The Week Ahead – A Particularly Busy Economic Calendar to Keep the Markets Busy

On the Macro

It’s a particularly busy week ahead on the economic calendar, with 76 stats in focus in the week ending 3rd September. In the week prior, 49 stats had also been in focus.

For the Dollar:

In the first half of the week, consumer sentiment, ADP nonfarm employment, and ISM Manufacturing PMI figures are in focus.

Expect the consumer sentiment and ADP numbers to be key.

In the 2nd half of the week, the focus will shift to the jobless claim figures on Thursday.

Wrapping things up, however, will be the nonfarm payrolls and ISM Non-Manufacturing PMIs for August. Another surge in hiring and that could be the green light for the FED to make a move.

In the week ending 3rd September, the Dollar Spot Index fell by 0.87% to 92.686.

For the EUR:

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

On Tuesday, French consumer spending and 2nd quarter GDP numbers are due out along with German unemployment data.

Expect the GDP and unemployment figures to be of greater influence.

On Wednesday, German retail sales and Spanish and Italian manufacturing PMIs are due out. Finalized numbers for France, Germany, and the Eurozone will also draw attention, however.

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

At the end of the week, service sector PMIs will also be in focus.

For the week, the EUR rose by 0.83% to $1.1795.

For the Pound:

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

Finalized private sector PMIs for August are due out on Wednesday and Friday.

Expect any revision to the services PMI to be key.

The Pound ended the week up by 1.04% to $1.3764.

For the Loonie:

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

2nd quarter GDP numbers will be key on Tuesday. On Thursday, trade data will also influence, however.

The Loonie ended the week up 1.57% to C$1.2620 against the U.S Dollar.

Out of Asia

For the Aussie Dollar:

Company gross operating profits and private sector credit will be in focus early in the week.

GDP numbers on Wednesday and trade data on Thursday will be the key stats of the week, however.

The Aussie Dollar ended the week up by 2.52% to $0.7312.

For the Kiwi Dollar:

It’s a quiet week ahead.

Building consents and business confidence figures are due out on Tuesday.

Expect business confidence figures for August to be key.

From elsewhere, private sector PMIs from China and COVID-19 news updates will also influence.

The Kiwi Dollar ended the week up by 2.57% to $0.7011.

For the Japanese Yen:

Retail sales figures for July gets things going on Monday.

On Tuesday industrial production figures for July will also draw plenty of interest.

Through the rest of the week, capital spending and finalized private sector PMIs will also be in focus.

The Japanese Yen fell by 0.05% to ¥109.84 against the U.S Dollar.

Out of China

Private sector PMIs for August will influence market risk sentiment through the week.

On Tuesday, the NBS numbers are due out ahead of the all-important Caixin Manufacturing PMI on Wednesday.

At the end of the week, the Caixin Services PMI will also provide riskier assets with direction.

The Chinese Yuan ended the week up by 0.45% to CNY6.4720 against the U.S Dollar.

Geo-Politics

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

Chatter from Capitol Hill over Afghanistan will also need tracking.

The Weekly Wrap – Economic Data and FED Chair Powell Delivered Commodity Currencies a Boost

The Stats

It was a relatively busy week on the economic calendar, in the week ending 27th August.

A total of 49 stats were monitored, which was down from 52 stats in the week prior.

Of the 49 stats, 17 came in ahead forecasts, with 28 economic indicators coming up short of forecasts. There were 4 stats that were in line with forecasts in the week.

Looking at the numbers, 17 of the stats reflected an upward trend from previous figures. Of the remaining 32 stats, 31 reflected a deterioration from previous.

For the Greenback, FED monetary policy and economic data delivered Dollar weakness. In the week ending 27th August, the Dollar Spot Index fell by 0.87% to 92.686. In the previous week, the Dollar had risen by 1.02% to 93.549.

Out of the U.S

Early in the week, private sector PMIs were in focus. Weaker numbers weighed, with the Services PMI falling from 59.9 to 55.2 in August, according to prelim figures.

On Wednesday, core durable goods rose by 0.7% in July, following a 0.6% increase in June, which was a positive.

2nd quarter GDP numbers were also revised up on Thursday. In the 2nd quarter, the economy grew by 6.6%, which was up from a 6.5% first estimate.

Jobless claims disappointed, however, with initial jobless claims rising from 349k to 353k.

At the end of the week, personal spending and inflation figures delivered mixed results.

In July, the Core PCE Price Index rose by 3.6% year-on-year, which was in line with forecasts and June figures. Month-on-month, the index rose by 0.3% following a 0.5% increase in June.

Personal spending disappointed, however, with spending up by just 0.3%. Spending had risen by 1.1% in June.

While the stats did influence, FED Chair Powell’s speech on Friday was the main event of the week…

The FED Chair Powell delivered what the markets were looking for, weighing on the Dollar while supporting riskier assets. In line with expectations, Powell talked of tapering later in the year but highlighted that tapering did not mean tightening and that it would not translate into a shift in policy on interest rates…

Out of the UK

Economic data was on the lighter side. Prelim private sector PMIs for August disappointed at the start of the week.

The all-important services PMI fell from 59.6 to 55.5, with the manufacturing PMI down from 60.4 to 60.1.

CBI industrial trend orders for August were of little comfort, in spite of an increase from 17 to 18.

In the week, the Pound rose by 1.04% to end the week at $1.3764. In the week prior, the Pound had fallen by 1.75% to $1.3623.

The FTSE100 ended the week up by 0.85%, partially reversing a 1.81% loss from the previous week.

Out of the Eurozone

Prelim private sector PMIs for August and the German economy were in focus, with the stats skewed to the negative.

Germany’s manufacturing PMI fell from 65.9 to 62.7, with the services PMI declining from 61.8 to 61.5.

For France, the manufacturing PMI fell from 58.0 to 57.3, with the services PMI falling from 56.8 to 56.4.

As a result, the Eurozone’s manufacturing PMI fell from 62.8 to 61.5. The services PMI slipped from 59.8 to 59.7.

From Germany, the economy grew by 1.6% in the 2nd quarter, coming in ahead of a forecasted 1.5%. Year-on-year, the economy grew by 9.8%. Year-on-year, the economy had contracted by 3.4% in the previous quarter.

While the GDP numbers were upbeat, business and consumer sentiment disappointed.

Germany’s IFO Business Climate Index fell from 100.7 to 99.4, with the GfK Consumer Climate Indicator falling from -0.40 to -1.20.

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 0.84%, with the DAX30 and the EuroStoxx600 ending the week with gains of 0.28% and 0.76% respectively.

For the Loonie

It was a quiet week on the economic data front, with RMPI numbers for July the key stat of the week.

In July, the RMPI, increased by 2.2%, month-on-month. The RMPI had risen by 3.90% in June.

Adding to the upside for the Loonie in the week was a sharp rebound in crude oil prices. FED Chair Powell’s outlook also put monetary policy divergence in favor of the Loonie.

In the week ending 27th August, the Loonie rose by 1.57% to C$1.2620. In the week prior, the Loonie had fallen by 2.45% to C$1.2821.

Elsewhere

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

The Aussie Dollar rallied by 2.52% to $0.0.7312, with the Kiwi Dollar ending the week up by 2.57% to $0.7011.

For the Aussie Dollar

Private new capex and retail sales figures were the key stats of the week.

In the 2nd quarter, private new CAPEX rose by 4.4% following a 6.0% increase in the previous quarter.

On the negative, however, was a 2.7% slide in retail sales in July. In June, retail sales had fallen by 1.8%. COVID-19 lockdown measures weighed on consumption in July, limiting the impact on the Aussie Dollar.

For the Kiwi Dollar

It was a relatively busy week, with retail sales and trade data in focus.

Retail sales figures for the 2nd quarter impressed, with retail sales up 3.2% and core retail sales up 3.4%. In the previous quarter, retail sales had been up 2.8%, with core retail sales up 3.2%.

On the negative, however, were trade figures for July. Month-on-month, the trade balance fell from a NZ$245m surplus to a NZ$402m deficit.

Year-on-year, the deficit widened from NZ$280m to NZ$1,100m. While the headline figure was negative, a more marked increase in imports, supported by strong demand, impacted the trade balances.

For the Japanese Yen

It was a relatively quiet week.

Private sector PMIs and Tokyo inflation figures were in focus.

PMI numbers disappointed, with the services PMI falling from 47.4 to 43.5. The manufacturing PMI saw a more modest decline from 53.0 to 52.4.

On the inflation front, Tokyo core consumer prices remained unchanged in August, year-on-year. In July, core consumer prices had fallen by 0.5%. The numbers had a muted impact on the Yen, however.

The Japanese Yen fell by 0.05% to ¥109.84 against the U.S Dollar. In the week prior, the Yen had fallen by 0.17% to ¥109.78.

Out of China

There were no major stats from China to influence the markets in the week.

In the week ending 27th August, the Chinese Yuan rose by 0.45% to CNY6.4720. In the week prior, the Yuan had ended the week down by 0.37% to CNY6.5015.

The CSI300 and the Hang Seng ended the week up by 1.21% and by 2.25% respectively.

European Equities: A Week in Review – 20/08/21

The Majors

It was a relatively bullish week for the majors in the week ending 27th August. Compared with the prior week’s losses, the gains were modest, however.

The DAX30 rose by 0.28%, with the DAX30 and the EuroStoxx600 ending the week up by 0.84% and by 0.76% respectively.

Private sector PMIs and economic data from Germany tested support for the DAX30 in particular.

While economic data from the U.S was mixed in the week, market focus was towards FED Chair Powell’s policy speech at the end of the week.

Uncertainty over FED policy had pegged the majors back in the week. FED Chair Powell’s speech delivered support for riskier asset, with the DAX30 reversing losses from earlier in the week.

Concerns over the continued rise in the number of Delta variant cases worldwide was a negative for the majors, however.

The Stats

Prelim private sector PMIs for August and the German economy were in focus, with the stats skewed to the negative.

Germany’s manufacturing PMI fell from 65.9 to 62.7, with the services PMI declining from 61.8 to 61.5.

For France, the manufacturing PMI fell from 58.0 to 57.3, with the services PMI falling from 56.8 to 56.4.

As a result, the Eurozone’s manufacturing PMI fell from 62.8 to 61.5. The services PMI slipped from 59.8 to 59.7.

From Germany, the economy grew by 1.6% in the 2nd quarter, coming in ahead of a forecasted 1.5%. Year-on-year, the economy grew by 9.8%. Year-on-year, the economy had contracted by 3.4% in the previous quarter.

While the GDP numbers were upbeat, business and consumer sentiment disappointed.

Germany’s IFO Business Climate Index fell from 100.7 to 99.4, with the GfK Consumer Climate Indicator falling from -0.40 to -1.20.

From the U.S

Early in the week, private sector PMIs were in focus. Weaker numbers weighed, with the Services PMI falling from 59.9 to 55.2 in August, according to prelim figures.

On Wednesday, core durable goods rose by 0.7% in July, following a 0.6% increase in June, which was a positive.

2nd quarter GDP numbers were also revised up on Thursday. In the 2nd quarter, the economy grew by 6.6%, which was up from a 6.5% first estimate.

Jobless claims disappointed, however, with initial jobless claims rising from 349k to 353k.

At the end of the week, personal spending and inflation figures delivered mixed results.

In July, the Core PCE Price Index rose by 3.6% year-on-year, which was in line with forecasts and June figures. Month-on-month, the index rose by 0.3% following a 0.5% increase in June.

Personal spending disappointed, however, with spending up by just 0.3%. Spending had risen by 1.1% in June.

While the stats did influence, FED Chair Powell’s speech on Friday was the main event of the week…

The FED Chair Powell delivered what the markets were looking for, weighing on the Dollar while supporting riskier assets. In line with expectations, Powell talked of tapering later in the year but highlighted that tapering did not mean tightening and that it would not translate into a shift in policy on interest rates…

The Market Movers

From the DAX, it was a bullish week for the auto sector. Volkswagen rallied by 4.03% to lead the way, with Continental and Daimler ending the week up by 2.05% and by 2.20% respectively. BMW saw a more modest 1.58% gain in the week.

It was also a bullish week for the banking sector. Deutsche Bank and Commerzbank rose by 0.67% and by 2.13% respectively.

From the CAC, it was a bullish week for the banks. Credit Agricole and Soc Gen rallied by 3.06% and by 3.61% respectively, with BNP Paribas rising by 2.61%.

It was a mixed week for the French auto sector, however. Stellantis NV slipped by 0.09%, while Renault eked out a 0.06% gain.

Air France-KLM and Airbus ended the week with gains of 5.40% and 4.11% respectively.

On the VIX Index

It was a back into the red for the VIX in the week ending 27th August, marking a 4th weekly loss in 6-weeks.

Partially reversing a 20.13% rise from the previous week, the VIX fell by 11.69% to end the week at 16.39.

3-days in the red from 5 sessions, which included a 7.60% fall on Monday and a 13.00% slide on Friday delivered the downside. A 12.21% rise on Thursday limited the downside, however.

For the week, the NASDAQ rallied by 2.82%, with the Dow and the S&P500 ending the week up by 0.96% and by 1.52% respectively.

VIX 280821 Weekly Chart

The Week Ahead

It’s another busy week ahead on the economic calendar.

On Tuesday, French consumer spending and 2nd quarter GDP numbers are due out along with German unemployment data.

Expect the GDP and unemployment figures to be of greater influence.

On Wednesday, German retail sales and Spanish and Italian manufacturing PMIs are due out. Finalized numbers for France, Germany, and the Eurozone will also draw attention, however.

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

At the end of the week, service sector PMIs will also be in focus.

From the U.S, there’s also plenty to consider…

In the first half of the week, consumer sentiment, ADP nonfarm employment, and ISM Manufacturing PMI figures are in focus.

Expect the consumer sentiment and ADP numbers to be key.

In the 2nd half of the week, the focus will shift to the jobless claim figures on Thursday.

Wrapping things up, however, will be the nonfarm payrolls for August. Another surge in hiring could be the green light for the FED to make a move.

From China, private sector PMIs for August will also influence… On, Wednesday, the Caixin Manufacturing PMI will be the key stat of the week.

Away from the economic calendar, COVID-19 news updates and monetary policy chatter will also need monitoring.

European Shares End Higher on Dovish Fed, Entra Leads Gains

The pan-European STOXX 600 index closed 0.4% higher, with mining stocks up 1.9%, while real estate stocks added 1.5%.

The day’s gains helped the STOXX 600 close 0.8% higher for the week, after trading flat for several days. Commodity-linked stocks were the best weekly performers, as they bounced back from steep losses.

Entra was the best performer on the STOXX 600, rising 4.6% as its peer Castellum bought 11.8% of shares in the firm from the government pension fund in Norway.

The STOXX 600 extended its gains after Powell’s highly anticipated announcement, which reassured investors that programs which have flooded markets with liquidity for the past year will remain in place for the time being.

“Powell’s warning about the risks of premature tightening and repeated reference to “much ground to cover” to reach the Fed’s employment objective hint that the Fed may be on hold until Q4 at the earliest,” said Matt Weller, global head of research at Forex.com.

U.S. stocks touched record highs after the announcement, while European stocks were less than a percent away from their peak, as investors looked past rising COVID-19 cases and concerns over slowing economic growth.

A survey showed French consumer confidence eased marginally in August, while morale amongst Italian businesses and consumers also fell this month.

The Delta variant of the coronavirus is only expected to have a limited impact on the euro zone economy, which remains on course for robust growth this year and next, European Central Bank Chief Economist Philip Lane said earlier this week.

Just Eat Takeaway.com, which owns GrubHub, fell 7.5% after the New York City Council approved legislation to license food-delivery apps and permanently cap commissions they can charge restaurants.

Just Eat was the biggest percentage loser on the STOXX 600 on Friday.

Norwegian fish farmer Salmar rose 2.5% after the company dropped plans to launch an 11.8 billion crowns ($1.29 billion) cash bid for rival Norway Royal Salmon (NRS). NRS shares fell 11.8%.

French auto parts maker Faurecia gained 2.7% to 42.07 euros after Citigroup hiked the price target on the company’s stock to 56 euros from 41 euros.

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

(Reporting by Sruthi Shankar and Ambar Warrick in Bengaluru; Editing by Shounak Dasgupta and Jonathan Oatis)

European Equities: With no Major Stats from the Eurozone it is all Eyes on FED Chair Powell

The Majors

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

The CAC40 slipped by 0.16%, with the DAX30 and the EuroStoxx600 falling by 0.42% and by 0.32% respectively.

Economic data was on the lighter side, with the German consumer sentiment figures. Disappointing consumer confidence from Germany tested support for the majors.

With the Jackson Hole Symposium underway, apprehension ahead of FED Chair Powell’s speech later today also weighed.

Economic data from the U.S had a muted impact, however, later in the European session.

The Stats

It was a quieter economic calendar through the European session.

Germany’s GfK Consumer Climate was in focus early in the session.

In September, the GfK Consumer Climate Index fell from -0.4 to -1.2. Economists had forecast a decline to -0.7.

According to the August report,

  • In August, while income expectations improved slightly, both economic expectations and propensity to buy waned.
  • As a result, the GfK is forecasting a value of -1.2 points in consumer sentiment for September.
  • According to the GfK, there was also an increase in propensity to save.
  • Concerns over COVID-19 weighed on sentiment and the September forecast.
  • Additionally, the GfK noted that inflation is playing a role, with the cost of living up 3.8% in July, year-on-year.
  • In June, sentiment had hit a 10-year high before retreating.

From the U.S

Weekly jobless claims and 2nd estimate GDP numbers were of little influence later in the session.

In the week ending 20th August, initial jobless claims rose from 349k to 353k. Economists had forecast claims of 350k.

According to 2nd estimates, the U.S economy grew by 6.6% in the 2nd quarter, which was up from a 1st estimate 6.1%. Economists had forecast growth of 6.8%, quarter-on-quarter.

The Market Movers

For the DAX: It was a mixed day for the auto sector on Thursday. Volkswagen bucked the trend, rising by 0.24%. Continental and Daimler ended the day down by 0.28% and by 0.46% respectively, with BMW falling by 0.04%.

It was a bearish day for the banks, however. Deutsche Bank and Commerzbank fell by 2.04% and by 1.31% respectively.

From the CAC, it was a relatively bearish day for the banks. BNP Paribas and Credit Agricole fell by 0.89% and by 0.67% respectively, with Soc Gen declining by 0.95%.

It was also a bearish day for the French auto sector. Stellantis NV and Renault saw losses of 0.93% and 1.21% respectively.

Air France-KLM and Airbus SE ended the day down by 1.74% and by 0.79% respectively.

On the VIX Index

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

Reversing a 2.50% fall from Wednesday, the VIX rose by 12.21% to end the day at 18.84

The NASDAQ fell by 0.64%, with the Dow and the S&P500 ending the day down by 0.54% and by 0.58% respectively.

VIX 270821 Daily Chart

The Day Ahead

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

The lack of stats will leave the majors firmly in the hands of FED Chair Powell. Powell is scheduled to speak later today.

Economic data from the U.S, will draw attention, however. Inflation and personal spending figures will be key ahead of Powell’s speech.

The Futures

In the futures markets, at the time of writing, the Dow Mini was up by 65 points.

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

European Equities: Economic Data from Germany and the U.S and the FED in Focus

Economic Calendar

Thursday, 26th August

GfK German Consumer Climate (Sep)

The Majors

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

The DAX30 fell by 0.28%, while the CAC40 and the EuroStoxx600 saw gains of 0.18% and 0.01% respectively.

Economic data was on the lighter side, with the German economy in focus once more. Disappointing business sentiment figures from Germany weighed on the DAX30.

With the Jackson Hole Symposium kicking off today, there was also plenty of caution, pegging the majors back.

While the markets are betting that the FED will kick the policy can further road, it’s not been a sure thing on the tapering front.

Rising delta variant cases globally have also raised concerns over the economic outlook as some economies trail on vaccination rates.

The Stats

It was a quieter economic calendar through the European session.

Germany’s IFO Business Climate Index figures were in focus early in the session.

In August, the Business IFO Business Climate Index fell from 100.7 to 99.4. Economists had forecast a decline to 100.4.

The decline came in spite of a pickup in business sentiment towards the current situation. In August, the Current Assessment sub-index increased from 100.4 to 101.4.

Weighing on the headline number was business expectations, which fell from 101.0 to 97.5.

According to the August survey,

  • In the manufacturing sector, the business climate has deteriorated noticeably. The assessment of the current situation was less positive. While companies were still satisfied with the day-to-day business, the outlook for the coming months hit reverse. The expectation indicator fell to its lowest level since November 2020.
  • For the services sector, optimism with regards to the future business development has been dampened. By contrast, the companies assessed the current situation as better than in the previous month.
  • Traders were less satisfied with their current business situation. Additionally, pessimism returned with regard to expectations. The retail sector was particularly concerned about the months ahead.

From the U.S

Durable and core durable goods orders also influenced.

Durable goods orders fell by 0.1% in July, partially reversing a 0.9% increase from June. Economists had forecast a 0.3% decline. Core durable goods rose by 0.7%, however, versus a forecasted 0.5% increase. In June, core durable goods had risen by 0.6%.

The Market Movers

For the DAX: It was a mixed day for the auto sector on Wednesday. BMW and Continental fell by 0.57% and by 0.17% respectively. Volkswagen and Daimler ended the day up by 0.40% and by 0.09% respectively.

It was a bullish day for the banks, however. Deutsche Bank and Commerzbank rose by 1.36% and by 2.45% respectively.

From the CAC, it was a bullish day for the banks. BNP Paribas and Soc Gen rallied by 2.04% and by 2.44% respectively, with Credit Agricole gaining by 1.38%.

It was also a relatively bullish day for the French auto sector. Stellantis NV and Renault saw modest gains of 0.55% and 0.22% respectively.

Air France-KLM slipped by 0.36%, while Airbus SE rallied by 2.17%.

On the VIX Index

It was back into the red for the VIX on Wednesday, marking a 3rd day in the red from 4 sessions.

Reversing a 0.40% rise on Tuesday, the VIX fell by 2.50% to end the day at 16.79.

The S&P500 rose by 0.22%, with the Dow and the NASDAQ ending the day up by 0.11% and by 0.15% respectively.

VIX 260821 Daily Chart

The Day Ahead

It’s a relatively quiet day ahead on the Eurozone’s economic calendar. Consumer sentiment figures for Germany will be in focus in the early part of the session.

While the numbers will provide the DAX30 with direction, we can expect the markets to be tentative ahead of the Symposium.

Later in the day, initial jobless claims and GDP numbers from the U.S will provide the majors with direction.

With the Symposium getting underway, a marked fall in jobless claims could test the market’s dovish bets…

Ultimately, any chatter from the Symposium will be the key driver on the day.

The Futures

In the futures markets, at the time of writing, the Dow Mini was up by 21 points.

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

European Stocks End Flat as Utility Losses Outweigh Travel, Bank Gains

The region-wide STOXX 600 index closed largely unchanged at 471.84 points after a record close on Wall Street. The European benchmark itself was just less than 1 percent away from its peak.

Travel and leisure stocks gained 1.8% to hit their highest level in almost two weeks, while banks rose 1.8%.

Utilities were the worst performing sector, falling 0.8% with major Italian utilities Terna, Snam and Italgas leading losses after brokerage RBC turned more negative on its expectations of future returns.

German stocks fell 0.3%.

Business morale fell for the second month running in August as companies took a dimmer view about the coming months due to rising numbers of COVID-19 cases and supply bottlenecks, a survey from the Ifo institute showed.

Earlier this week, IHS Markit’s survey showed the pace of euro zone business growth dipped from July’s two-decade-high.

“Equity markets (outside China) have not yet seen the usual wobble associated with a PMI roll-over, so could be vulnerable,” Robert Buckland at Citi’s global strategy team said.

“Nevertheless, past experience suggests that investors should buy any dip as long as another global recession is not imminent. We don’t think it is.”

A Reuters poll of 18 strategists predicted strong earnings will keep European stocks around current record levels for the rest of 2021, while worries related to U.S. monetary policy tightening, the German election and a Chinese regulatory crackdown will cap gains.

Investors are watching German election updates. An opinion poll released on Tuesday showed the centre-left Social Democrats (SPD) pulling ahead of Chancellor Angela Merkel’s conservatives for the first time in 15 years, with a month before the vote.

Among stocks, Swedish radiation therapy equipment maker Elekta slid 7.8% and was the worst performer on the STOXX 600, after it flagged higher costs.

Deutsche Bank’s recommendations spurred moves among retail stocks, with Zara-owner Inditex and H&M slipping over 1% after the brokerage rated them as “sell”, while Adidas and Puma rose 1.5% after an upgrade to “buy”.

Marks and Spencer Group was among the best performers on the STOXX 600, rising 5.1% after Deutsche Bank rated the apparel retailer as “buy”.

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 Shares Seen Holding Tight to Record Levels: Reuters Poll

The Reuters poll of 18 fund managers, strategists and brokers surveyed over the past week predicted the STOXX 600 would reach 470 points by year end, just 0.4% below Monday’s close.

A much stronger-than-expected second-quarter earnings season and improving economic data in Europe pushed the benchmark STOXX 600 to its longest winning daily streak in almost 15 years in August.

With most of the results accounted for, European profits are expected to have surged a whopping 151% in the second quarter, according to the latest Refinitiv I/B/E/S data.

And European corporates are set for more quarters of double-digit profit growth, with the European Union pumping more support through its huge post-pandemic recovery fund and vaccines mitigating worries around the COVID-19 Delta variant.

Refinitiv data points to profit growth of 43% and 35% in the third and fourth quarter, respectively.

Data has already shown that euro zone business activity grew strongly again in August, only dipping from July’s two-decade high monthly pace, with the IHS Markit flash Composite Purchasing Managers’ Index, a gauge of economic health, at 59.5, well above the 50 mark separating growth from contraction.

European stocks are up 18% this year and have outperformed the MSCI’s global stock index, which is up 13% year to date.

But remaining anchored to record levels won’t come without challenges, as investors ponder risks that inflation could lead to a tightening of monetary policy conditions, especially in the United States, while China’s months-long regulatory crackdown on an array of private companies keeps investors on their toes.

Equities will “continue climbing a wall of worry,” said Emmanuel Cau, head of European equity strategy at Barclays, with the regulatory crackdown in China being “another challenge for investor confidence”.

Some $120 billion of market capitalization was wiped off the European luxury space, which shed 14% in two days in August, after Chinese President Xi Jinping delivered a blow to the sector, with plans for wealth redistribution.

ALL EYES WILL BE ON GERMANY

Investors are also taking into account the prospect of political gridlock in Germany in the wake of the upcoming elections, the first without Angela Merkel in more than 15 years.

“All eyes will be on Germany’s federal elections in September 2021”, said Roland Kaloyan, head of European equity strategy at SocGen.

Barclays is not planning to turn more defensive just yet after it moderated its cyclical exposure, as European shares still offer attractive relative value, Cau said.

European indexes are cheaper than global peers as they are heavy in banks and other cyclical stocks which benefit when the economy looks up, and are light on tech and growth stocks for which investors are reluctant to pay hefty premiums amid buoyant economic activity and rising interest rates.

According to the poll, Germany’s industrials-heavy DAX index should gain about 1.2% to 16,050 points at the end of the year against Monday’s close of 15,852.8 points.

London’s blue chip index is expected to rise 1.3% to 7,200 points. France’s CAC 40 index is seen rising 1.7% to 6,800 points.

While Italy’s FTSE MIB and Spain’s IBEX are seen making the biggest gains, jumping 2.9% to 26,810 points and 2.1% to 9,160 points, respectively, before the end of the year.

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

(Other stories from the Reuters Q3 global stock markets poll package:)

(Reporting by Joice Alves; additional polling by Sujith Pai and Indradip Ghosh; Editing by Chizu Nomiyama)

European Equities: German Business Sentiment in Focus Early in the Session

Economic Calendar

Wednesday, 25th August

German Ifo Business Climate Index (Aug)

Thursday, 26th August

GfK German Consumer Climate (Sep)

The Majors

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

The DAX30 rose by 0.33%, while the CAC40 and the EuroStoxx600 saw losses of 0.28% and 0.02% respectively.

Economic data was on the lighter side, with the German economy back in focus. Better than expected GDP numbers from Germany delivered the DAX with the support to buck the trend on the day.

For the broader market, FED uncertainty and concerns over the Delta variant continued to weigh, however.

The Stats

It was a quieter economic calendar through the European session, with German GDP numbers in focus.

In the 2nd quarter, the German economy grew by 1.6%, quarter-on-quarter, recovering from 1st quarter 1.8% contraction. Economists had forecast growth of 1.5%.

According to Destatis, the economy grew by 9.8%, year-on-year, versus a forecasted 9.6%. In the 1st quarter, the economy had contracted by 3.3%.

From the U.S

New home sales figures for July were in focus, which had a muted impact on the European majors.

The Market Movers

For the DAX: It was a bullish day for the auto sector on Tuesday. BMW and Volkswagen led the way, with gains of 2.04% and 2.11% respectively. Continental and Daimler ended the day up by 1.71% and by 1.25% respectively.

It was also a bullish day for the banks. Deutsche Bank and Commerzbank rose by 1.28% and by 0.87% respectively.

From the CAC, it was a relatively bullish day for the banks. BNP Paribas and Credit Agricole rose by 0.68% and by 0.69% respectively, with Soc Gen gaining by 0.59%.

It was also a relatively bullish day for the French auto sector. Stellantis NV and Renault saw modest gains of 0.26% and 0.90% respectively.

Air France-KLM surged by 5.58%, with Airbus SE rising by 1.56%.

On the VIX Index

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

Following a 7.60% decline on Monday, the VIX rose by 0.41% to end the day at 17.22.

The NASDAQ rose by 0.52%, with the Dow and the S&P500 ending the day up by 0.09% and by 0.15% respectively.

VIX 250821 Daily Chart

The Day Ahead

It’s another relatively busy day ahead on the Eurozone’s economic calendar. The German economy is back in focus, with Business IFO Climate Index numbers in focus.

With business investment a key component of the economic recovery, the numbers will influence.

From the U.S, durable goods orders and core durable goods orders for July will also provide direction late in the day.

With the Jackson Hole Symposium just around the corner, however, we can expect some caution…

The Futures

In the futures markets, at the time of writing, the Dow Mini was up by 3 points.

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

European Shares End Flat as Fed Fears, Virus Concerns Weigh

The pan-European STOXX 600 index closed largely unchanged at 471.79 points, following a selloff last week that knocked it off record levels.

Commodity-linked sectors continued to outpace the general market, as oil and metal prices rose on expectations of a recovery in major importer China.

Basic resources stocks were the best performers for the day, rising 2.0%.

Travel stocks also surged nearly 2% after U.S. health regulators granted full approval to the COVID-19 vaccine developed by Pfizer Inc and BioNTech SE in a move that could accelerate U.S. inoculations.

Global stocks wobbled last week after data from U.S. and Asian economies signalled a slowing global economic recovery, as a spike in the Delta variant of the coronavirus prompted fresh restrictions in several parts of the world.

Investors are awaiting U.S. Federal Reserve chief Jerome Powell’s speech at the annual Jackson Hole symposium on Friday for hints on the central bank’s asset purchases tapering plans.

“Since the release of the Fed minutes last week, the consensus for the start of tapering has moved slightly forward, from the beginning of 2022 to December 2021,” Unicredit analysts said.

“A hawkish surprise from Jackson Hole appears less likely and the next topic of major relevance is probably the U.S. labour market report on Sept. 3.”

Meanwhile, German stocks rose 0.3% as data showed Germany’s gross domestic product grew by 1.6% on the quarter from April to June, slightly up from its previous estimate of 1.5%, helped by private consumption and state spending.

Marks and Spencer Group rose 4.1% after Berenberg and Credit Suisse raised their price targets on the UK retailer’s stock.

“Despite it being a moderate environment for UK consumption…, M&S is enjoying favourable positioning, market share gains from peers disappearing,” Credit Suisse analysts said in a note.

Norwegian salmon farmer Bakkafrost gained 1.9% following its second-quarter results.

Novartis slipped 1.7% after the Swiss drugmaker said its Kymriah CAR-T therapy did not meet the primary endpoint in a late-stage study.

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 Heinrich)

European Equities: German GDP Numbers, FED Policy, and COVID-19 in Focus

Economic Calendar

Tuesday, 24th August

German GDP (YoY) (Q2)

German GDP (QoQ) (Q2)

Wednesday, 25th August

German Ifo Business Climate Index (Aug)

Thursday, 26th August

GfK German Consumer Climate (Sep)

The Majors

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

The DAX30 rose by 0.28%, with the CAC40 and the EuroStoxx600 seeing gains of 0.86% and 0.66% respectively.

Following the previous week’s losses, the majors were in recovery mode. Private sector PMI figures from the Eurozone could have been worse, delivering some comfort.

Ultimately, however, plenty of uncertainty over FED monetary policy and the Delta variant remained negatives for the majors.

The Stats

It was a busier economic calendar through the European session, with private sector PMIs in focus.

According to prelim figures for August, Germany’s manufacturing PMI fell from 65.9 to 62.7. Economists had forecast a decline to 65.0. The services PMI slipped from 61.8 to 61.5 versus a forecasted 61.0.

For France, the manufacturing PMI fell from 58.0 to 57.3, which was in line with forecasts. The Services PMI fell from 56.8 to 56.4. Economists had forecast an increase to 57.0.

The Eurozone’s Manufacturing PMI fell from 62.8 to 61.5, with the Services PMI falling from 59.8 to 59.7. Economists had forecast PMIs of 62.0 and 59.8 respectively. As a result, the Composite PMI fell from 60.2 to 59.5 versus a forecasted 59.7.

According to the Eurozone’s prelim survey,

  • Eurozone business activity continued to grow at a fast pace in August.
  • The rate of expansion cooled only slightly despite supply chain delays.
  • Growth sector growth exceeded that of the manufacturing sector for the first time since the pandemic.
  • Firms’ costs and prices charged rose at some of the fastest rates seen over the past 20-years.
  • Business confidence was subdued as a result of the Delta variant.
  • In spite of softer confidence, hiring remained the strongest for 21-years.
  • Inflows of new orders were amongst the highest seen in the past two decades.
  • Within the Eurozone, Germany continued to lead the expansion. This was in spite of growth softening from July’s 23-year record high.

Late in the European session, consumer confidence figures for the Eurozone also influenced.

In August, the Eurozone’s Consumer Confidence Indicator fell from -4.4 to -5.3. Economists had forecast a decline to -5.0.

From the U.S

Prelim private sector PMIs were also in focus along with housing sector data.

The Manufacturing PMI fell from 63.4 to 61.2, with the Services PMI falling from 59.9 to 55.2. Economists had forecast PMIs of 62.5 and 58.3 respectively.

Housing sector data from the U.S had a muted impact on the European majors.

The Market Movers

For the DAX: It was a mixed day for the auto sector on Monday. Volkswagen rose by 1.19% to lead the way, with Daimler (+0.44%) also finding support. BMW and Continental saw modest losses of 0.01% and by 0.04% respectively, however.

It was a bullish day for the banks. Deutsche Bank and Commerzbank ended the day with gains of 0.72% and 0.56% respectively.

From the CAC, it was a relatively bullish day for the banks. BNP Paribas and Soc Gen rose by 1.17% and by 1.16% respectively, with Credit Agricole rallying by 1.75%.

It was a mixed day in the red for the French auto sector, however. Stellantis NV rose by 0.81%, while Renault fell by 0.40%.

Air France-KLM rallied by 2.51%, with Airbus SE rising by 1.12%.

On the VIX Index

It was a 2nd consecutive day in the red for the VIX on Monday.

Following a 14.35% slide on Friday, the VIX fell by a further 7.60% to end the day at 17.15.

The NASDAQ rallied by 1.55%, with the Dow and the S&P500 seeing gains of 0.61% and by 0.85% respectively.

VIX 240821 Daily Chart

The Day Ahead

It’s a relatively busy day ahead on the Eurozone’s economic calendar. 2nd quarter GDP numbers for Germany are due out later this morning.

With little else for the markets to consider, expect plenty of influence from the numbers.

From the U.S, new home sales figures, due out late in the day, should have a muted impact on the majors.

FOMC member chatter ahead of Jackson Hole and COVID-19 will also remain the key areas of interest.

The Futures

In the futures markets, at the time of writing, the Dow Mini was up by 69 points.

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

European Shares End Higher on Commodity Recovery After Bruising Week

The pan-European STOXX 600 index closed 0.7% higher after losing nearly 1.5% last week. Oil and mining were the best performing sectors, rising about 2.1% and 1.5% respectively.

Sentiment appeared to have improved after growing uncertainty over when the U.S. Federal Reserve would begin tightening policy, which sparked a broad selloff across global markets last week.

Focus now turns to the Fed’s annual Jackson Hole Economic Policy Symposium beginning later in the week.

“With the Jackson Hole meeting beginning on Thursday, investors may be reluctant to make big new commitments in the next couple of sessions,” Ian Williams, economics & strategy research analyst at Peel Hunt, said.

Data in Europe suggested that business activity remained strong in August, albeit at a slightly slower growth pace than the two-decade peak seen in July.

With a nearly 18% rise so far this year, the STOXX 600 hit a record high earlier this month, but has stumbled recently on concerns over the Delta variant of COVID-19 stalling economic growth.

Among individual stocks, Britain’s second-largest grocer Sainsbury’s jumped 15.4% and was the best performer on the STOXX 600, following a report that private equity firms were circling the company with a view of possibly launching bids of more than 7 billion pounds ($9.5 billion).

Last week, smaller rival Morrisons backed a 7 billion pounds offer from U.S. private equity group Clayton, Dubilier & Rice.

Germany’s BioNTech surged 7.6% after the U.S. Food and Drug Administration granted full approval to the Pfizer Inc/BioNTech COVID-19 vaccine.

Luxury stocks including LVMH, Kering and Moncler clawed back some of last week’s losses after being sold off on China’s wealth redistribution plans.

Switzerland-based Cembra Money Bank plunged 30.9% to the bottom of the STOXX 600 after it terminated its credit card partnership with Swiss retailer Migros.

French lottery operator La Francaise des Jeux fell 1.7% after Goldman Sachs downgraded the stock to “sell”.

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

(Reporting by Sruthi Shankar and Ambar Warrick in Bengaluru; Editing by Shounak Dasgupta and David Holmes)

Canadian Dollar Reverses the Losses From the Last Week

Global indices continue the reversal. Asian stocks started the week off on the front foot and the rest of the world is about to follow.

SP500 is aiming for new all-time highs. Most probably, buyers will succeed.

DAX is defending the crucial horizontal support on the 15800 points.

Gold ends last week’s correction and breaks the upper line of the flag, aiming north.

The EURUSD is still inside of the wedge pattern with a negative sentiment.

The USDCAD is aiming lower after the bounce from the 38,2% Fibonacci. Sentiment is back to negative.

The GBPCAD is showing us the beauty of the false breakout pattern. The sentiment is bearish.

The EURCAD fails to break the neckline of the iH&S formation.

The CADJPY shows strength by bouncing from the neckline and the 38,2% Fibonacci.

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

Marketmind: Gathering Clouds?

European stocks posted their biggest weekly drop last week since February. A large part of the reason behind the sharp drop is growing concerns over a slowing global economy, as well as increasing fears over rising infection rates and vaccine durability. Investors hoping for a bounce this week from a clutch of “flash” European manufacturing surveys for August out on Monday may be disappointed going by the recent softening trend in U.S. and Chinese PMIs.

The broad message from the European PMI camp is likely that the strong recovery in growth seen over Q2 is now in danger of fading as a combination of rising prices, ongoing supply chain issues (see Toyota news last week) and labour shortages take their toll on business activity.

Indeed, investors in an August global fund manager survey by investment bank BoFA Securities cut their expectations for global growth to their lowest since April 2020. Notwithstanding a wave of short covering lifting Asian markets in early Monday, signs of growing caution are rife in asset markets.

Base metals, bulk resources and oil are struggling after global growth jitters took a heavy toll on commodities last week. The dollar index consolidated gains below a November 2020 high while the yield curve held near a one-year low.

The focus will shift to the Fed later in the week when Fed Chair Jerome Powell takes the stage at the Jackson Hole symposium. Markets will be keenly watching the tapering plan and potential next steps from officials.

While much of the tapering news value is already baked into markets, it remains to be seen whether the global rise of the Delta variant prompts the Fed to soften its rhetoric.

Elsewhere, in coronavirus news, Prime Minister Jacinda Ardern on Monday extended New Zealand’s strict nationwide COVID-19 lockdown.

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

Germany, France, UK, Euro PMIs

U.S. home sales

Private equity companies are circling British supermarket group Sainsbury’s SBRY.L with a view to possibly launching bids of more than 7 billion pounds ($9.53 billion), the Sunday Times reported.

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

(Reporting by Saikat Chatterjee)

 

European Equities: Private Sector PMIs and Consumer Confidence in Focus

Economic Calendar

Monday, 23rd August

French Manufacturing PMI (Aug) Prelim

French Services PMI (Aug) Prelim

German Manufacturing PMI (Aug) Prelim

German Services PMI (Aug) Prelim

Eurozone Manufacturing PMI (Aug) Prelim

Eurozone Markit Composite PMI (Aug) Prelim

Eurozone Services PMI (Aug) Prelim

Eurozone Consumer Confidence (Aug)

Tuesday, 24th August

German GDP (YoY) (Q2)

German GDP (QoQ) (Q2)

Wednesday, 25th August

German Ifo Business Climate Index (Aug)

Thursday, 26th August

GfK German Consumer Climate (Sep)

The Majors

It was relatively bullish day for the European majors on Friday, with the majors reversing losses from early in the session.

The DAX30 rose by 0.27%, with the CAC40 and the EuroStoxx600 seeing gains of 0.31% and 0.33% respectively.

A quiet economic calendar allowed the markets to hit pause on the pullback through the week.

Apprehension ahead of next week’s Jackson Hole Symposium and concerns over the Delta variant pegged the majors back, however.

The Stats

In July, Germany’s producer price index for industrial products rose by 1.9% versus a forecasted 0.8% increase. The index had risen by 1.3% in June.

According to Destatis,

  • Compared with July 2020, the index was up by 10.4%.
  • This was the highest increase compared to the corresponding month of the preceding year since January 1975.
  • Increases inn prices of intermediate products and energy drove the index northwards.
  • Prices of intermediate goods increased 15.6% compared with July 2020 and by 2.3% month-on-month.
  • Energy prices as a whole increased by 20.4% compared with July 2020 and by 4.1% compared with June 2021.

From the U.S

There were no major stats to provide the European majors with direction late in the day.

The Market Movers

For the DAX: It was a mixed day for the auto sector on Friday. Daimler rose by 0.39% to buck the trend on the day. BMW and Continental fell by 0.30% and by 0.22% respectively, however, with Volkswagen ending the day down by 1.09%.

It was a bearish day for the banks. Deutsche Bank and Commerzbank ended the day with losses of 0.38% and 0.37% respectively.

From the CAC, it was a relatively bullish day for the banks. BNP Paribas rose by 0.37%, with Soc Gen and Credit Agricole ending the day up by 0.02% and by 0.17% respectively.

It was another day in the red for the French auto sector, however. Stellantis NV and Renault fell by 1.15% and by 1.13% respectively.

Air France-KLM declined by 1.26%, while Airbus SE rose by 0.40%.

On the VIX Index

It was back into the red for the VIX on Friday, ending a 4-day winning streak.

Reversing a 0.46% gain from Thursday, the VIX slid by 14.35% to end the day at 18.56.

The NASDAQ rose by 1.19%, with the Dow and the S&P500 seeing gains of 0.65% and by 0.81% respectively.

VIX 230821 Daily Chart

The Day Ahead

It’s a busy day ahead on the Eurozone’s economic calendar. Prelim August private sector PMIs for France, Germany, and the Eurozone will be in focus early in the European session.

Expect plenty of influence from the numbers as the markets look to assess whether the Delta variant has impacted activity.

With consumption key to a sustainable economic recovery, Eurozone consumer sentiment figures for August will also draw attention late in the day.

From the U.S, prelim private sector PMis will also be in focus, with the Services PMI the key driver.

FOMC member chatter ahead of Jackson Hole and COVID-19 will also remain the key areas of interest.

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.

The Week Ahead – Private Sector PMIs and the Jackson Hole Symposium Key Areas of Focus

On the Macro

It’s a relatively busy week ahead on the economic calendar, with 50 stats in focus in the week ending 30th August. In the week prior, 52 stats had also been in focus.

For the Dollar:

In the first half of the week, prelim private sector PMIs and core durable goods will draw interest.

Expect the services PMI on Monday and core durable goods on Wednesday to be the key drivers.

On Thursday, the weekly jobless claims and 2nd estimate GDP numbers for the 2nd quarter will be in focus.

Barring any revisions from 1st estimates, the jobless claim figures will be key.

At the end of the week, the inflation and personal spending numbers wrap things up.

Finalized consumer sentiment figures for August are also due out. Expect any revisions to influence, particularly to the downside.

On the monetary policy front, the markets will also respond to chatter from Jackson Hole. This is expected to be the key driver for the Dollar and the broader markets. The Symposium commences on 26th August.

In the week ending 13th August, the Dollar Spot Index rose by 1.06% to 93.496.

For the EUR:

It’s a busier week on the economic data front.

Prelim private sector PMIs for France, Germany, and the Eurozone will be in focus on Monday.

Expect plenty of influence from the numbers. Late in the day on Monday, Eurozone consumer confidence figures will also draw interest.

On Tuesday, German GDP numbers for the 2nd quarter will draw attention ahead of business sentiment figures on Wednesday.

Germany’s headline Ifo Business Climate Index numbers for August will be key.

Wrapping things up on Thursday, German consumer confidence figures will also influence.

Both business and consumer confidence are key to a sustainable economic recovery. Weak numbers could further weigh on the EUR.

For the week, the EUR fell by 0.84% to $1.1698.

For the Pound:

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

Prelim private sector PMIs for August will be in focus on Monday along with CBI Industrial Trend Orders.

Expect the services PMI to be the key driver.

Away from the economic calendar, UK politics and central bank chatter will also need monitoring.

The Pound ended the week down by 1.75% to $1.3623.

For the Loonie:

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

RPMI numbers for July is the only data for the markets to consider in the week.

With the numbers due out on Friday, market risk sentiment and prelim private sector PMIs from elsewhere will drive market risk appetite and ultimately the Loonie.

The Loonie ended the week down 2.45% to C$1.2821 against the U.S Dollar.

Out of Asia

For the Aussie Dollar:

Retail sales figures for July are due out on Friday and will be the key stat of the week.
With lockdown measures in place, the markets will be looking to assess the damage.

Other stats include construction work down and new CAPEX expenditure for the 2nd quarter.

Thursday’s CAPEX numbers will draw interests ahead of the retail sales figures.

The Aussie Dollar ended the week down by 3.23% to $0.7132.

For the Kiwi Dollar:

It’s a quiet week ahead.

Retail sales for the 2nd quarter will provide the Kiwi with direction on Tuesday.

On Wednesday, trade data for July will also influence.

Following the RBNZ decision to hit the pause button, COVID-19 news updates will also influence.

The Kiwi Dollar ended the week down by 2.94% to $0.6835.

For the Japanese Yen:

It’s a quiet week ahead.

Private sector PMIs for August will be in focus on Monday. The markets will be looking for a pickup in service sector activity and for continued growth across the manufacturing sector.

Tokyo inflation figures for August are also due out at the end of the week.

Barring a marked pickup in inflationary pressures, however, the numbers are unlikely to move the dial.

The Japanese Yen fell by 0.17% to ¥109.780 against the U.S Dollar.

Out of China

There are no material stats to provide the markets with direction in the week ahead.

The Chinese Yuan ended the week down by 0.37% to CNY6.5015 against the U.S Dollar.

Geo-Politics

Iran and China continue to be the main areas of interest for the markets. News updates from the Middle East, in particular, will need continued monitoring…

Chatter from Capitol Hill over Afghanistan will also need monitoring.

The Weekly Wrap – FED Monetary Policy and U.S Economic Data Drove Dollar Demand

The Stats

It was a busier week on the economic calendar, in the week ending 20th August.

A total of 52 stats were monitored, which was up from 40 stats in the week prior.

Of the 52 stats, 24 came in ahead forecasts, with 23 economic indicators coming up short of forecasts. There were 5 stats that were in line with forecasts in the week.

Looking at the numbers, 26 of the stats reflected an upward trend from previous figures. Of the remaining 26 stats, 25 reflected a deterioration from previous.

For the Greenback, market sentiment towards FED monetary policy and economic data delivered Dollar strength. In the week ending 20th August, the Dollar Spot Index rose by 1.06% to 93.496. In the previous week, the Dollar had fallen by 0.30% to 92.523.

Out of the U.S

Key stats included retail sales and jobless claims figures.

Retail sales figures disappointed. In July, retail sales fell by 1.1%, reversing a 0.7% rise from June. Economists had forecast a 0.3% decline. Core retail sales fell by 0.4% versus a forecasted 0.1% rise. In June, core retail sales rose by 1.6%.

On the positive side, however, were labor market numbers once more. In the week ending 13th August, initial jobless claims fell from 377k to 348k. Economists had forecast a decline to 363k.

On the monetary policy front, the FOMC meeting minutes from Wednesday contributed to the upside in the Dollar. FOMC member chatter also suggested a near-term move that drove demand for the Greenback.

Out of the UK

Economic data was on the busier side once more. Employment, inflation, and retail sales figures were in focus.

It was a mixed bag on the economic data front. Claimant counts saw a modest decrease in July, falling by just 7.8k. In June, claimant counts had tumbled by 114.8k.

On the positive, however, was a sharp pickup in wage growth in June and a fall in the unemployment rate. The unemployment rate fell from 4.8% to 4.7%, with average wages incl. bonuses up 8.8%. In May, average wages incl. bonuses had been up by 7.4%.

At the end of the week, retail sales declined by 2.5% in July versus a forecasted 0.4% rise. In June, retail sales had risen by 0.5%. Core retail sales fell by 2.4% versus a forecasted 0.3% rise. Core retail sales had risen by 0.3% in June.

In the week, the Pound slid by 1.75% to end the week at $1.3623. In the week prior, the Pound had fallen by 0.04% to $1.3866.

The FTSE100 ended the week down by 1.81%, reversing a 1.34% gain from the previous week.

Out of the Eurozone

It was a quiet week on the economic data front.

Eurozone employment, 2nd estimate GDP, and finalized inflation figures were in focus.

In line with 1st estimates, the Eurozone economy expanded by 2.0% in the 2nd quarter, rebounding from a 0.3% contraction in the previous quarter. While, the year-on-year, number was revised down from 13.7% to 13.6%, the numbers were good enough to support the EUR.

Employment also picked up in the 2nd quarter, rising by 0.5% to reverse a 0.2% decline from the previous quarter.

On the inflation front, the Eurozone’s annual rate of inflation picked up from 1.9% to 2.2%, which was in line with prelim figures. The Eurozone’s core annual rate of inflation softened from 0.9% to 0.7%, which was also in line with prelim numbers.

For the week, the EUR fell by 0.84% to $1.1698. In the week prior, the EUR had risen by 0.30% to $1.1797.

The CAC40 slid by 3.91%, with the DAX30 and the EuroStoxx600 ending the week with losses of 1.06% and 1.48% respectively.

For the Loonie

It was a busy week on the economic data front.

Inflation, employment, and retail sales figures were in focus through the week.

In July, the core annual rate of inflation accelerated from 2.7% to 3.3%. For the month of July, core consumer prices increased by 0.6% following a 0.3% rise in June.

Employment figures were also Loonie positive. In July, the ADP reported a 221.3k increase in hiring, reversing most of a 294.2k slide from June.

At the end of the week, retail sales delivered much-needed support. In June, retail sales rose by 4.7% versus a forecasted 4.6% increase. Retail sales had fallen by 2.0% in May. Core retail sales rose by 4.2%, reversing a 2.1% decline from May. Economists had forecast a 4.4% rise.

Other stats included housing sector data that had a muted impact on the Loonie.

While the stats were skewed to the positive, bearish market sentiment and sliding crude oil prices weighed.

In the week ending 20th August, the Loonie slid by 2.45% to C$1.2821. In the week prior, the Loonie had risen by 0.31% to C$1.2515.

Elsewhere

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

The Aussie Dollar tumbled by 3.23% to $0.0.7132, with the Kiwi Dollar ending the week down by 2.94% to $0.0.6835.

For the Aussie Dollar

Employment figures were in focus late in the week.

In July, the unemployment rate fell from 4.9% to 4.6% versus a forecasted increase to 5.0%.

While positive, the decline came as a result of a fall in the participation rate attributed to lockdown measures.

Employment rose by a modest 2.2k in July, while full-time employment fell by 4.2k. In June, full-time employment had risen by 51.6k.

On the monetary policy front, the RBA meeting minutes were also in focus early in the week. There were no major surprises, however, with near-term economic speed bumps leaving the RBA in a holding pattern.

For the Kiwi Dollar

It was a particularly quiet week, with no major stats to consider.

The RBNZ monetary policy decision sank the Kiwi Dollar mid-week, however. Expectations of a hawkish rate hike were dashed as New Zealand went into full lockdown earlier in the week.

As a result of the lockdown, the RBNZ hit pause on lifting the cash rate. In spite of a hawkish press conference and upbeat sentiment towards the economy, the Kiwi failed to recover.

For the Japanese Yen

It was a busy week.

At the start of the week, 2nd quarter GDP numbers were in focus. The Japanese economy expanded by 0.3%, quarter-on-quarter, partially surprises recovering from a 1% contraction in the previous quarter. Economists had forecast a 0.2% expansion.

Year-on-year, the economy grew by 1.3% versus a forecasted 0.70%. In the 1st quarter, the economy had contracted by 3.9%.

Mid-week, trade data also beat forecasts, with the trade surplus widening from ¥384.0bn to ¥441.9bn. Exports were up 37.0%, year-on-year. In June, exports had been up 48.6%.

Machinery orders did disappoint, however, with orders falling by 1.5% in June. In May, orders had jumped by 7.8%.

The Japanese Yen fell by 0.17% to ¥109.78 against the U.S Dollar. In the week prior, the Yen had risen by 0.60% to ¥109.59.

Out of China

Industrial production, retail sales, and fixed asset investment numbers were in focus.

Disappointing economic data set the tone for the markets at the start of the week, raising concerns over the economic recovery.

In July, industrial production was up 6.4% year-on-year, which was down from 8.3% in June. Economists had forecast a 7.8% increase.

Retail sales were up 8.5%, which was softer than a 12.1% increase in June. Fixed asset investments increased by 10.3%, year-to-date, compared with 12.6% in June.

On the monetary policy front, the PBoC left loan prime rates unchanged at the end of the week. Despite some weak numbers out of China of late, this was in line with expectations.

In the week ending 20th August, the Chinese Yuan fell by 0.37% to CNY6.5015. In the week prior, the Yuan had ended the week up by 0.03% to CNY6.4774.

The CSI300 and the Hang Seng ended the week down by 3.57% and by 5.84% respectively.

European Equities: A Week in Review – 20/08/21

The Majors

It was a bearish week for the majors in the week ending 20th August.

The CAC40 slid by 3.91%, with the DAX30 and the EuroStoxx600 ending the week with losses of 1.06% and 1.48% respectively. For the EuroStoxx600, the loss ended a run of 4 consecutive weekly gains.

Economic data from the Eurozone was on the lighter side in the week, leaving COVID-19, U.S Stats, and the FED in focus.

Overnight FOMC meeting minutes from Wednesday sent the European majors into the deep red on Thursday.

While falling short of a taper tantrum, rising expectations of a near-term move by the FED weighed on riskier assets.

A continued spread of the Delta variant and disappointing economic data from China also weighed on the majors.

From China, industrial production increased by 6.4% in July, year-on-year. In June. industrial production had risen by 8.3%. Retail sales was up 8.5% compared with 12.1% in June.

The Stats

Eurozone employment, 2nd estimate GDP, and finalized inflation figures were in focus.

In line with 1st estimates, the Eurozone economy expanded by 2.0% in the 2nd quarter, rebounding from a 0.3% contraction in the previous quarter. While, the year-on-year, number was revised down from 13.7% to 13.6%, the numbers were good enough to support the majors.

Employment also picked up in the 2nd quarter, rising by 0.5% to reverse a 0.2% decline from the previous quarter.

On the inflation front, the Eurozone’s annual rate of inflation picked up from 1.9% to 2.2%, which was in line with prelim figures. The Eurozone’s core annual rate of inflation softened from 0.9% to 0.7%, which was also in line with prelim numbers.

From the U.S

Key stats included retail sales and jobless claims figures.

Retail sales figures disappointed. In July, retail sales fell by 1.1%, reversing a 0.7% rise from June. Economists had forecast a 0.3% decline. Core retail sales fell by 0.4% versus a forecasted 0.1% rise. In June, core retail sales rose by 1.6%.

On the positive side, however, were labor market numbers once more. In the week ending 13th August, initial jobless claims fell from 377k to 348k. Economists had forecast a decline to 363k.

On the monetary policy front, the FOMC meeting minutes from Wednesday weighed on riskier assets. FOMC member chatter also suggested an increased chance of a near-term move.

The Market Movers

From the DAX, it was a bearish week for the auto sector. Daimler slumped by 7.66% to lead the way down, with BMW and Volkswagen ending the week down by 7.35% and 7.26% respectively. Continental saw a more modest 4.40% decline in the week.

It was also a bearish week for the banking sector. Deutsche Bank and Commerzbank fell by 4.83% and by 5.49% respectively.

From the CAC, it was a bearish week for the banks. Soc Gen slid by 6.19%, with BNP Paribas and Credit Agricole falling by 4.19% and by 4.39% respectively.

The French auto sector also struggled, with Stellantis NV and Renault sliding by 7.43% and by 7.48% respectively.

Air France-KLM and Airbus ended the week with losses of 4.94% and 4.30% respectively.

On the VIX Index

It was a back into the green for the VIX in the week ending 20th August.

Reversing a 4.33% fall from the previous week, the VIX rose by 20.13% to end the week at 18.56.

4-days in the green from 5 sessions, which included a 20.44% jump on Thursday delivered the downside. A 14.35% slide on Friday pared some of the gains, however.

For the week, the Dow fell by 1.11%, with the NASDAQ and the S&P500 ending the week down by 0.73% and by 0.59% respectively.

VIX 210821 Weeklly Chart

The Week Ahead

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

Early in the week, prelim August private sector PMIs for France, Germany, and the Eurozone will be in focus.

Expect plenty of interest in the numbers. There’s been lingering concerns over the sustainability of the economic recovery. Weak numbers would pressure the majors.

Through the remainder of the week, the German economy will be in focus.

2nd quarter GDP, business sentiment, and consumer sentiment figures will provide direction.

From the U.S, private sector PMIs, core durable goods, jobless claims, personal spending, and inflation will also influence.

On the monetary policy front, the FED will also be in the limelight once more. The FED’s annual Economic Policy Symposium is scheduled for 26th August to 28th August. With the markets expecting a tapering to the asset purchasing program, the markets will be expecting guidance on what’s to come.

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

European Stocks End Higher but Log Worst Week in 6 Months

The pan-European STOXX 600 index was up 0.3%, with the retail sector gaining 1.2%.

British retailer Marks & Spencer jumped 14.1% to the top of the STOXX 600, as it hiked its profit outlook after a jump in demand for food and a surge in online clothes’ orders indicated that its latest turnaround plan was starting to deliver.

London’s FTSE 100 index rose 0.4%, while Germany’s DAX was up 0.3%. Frankfurt shares recovered from a fall earlier in the session after data showed a bigger-than-expected jump in producer prices in July.

The mining index ended flat, becoming the worst performing European sector for the week.

Signs of a slowdown in the global economic recovery and a surge in cases of the Delta variant of the coronavirus have knocked Europe’s STOXX 600 off record highs this week.

The index slumped 1.5% on Thursday alone, tracking a fall in global equities on indications the U.S. Federal Reserve could start reining in easy money policies later this year.

“Progress made by countries in dealing with COVID-19 still seems to have had little bearing, in general, on the relative performance of their stock markets,” said Bethany Beckett, UK economist at Capital Economics.

“Instead, swings in sentiment about the virus at a global level appear to have continued to exert a bigger influence via sector rotation.” Beckett expects this trend to persist.

Focus next week will be on the high-profile annual U.S. Jackson Hole central bankers’ conference, where Fed Chair Jerome Powell could signal he is ready to start easing monetary support.

ECB President Christine Lagarde will not attend the conference, a spokesperson for the central bank said this week.

Luxury goods rebounded from declines earlier in the day to gain 0.5%, but fell 5.5% over the week, pressured by worries over possible wealth policy developments in China.

UK supermarket Morrisons rose 4.2% after agreeing to a takeover offer worth 7.0 billion pounds ($9.54 billion), while Swedish real estate web portal Hemnet surged 27.8% on an upbeat quarterly report.

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

(Reporting by Sagarika Jaisinghani and Shreyashi Sanyal in Bengaluru; editing by Uttaresh.V, Kirsten Donovan)

 

Canadian Dollar Crashes

The SP500 bounced off a crucial long-term up trendline but once again the new day starts with a drop. I guess that sellers won’t give up that easily.

The DAX stayed below the 15800 level. As long as it stays below, the sentiment is negative.

Gold is continuing the upswing but it would have been much easier if the USD wasn’t so strong.

WTI Oil keeps dropping. As long as it stays below the 66.8 USD/bbl, the sentiment is negative.

The EURUSD continued the downswing after the price broke the neckline of the big Head and Shoulders formation.

On the other hand, the GBPUSD is still above the neckline but it surely is aiming for it.

The USDCAD is aiming for the 38,2% Fibonacci, where we can expect at least a small pause.

The EURCAD broke the neckline of the inverted Head and Shoulders pattern. Sentiment is definitely positive

The AUDCAD is declining, locked inside the wedge pattern. A comeback above the 38,2% Fibonacci can be a great buy signal.

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