unemployment numbers were in focus early in the day.

French Economy

In the 2nd quarter, the French economy expanded by 1.1%, quarter-on-quarter, after having stalled in the previous quarter. Economists had forecast growth of 0.9%

Consumer spending disappointed, however, with spending falling by 2.2% in July to reverse a 0.3% rise from June. Economists had forecast a 0.5% decline.

German Economy

Unemployment fell by 53k in August, following a 90k slide from July. Economists had forecast a 40k decline.

As a result, the unemployment rate fell from a revised 5.6% to 5.5%. Economists had forecast for the unemployment rate to hold steady at the revised 5.6%.

Inflation

French, Italian, and the all-important Eurozone inflation figures were also in focus and key for the markets.

French consumer prices rose by 0.6% in August, according to prelim figures, following a 0.1% increase in July.

France’s annual rate of inflation accelerated from 1.2% to 1.9%. Economists had forecast an annual rate of inflation of 1.6%.

Italy also saw inflationary pressures build, with the annual rate of inflation picking up from 1.9% to 2.1%.

Of greater significance, however, were Eurozone inflation figures.

According to prelim figures, the Eurozone’s annual rate of inflation picked up from 2.2% to 3.0% versus a forecasted 2.7%.

The core annual rate of inflation accelerated from 0.7% to 1.6%. Economists had forecast a core annual rate of inflation of 1.4%.

According to Eurostat,

  • Energy is expected to have the highest annual rate in August (15.4% compared with 14.3% in July).
  • Non-energy industrial goods saw the annual rate pick up from 0.7% to 2.7%.
  • There were also contributions from food, alcohol, & tobacco (2.0% compared with 1.6% in July) and services (1.1% compared with 0.9% in July).

From the U.S

Key stats included August’s Chicago PMI and, more importantly, consumer confidence figures for August.

Chicago’s PMI fell from 73.4 to 66.8 in August. Economists had forecast a decline to 68.0.

In August, the CB Consumer Confidence Index fell from 129.1 to 113.8 versus a forecasted 124.0.

The Market Movers

For the DAX: It was a mixed day for the auto sector on Tuesday. BMW bucked the trend, rallying by 1.57%, while Continental fell by 1.38%. Daimler and Volkswagen ended the day down by 0.73% and by 0.34% respectively.

It was a bullish day for the banks, however. Deutsche Bank and Commerzbank rose by 0.38% and by 1.09% respectively.

From the CAC, it was a bullish day for the banks. BNP Paribas and Credit Agricole rose by 1.38% and by 1.01% respectively, with Soc Gen gaining by 1.50%.

It was a mixed day for the French auto sector. Stellantis NV fell by 0.38%, while Renault rose by 1.35%.

Air France-KLM fell by 0.80%, while Airbus SE ended the day up by 0.73%.

On the VIX Index

It was back into the green for the VIX on Tuesday, ending a 2-day losing streak.

Reversing a 1.22% fall from Monday, the VIX rose by 1.79% to end the day at 16.48.

The NASDAQ slipped by 0.04%, with the Dow and the S&P500 ending the day down by 0.11% and by 0.13% respectively.

VIX 010921 Daily Chart

The Day Ahead

It’s another busy day ahead on the Eurozone’s economic calendar.

Italian and Spanish manufacturing PMIs for August are due out. Finalized PMIs for France, Germany, and the Eurozone are also due out.

Barring any marked revisions from prelim numbers, expect Italy and the Eurozone’s PMIs to be key.

From Germany, retail sales figures for August will also draw interest ahead of the PMIs

From the U.S, ADP nonfarm employment change and ISM Manufacturing PMIs will also influence late in the session.

Ahead of the European open, expect China’s Caixin Manufacturing PMI for August to set the tone.

The Futures

In the futures markets, at the time of writing, the Dow Mini was up by 52 points.

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

European Equities: A Month in Review – August 2021

The Majors

It was yet another bullish month for the European majors in August, logging a 7th consecutive monthly gain.

The DAX30 and the EuroStoxx600 rose by 1.87% and by 1.98% respectively, with the CAC40 trailing once more with a 1.02% gain.

It was another choppy month for the European majors, with economic data, FED monetary policy, and COVID-19 key areas of focus.

While economic data was mixed in the month, from the U.S and the Eurozone, the numbers were good enough to avoid a sell-off.

Market jitters over FED monetary policy tested support ahead of the Jackson Hole Symposium late in the month. FED Chair Powell’s assurances that tapering did not constitute tightening was good enough for the markets in August.

On the negative, however, was the continued spread of the Delta variant, which raised concerns over the economic recovery.

The Stats

Key stats in the month included inflation, consumer spending, consumer sentiment, private sector PMIs and 2nd quarter GDP numbers.

Private Sector PMIs

Private sector PMIs for August were better than expected easing concerns over a material slowdown in economic growth.

For the Eurozone, the Manufacturing PMI fell from 62.8 to 61.5, while the services PMI slipped from 59.8 to 59.7.

Both France and Germany saw slower growth across the manufacturing and the services sectors. For Germany, the manufacturing PMI slipped from 65.9 to 62.7. Avoiding a PMI of sub-60 was key.

2nd Quarter Growth

GDP numbers for France and Germany were in focus in the month, with the numbers beating expectations.

For Germany, the economy grew by 1.6% in the 2nd quarter versus a forecasted 1.5%. The economy had contracted by 1.8% in the quarter prior.

Quarter-on-quarter, the French economy expanded by 1.1%, coming in ahead of a forecasted 0.9%. In the previous quarter, the economy had stalled.

For the Eurozone, 2nd estimate GDP numbers were also market positive in spite of a modest downward revision from the 1st estimate. In the 2nd quarter, the Eurozone economy expanded by 2.0%, quarter-on-quarter, which was in line with prelim numbers.

Year-on-year, however, the economy expanded by 13.6%, revised down from a 1st estimate 13.7%. In the 1st quarter, the economy had contracted by 1.3%.

Inflation

With the ECB in action next week, inflation figures for August also drew plenty of attention. The markets were looking for any further pickup in inflationary pressure that could question the ECB’s transitory view.

For the Eurozone, the annual rate of inflation accelerated from 2.2% to 3.0%. The core annual rate of inflation picked up from 0.7% to 1.6%.

Business and Consumer Sentiment

For the markets, a deterioration in business and consumer sentiment was palatable, as a result of the Delta variant.

Germany and the Eurozone saw business and consumer confidence wane in the 3rd quarter.

From Germany, the GfK Consumer Climate Indicator fell from -0.3 to -1.2 in August. The all-important Ifo Business Climate Index declined from 100.7 to 99.4.

For the Eurozone, consumer confidence fell from -4.4 to-5.3 in August, with the business climate index falling from 1.88 to 1.75.

From the U.S

Economic data delivered mixed results once more.

Labor market numbers impressed, with nonfarm payrolls surging by a further 943k in July. In June, nonfarm payrolls had jumped by 938k.

Jobless claims failed to fall below the 300k mark in the month, however, in spite of the NFP numbers.

Private sector PMI numbers also impressed.

The all-important ISM Non-Manufacturing PMI rose from 60.1 to 64.1 in July, supporting the optimistic economic outlook.

Manufacturing sector saw slower growth, but only modestly, with the PMI falling from 60.6 to 59.6.

On the consumption front, retail sales figures were weak, with retail sales falling by 1.1% in July. In June, retail sales had risen by 0.7%.

The figures coincided with weaker consumer sentiment driven by the Delta variant.

In August, the Michigan Consumer Expectations Index fell from 79.0 to 70.3, with the expectations index sliding from 81.2 to 65.1.

The markets preferred CB Consumer Confidence also showed weakness. In August, the consumer confidence index fell from 129.1 to 113.8. Economists had forecast a more modest decline to 124.0.

On the inflation front, the annual rate of inflation softened from 4.5% to 4.3% in July, easing concerns over a further build up. The FED’s preferred Core PCE Price Index was up 3.6%, year-on-year, the rate of inflation unchanged from June. This was also a positive for riskier assets. From a market perspective, softer numbers are going to be needed near-term, however, to further support the FED’s transitory outlook.

The Market Movers

For the DAX: It was a bearish month for the auto sector in August. Daimler slid by 5.41%, with BMW and Volkswagen down by 4.30% and by 2.52% respectively. Continental ended the month with a more modest 0.87% loss.

It was also a bearish month for the banks. Deutsche Bank fell by 1.82%, with Commerzbank declining by 2.39%.

From the CAC, it was a bullish month for the banking sector. BNP Paribas and Credit Agricole rose by 4.43% and by 3.83% respectively. Soc Gen led the way, however, rallying by 7.76%.

It was a mixed month for the auto sector. Renault fell by 1.81%, while Stellantis NV ended the month up by 4.71%.

Air France-KLM avoided the red, rising by 0.66%, while Airbus SE ended the month flat.

On the VIX Index

It was a back into the red for the VIX in August, marking a 6th monthly decline in 7-months.

Partially reversing a 15.22% rise from July, the VIX fell by 9.65% to end the month at 16.48.

In August, the NASDAQ rallied by 4.00%, with the Dow and the S&P500 ending the month up by 1.22% and by 2.90% respectively.

VIX 010921 Monthly Chart

The Month Ahead

The usual data sets will need continued monitoring. With progress made on the vaccination front, however, the markets will be looking for a pickup in business and consumer confidence.

Inflation numbers will also need to soften to support the transitory view shared by both the ECB and the FOMC.

Following some mixed numbers from China of late, economic data will also need to resume an upward trend to ease any concerns over growth.

Away from the economic calendar, COVID-19 news will need monitoring. As new cases continued to rise in August, the threat of a vaccine resilient variant remains.