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.

European Equities: A Light Economic Calendar Leaves FED Policy in Focus

Economic Calendar

Friday, 20th August

German PPI MoM JUL

The Majors

It was a particularly bearish day for the European majors on Thursday, with the majors heading for a 1st weekly loss of the month.

The CAC40 slid by 2.43%, with the DAX30 and the EuroStoxx600 falling by 1.25% and by 1.54% respectively.

From the Eurozone, there were no major stats to distract the markets.

The overnight FOMC meeting minutes from Wednesday and economic data from the U.S raised the prospects of a near-term move by the FED.

Jitters over an imminent tapering by the FED delivered the downside on the day.

The Stats

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

From the U.S

Philly FED Manufacturing and weekly jobless claims figures were in focus.

In August, the Philly FED Manufacturing Index fell from 21.9 to 19.4. Economists had forecast an increase to 23.0.

More significantly, in the week ending 13th August, jobless claims fell from 377k to 348k. Economists had forecast a decline to 363k.

The Market Movers

For the DAX: It was a bearish day for the auto sector on Thursday. BMW and Daimler slid by 3.12% and by 3.37% respectively to lead the way down. Continental and Volkswagen ended the day down by 2.13% and by 1.81% respectively.

It was also a bearish day for the banks. Deutsche Bank and Commerzbank ended the day with losses of 2.92% and 1.93% respectively.

From the CAC, it was a bearish day for the banks. Soc Gen slid by 3.03%, with BNP Paribas and Credit Agricole ending the day down by 2.68% and by 2.05% respectively.

Things were not much better for the French auto sector. Stellantis NV slid by 3.56%, with Renault falling by 2.60%.

Air France-KLM saw a relatively modest 1.60% decline, while Airbus SE slid by 3.15%.

On the VIX Index

It was a 4th consecutive day in the green for the VIX on Thursday.

Following a 20.44% jump on Wednesday, the VIX rose by 0.46% to end the day at 21.67.

The NASDAQ and the S&P500 rose by 0.11% and by 0.13% respectively, while the Dow slipped by 0.19%.

VIX 200821 Daily Chart

The Day Ahead

It’s a relatively quiet day ahead on the Eurozone’s economic calendar. Wholesale inflation figures from Germany are due out in the early part of the day.

We don’t expect the numbers to influence, however.

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

The Futures

In the futures markets, at the time of writing, the Dow Mini was down by 27 points.

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

Europe Shares Mark Biggest Daily Drop in a Month as Miners, Luxury Stocks Tumble

The pan-European STOXX 600 was down 1.6% at a two-week low, with mining stocks sliding 4.2% in their biggest one-day decline since March.

Luxury stocks with a large exposure to China’s economy such as LVMH, Kering and Richemont dropped between 5.8% and 9.2% on Beijing’s plans to target excessive corporate profits and wealth inequalities.

“The increasing determination on the part of China to pour sand in the wheels of its own recovery story with a crackdown on various sectors, including tech and luxury, also appears to be weighing on sentiment, as well as on demand for raw materials,” said Michael Hewson, chief market analyst at CMC Markets UK.

Stocks around the globe fell earlier in the day, as minutes published Wednesday from the U.S. Federal Reserve’s latest policy meeting gave the impression of a looming cut in its massive, pandemic-era bond-buying programme.

Although the European Central Bank has held steady, rising inflation has prompted some policymakers to say it must begin to rein-in its easy money policies that have been instrumental in lifting the STOXX 600 to record highs.

Focus will turn to the high-profile annual U.S. Jackson Hole conference of central bankers in late August, where Fed Chair Jerome Powell could signal he is ready to start easing monetary support.

ECB President Christine Lagarde will not attend the conference, an ECB spokesperson said this week.

Banking stocks including Asia-focused HSBC, as well as Spain’s BBVA and France’s BNP Paribas fell about 3% each.

The travel and leisure index declined 2.5% as a surge in cases of the Delta variant of the coronavirus added to concerns of slowing global growth and took the shine off a solid second-quarter corporate earnings season.

With the European earnings season nearly at the halfway mark, profit for STOXX 600 companies is expected to have surged 150% in the second quarter, the best since Refinitiv IBES records began in 2012.

Among individual stocks, Swedish heating technology specialist Nibe Industrier jumped 10.1% after posting a 64% jump in first-half profit.

Swiss building materials supplier Geberit, on the other hand, fell 1.7% as it warned about rising raw materials prices.

Utilities , considered a safe bet at a time of economic uncertainty, were the only sector in the green.

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

(Reporting by Sagarika Jaisinghani and Shreyshi Sanyal in Bengaluru; Editing by Barbara Lewis and David Holmes)

European Equities: A Quiet Economic Calendar Leaves U.S Data to Influence

Economic Calendar

Friday, 20th August

German PPI MoM JUL

The Majors

It was another mixed day for the European majors on Wednesday, with the EuroStoxx600 finding further support after Monday’s slip.

DAX30 and the EuroStoxx600 rose by 0.28% and by 0.14% respectively, while the CAC40 fell by 0.73%.

Economic data from the Eurozone had a muted impact on the majors, with housing sector data from the U.S also failing to move the dial.

Continued concerns over the ongoing spread of the Delta variant pegged the majors back once more,

Uncertainty over the FED’s tapering plans ahead of the FOMC meeting minutes also tested the majors on the day.

The Stats

Finalized inflation figures for the Eurozone were the key stats of the day.

In July, the Eurozone’s annual rate of inflation picked up from 1.9% to 2.2%, which was in line with prelim figures. Month-on-month, consumer prices fell by 0.1%, following a 0.3% rise in June.

The core annual rate of inflation softened from 0.9% to 0.7%, which was also in line with forecasts.

According to Eurostat,

  • The lowest annual rates were registered in Malta (+0.3%), Greece (+0.7%), and Italy (+1.0%).
  • Estonia recorded the highest annual rate of inflation of 4.9%.
  • For the euro area, the largest contribution came from energy (+1.34 pp), followed by food, alcohol, & tobacco (+0.35 pp).
  • Services contributed 0.31 pp, with non-energy industrial goods 0.17 percentage points.

From the U.S

Housing sector data for July were in focus. With the FOMC minutes due out after the European close however, the stats failed to move the dial.

The Market Movers

For the DAX: It was a mixed day for the auto sector on Wednesday. Continental rose by 0.97% to buck the trend. By contrast, Daimler slid by 1.21% to lead the way down. BMW and Volkswagen ended the day down by 0.70% and by 1.12% respectively.

It was a bullish day for the banks, however. Deutsche Bank and Commerzbank ended the day with gains of 1.17% and 2.32% respectively.

From the CAC, it was a bullish day for the banks. BNP Paribas rose by 0.91%, with Soc Gen and Credit Agricole ending the day up by 0.59% and by 0.23% respectively.

It was a mixed day for the French auto sector, however. Stellantis NV rose by 0.76%, while Renault fell by 0.40%.

Air France-KLM and Airbus SE saw relatively modest gains of 0.41% and 0.07% respectively.

On the VIX Index

It was a 3rd consecutive day in the green for the VIX on Wednesday.

Following an 11.10% rise on Tuesday, the VIX jumped by 20.44% to end the day at 21.57.

The Dow and the S&P500 slid by 1.08% and by 1.07% respectively, with the NASDAQ ending the day down by 0.89%.

VIX 190821 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 majors to respond to the overnight FOMC meeting minutes going into the open.

Later in the day, jobless claims and Philly FED manufacturing numbers from the U.S will also influence.

The Futures

In the futures markets, at the time of writing, the Dow Mini was down by 18 points.

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

European Equities: Eurozone Inflation and U.S Monetary Policy in Focus

Economic Calendar

Wednesday, 18th August

Eurozone Core Inflation Rate YoY Final JUL

Eurozone Inflation Rate YoY Final JUL

Friday, 20th August

German PPI MoM JUL

The Majors

It was mixed day for the European majors on Tuesday, with the EuroStoxx600 resuming its upward trajectory, albeit modestly.

The CAC40 and the DAX30 fell by 0.28 and by 0.02% respectively, while EuroStoxx600 eked out a 0.07% gain on the day.

Economic data from the Eurozone delivered support, while stats from the U.S were market negative on the day.

Anticipation of FED Chair Powell announcing tapering plans late in the day also pegged the majors back.

Away from the economic calendar, the Delta variant continued to add to market woes on the day following news of New Zealand going into full lockdown.

The Stats

2nd estimate GDP numbers for the Eurozone were in focus late in the European session.

In the 2nd quarter, the economy grew by 2.0%, which was in line with 1st estimate numbers. The economy had contracted by 0.3% in the previous quarter. Year-on-year, the economy grew by 13.6%, down from a 1st estimate 13.7%. The economy had contracted by 1.3% in the quarter prior.

From the U.S

Retail sales and industrial production figures were the key stats of the day.

In July, industrial production rose by 0.9%, month-on-month, following a 0.2% increase in June. Economists had forecast a 0.5% rise.

More significantly, U.S retail sales fell by 1.1% in July versus a forecasted 0.3% decline. In June, retail sales had risen by 0.7%.

Core retail sales declined by 0.4%, month-on-month, following a 1.6% jump in June. Economists had forecast a 0.1% rise in sales.

The Market Movers

For the DAX: It was a bearish day for the auto sector on Tuesday. Continental slid by 2.58%, with Daimler falling by 1.90%. BMW and Volkswagen ended the day down by 1.52% and by 1.31 respectively.

It was also a bearish day for the banks. Deutsche Bank and Commerzbank ended the day with losses of 1.20% and 2.59% respectively.

From the CAC, it was a bearish day for the banks. Soc Gen slid by 2.17%, with BNP Paribas and Credit Agricole ending the day down by 1.84% and by 1.94% respectively.

Things were not much better for the French auto sector. Stellantis NV slid by 2.72%, with Renault falling by 1.38%.

Air France-KLM and Airbus SE saw relatively modest losses of 0.61% and 0.94% respectively.

On the VIX Index

It was a 2nd consecutive day in the green for the VIX on Tuesday.

Following a 4.34% rise on Monday, the VIX jumped by 11.10% to end the day at 17.91.

The Dow and the S&P500 fell by 0.79% and by 0.71% respectively, with the NASDAQ ending the day down by 0.93%.

VIX 180821 Daily Chart

The Day Ahead

It’s a relatively quiet day ahead on the Eurozone’s economic calendar. Finalized July inflation figures for the Eurozone are due out later today.

Barring any marked revision to prelim figures, however, the stats should have a muted impact on the majors.

Housing sector data from the U.S should also have limited impact, as the markets look ahead to the FOMC meeting minutes. The minutes are due out after the European close…

The Futures

In the futures markets, at the time of writing, the Dow Mini was up by 47 points.

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

European Stocks Edge Higher After Data, Virus Worries Linger

The pan-European STOXX 600 was 0.1% higher, after the index marked its longest winning streak in over a decade.

Tighter scrutiny of China’s internet sector, a nationwide lockdown in New Zealand and movement restrictions in several Asian countries kept investors on edge even as European economies continued to recover from pandemic lows.

The travel and leisure sector fell 1.0%, with holiday company TUI Group and British Airways owner IAG leading declines.

“Travel stocks are experiencing yet another day of turbulence, with questions over travel regulations serving to highlight the uncertain road ahead,” Joshua Mahony, senior market analyst at IG, wrote in a client note.

Dutch tech firm Prosus, which has a stake in Chinese tech giant Tencent, fell 3.2%.

Economically sensitive sectors such as oil and gas, automakers and banks also retreated.

Data showed the euro zone economy grew 2% in the second quarter, confirming its earlier reading as the relaxation of coronavirus restrictions spurred economic activity after a brief recession.

“The strong growth in euro zone GDP in Q2 is likely to be repeated in Q3 despite the spread of the Delta variant, and should bring the economy back towards its pre-virus size in the coming months,” said Jessica Hinds, Europe economist at Capital Economics.

“But the southern economies continue to lag, with travel restrictions still holding back their tourism sectors.”

A rally in hard-hit cyclical stocks helped European shares hit all-time highs last week as expectations of a record jump in European corporate profit and optimism around the pace of vaccinations underpinned the continent’s economic recovery prospects.

However, a monthly survey of fund managers by Bank of America showed only less than half of the respondents now expect the European economy to further improve over the next 12 months – the lowest proportion since last June.

UK-listed shares of BHP Group gained 3.4.4% after the world’s biggest miner posted its best annual profit in nearly a decade and said it would pay a record dividend.

Online trading platform Plus500 jumped 5.1.1% as it forecast annual revenue to be “significantly ahead” of analysts’ estimates.

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

(Reporting by Sruthi Shankar and Shreyashi Sanyal in Bengaluru; Editing by Saumyadeb Chakrabarty, Subhranshu Sahu and Mark Heinrich)

European Equities: Eurozone GDP and U.S Retail Sales to Test the Majors

Economic Calendar

Tuesday, 17th August

Eurozone Employment Change QoQ Prel Q2

Eurozone GDP Growth Rate 2nd Est Q2

Wednesday, 18th August

Eurozone Core Inflation Rate YoY Final JUL

Eurozone Inflation Rate YoY Final JUL

Friday, 20th August

German PPI MoM JUL

The Majors

It was a bearish day for the European majors on Monday, with the EuroStoxx600 seeing its 10-day winning streak come to an end.

The CAC40 and the EuroStoxx600 fell by 0.83% and by 0.44% respectively, with DAX30 ending the day down by 0.32%.

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

Economic data from China and the U.S did influence, however.

Key stats from China included industrial production, fixed asset investment, and retail sales. All three stats disappointed, leading the pullback on the day.

In July, industrial production was up 6.4% year-on-year, which was softer than and 8.3% increase in June. Retail sales rose by 8.5% compared with 12.1% in June. Fixed asset investment increased 10.3%, year-to-date, compared with 12.6% in June.

The Stats

There were no major stats from the Eurozone at the start of the week.

From the U.S

NY Empire State Manufacturing figures were in focus late in the European session.

In August, the NY Empire State Manufacturing Index slid from 43.0 to 18.3. Economists had forecast a fall to 29.0.

The Market Movers

For the DAX: It was a bearish day for the auto sector on Monday. BMW and Volkswagen slid by 1.91% and by 2.14% respectively, with Daimler falling by 1.78%. Continental saw a more modest 0.48% loss on the day.

It was also a bearish day for the banks. Deutsche Bank and Commerzbank ended the day down by 1.55% and by 2.90% respectively.

From the CAC, it was a bearish day for the banks. Soc Gen slid by 1.71%, with BNP Paribas and Credit Agricole ending the day down by 0.97% and 0.89% respectively.

It also a bearish day for the French auto sector. Stellantis NV and Renault fell by 1.44% and by 2.18% respectively.

Air France-KLM and Airbus SE ended the day with losses of 1.96% and 0.71% respectively.

On the VIX Index

It was back into the green for the VIX on Monday, ending a 3-day losing streak.

Reversing a 0.90% decline from Friday, the VIX rose by 4.34% to end the day at 16.12.

The Dow and the S&P500 saw gains of 0.31% and 0.26% respectively, while the NASDAQ ended the day down by 0.20%.

VIX 170821 Daily Chart

The Day Ahead

It’s a relatively quiet day ahead on the Eurozone’s economic calendar. 2nd estimate GDP numbers for the Eurozone are due out along with 2nd quarter employment change figures.

Expect any revisions to the 2nd quarter GDP numbers to be of greater influence.

From the U.S, retail sales figures will also provide direction later in the European session.

The Futures

In the futures markets, at the time of writing, the Dow Mini was down by 37 points.

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

European Stocks Snap 10-Day Rally as China Data Drags

The pan-European STOXX 600 index fell 0.5% to 473.45, easing from a record level scaled last week.

Oil and mining stocks fell about 1.5% each as commodity prices took a hit after Chinese data raised concerns about faltering demand in the world’s major consumer of metals and oil.

China’s factory output and retail sales growth slowed sharply and missed expectations in July as new COVID-19 outbreaks and floods disrupted business operations.

China-exposed luxury names such as LVMH, Gucci-owner Kering and Cartier-maker Richemont fell between 2.1% and 4.6%.

“European markets will pay attention to U.S. and China growth concerns… especially as Europe’s data calendar is almost empty today,” Jeffrey Halley, a senior market analyst at OANDA, wrote in a note.

Optimism around the second-quarter earnings season, a revival in dealmaking and the pace of vaccinations in Europe drove the benchmark STOXX 600 to record highs last week.

“Having seen European markets eke out incremental gains on an almost daily basis since the beginning of the month, it shouldn’t have been too much of a surprise to see a little bit of a pullback at some point,” said Michael Hewson, chief market analyst at CMC Markets UK.

However, major money houses are mixed about the outlook for equity markets, with Bank of America setting a year-end target of 420 points for the STOXX 600, while Goldman Sachs lifted its 12-month target to 520 points.

All eyes now will be on U.S. economic data due this week and the Federal Reserve’s minutes from its July policy meeting to gauge when and how the central bank will start tightening its monetary policy.

A Reuters poll of economists showed the European Central Bank is likely to announce long-awaited plans to reduce its pandemic-related asset purchases in the next quarter.

French car parts supplier Faurecia SE jumped 12.1% after it agreed to acquire a majority stake in German automotive lighting group Hella, trumping rival bidders with a 6.7 billion euros deal.

Hella, whose shares hit a record high last week on anticipation of a deal, slipped 3.4%.

Lufthansa fell 3.6% after the German finance agency unveiled plans to sell up to a quarter of its 20% stake in the airline.

The broader travel and leisure index was down 1.6% as the fast-spreading Delta variant of COVID-19 remained a concern, particularly as many Asian economies imposed movement restrictions.

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

(Reporting by Sruthi Shankar and Shreyashi Sanyal in Bengaluru; Editing by Shounak Dasgupta and Subhranshu Sahu)

European Equities: A Quiet Start to the Week Leaves Data from China to Set the Tone

Economic Calendar

Tuesday, 17th August

Eurozone Employment Change QoQ Prel Q2

Eurozone GDP Growth Rate 2nd Est Q2

Wednesday, 18th August

Eurozone Core Inflation Rate YoY Final JUL

Eurozone Inflation Rate YoY Final JUL

Friday, 20th August

German PPI MoM JUL

The Majors

It was another relatively bullish day for the European majors on Friday, with the EuroStoxx600 up for a 10th consecutive day.

The CAC40 and the EuroStoxx600 rose by 0.20 and by 0.21% respectively, with DAX30 ending the day up by 0.25%.

Economic data from the U.S was market friendly once more, with consumer sentiment sinking according to prelim figures for August.

Following the disappointing U.S inflation figures from Wednesday, Friday’s stats further suggested the need for the FED to stand pat.

Stats from the Eurozone provided support, with Eurozone trade data pointing to improving trade terms.

COVID-19 remained a major concern, however. A continued rise in new cases globally has raised uncertainty over the economic outlook.

The Stats

Economic data was on the busier side this morning, with French inflation and Eurozone trade data in focus.

In June, the Eurozone’s trade surplus widened from €7.5bn to €18.1bn. Economists had forecast a widening to €18.2bn.

According to Eurostat,

  • Euro area goods exports to the rest of the world rose by 23.8% to €209.9bn compared with June 2020.
  • Imports from the rest of the world increased by 28.2% to €191.8bn.
  • In January to June 2021, intra-euro area trade rose by 20.3% when compared with January to June 2020.
  • Euro area goods exports increased by 15.5% in January-June 2021, when compared with January-June 2020. Imports rose by 15.2%.

Inflation figures from France had a muted impact on the majors, however. In July, France’s annual rate of inflation softened from 1.5% to 1.2%, which was in line with prelim figures.

From the U.S

Consumer sentiment figures for August were out late in the European session.

According to prelim figures, the Michigan Consumer Sentiment Index slid from 81.2 to 702. Economists had forecast an increase to 81.5. The Michigan Consumer Expectations Index also took a hit, falling from 79.0 to 65.2.

The Market Movers

For the DAX: It was a mixed day for the auto sector on Friday. Continental bucked the trend, rising by 1.11%. BMW and Daimler fell by 0.32% and by 0.26% respectively, with Volkswagen down by 0.51%.

It was a bullish day for the banks, however. Deutsche Bank and Commerzbank ended the day with gains of 0.50% and 0.04% respectively.

From the CAC, it was a mixed day for the banks. Soc Gen slipped by 0.04%, while BNP Paribas and Credit Agricole ended the day up by 0.11% and 0.42% respectively.

It another mixed day for the French auto sector. Stellantis NV rose by 0.61%, while Renault fell by 0.61%.

Air France-KLM also saw red, falling by 0.54%, while Airbus SE ended the day up by 0.12%.

On the VIX Index

It was a 3rd consecutive day in the red for the VIX on Friday.

Following a 2.93% decline on Thursday, the VIX fell by 0.90% to end the day at 15.45.

The Dow and the NASDAQ both rose by 0.04%, with the S&P500 ending the day up by 0.16%.

VIX 160821 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 majors with direction at the start of the week.

From the U.S, NY Empire State Manufacturing data will draw some interest late in the session.

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

Industrial production, fixed asset investment, retail sales, and unemployment figures are due out this morning.

Away from the economic calendar, news from Capitol Hill, COVID-19 updates, and FOMC member chatter will also need monitoring.

The Futures

In the futures markets, at the time of writing, the Dow Mini was down by 45 points.

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

The Week Ahead – Monetary Policy, Economic Data, and COVID-19 in Focus

On the Macro

It’s busier week ahead on the economic calendar, with 54 stats in focus in the week ending 20th August. In the week prior, 40 stats had also been in focus.

For the Dollar:

Retail sales figures will draw plenty of interest on Tuesday. Following impressive NFP numbers, the markets will be expecting positive numbers. Last week’s data, sent mixed messages, however, leaving uncertainty and increased volatility.

On Thursday, the weekly jobless claims data for the 1st week of August will be in focus, along with Philly FED manufacturing data.

While the Philly FED numbers are key, expect the initial jobless claims data to be of greater influence.

On the monetary policy front, the FOMC Meeting Minutes on Wednesday will also provide plenty of direction. Any talk of tapering should labor market numbers improve would deliver Dollar support.

In the week ending 13th August, the Dollar Spot Index fell by 0.30% to 92.518.

For the EUR:

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

2nd estimate GDP numbers for the Eurozone will be in focus on Tuesday. Expect any downward revisions to test EUR support. The ECB has raised concerns over growth in the 3rd quarter. Lowering the bar for the 2nd quarter would deliver a gloomier outlook.

Finalized inflation figures for the Eurozone on Wednesday and wholesale inflation figures from Germany will also draw interest.

For the week, the EUR rose by 0.30% to $1.1797.

For the Pound:

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

Claimant counts, employment change, and the unemployment rate will be in focus on Tuesday. Expect the unemployment rate and claimant count figures to be key.

Also of influence will be inflation and retail sales figures due out on Wednesday and Thursday.

The Pound ended the week down by 0.04% to $1.3866.

For the Loonie:

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

Mid-week, inflation will be in focus ahead of ADP employment change and retail sales figures due out on Thursday and Friday.

After a quiet week on the economic data front in the week prior, expect plenty of interest in the numbers.

The Loonie ended the week up 0.31% to C$1.2515 against the U.S Dollar.

Out of Asia

For the Aussie Dollar:

Employment figures due out on Thursday will be the only stats for the markets to consider.

Weak numbers, linked to the rise in new COVID-19 cases and containment measures, would weigh on the Aussie Dollar.

On the monetary policy front, however, the RBA meeting minutes due out on Tuesday will also be key.

The Aussie Dollar ended the week up by 0.19% to $0.7370.

For the Kiwi Dollar:

It’s a quiet week ahead. There are no material stats due out of New Zealand to provide the Kiwi Dollar with direction.

While there are no stats to consider, the RBNZ monetary policy decision will have a material impact on Wednesday.

Economic data from New Zealand has been upbeat of late. The markets will be expecting hawkish chatter.

The Kiwi Dollar ended the week up by 0.46% to $0.7042.

For the Japanese Yen:

It’s a busier week ahead.

2nd quarter GDP numbers will set the tone on Monday.

The focus will then shift to trade data and machinery orders due out on Wednesday.

Inflation figures wrap things up on Friday.

The Japanese Yen rose by 0.60% to ¥109.590 against the U.S Dollar.

Out of China

It’s also a busier week ahead.

Industrial production, retail sales, fixed asset investments, and the unemployment rate are due out on Monday.

Expect the retail sales and industrial production figures to be key.

On the monetary policy front, the PBoC will set the loan prime rates on Friday. The markets are expecting the PBoC to stand pat, however.

The Chinese Yuan ended the week up by 0.03% to CNY6.4774 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…

The Weekly Wrap – Inflation and Consumer Sentiment Sink the Greenback…

The Stats

It was a quieter week on the economic calendar, in the week ending 13th August.

A total of 40 stats were monitored, which was down from 50 stats in the week prior.

Of the 40 stats, just 8 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 23 stats, 21 reflected a deterioration from previous.

For the Greenback, a string of disappointing economic data from the U.S sent the Dollar into the red. In the week ending 13th August, the Dollar Spot Index fell by 0.30% to 92.518. In the previous week, the Dollar had risen by 0.68% to 92.800.

Out of the U.S

Key stats in the week included inflation, jobless claims, and consumer sentiment figures.

In July, inflation numbers came in softer than expected, with the core annual rate of inflation softening from 4.5% to 4.3%.

While the annual rate of inflation held steady at 5.4%, however, consumer prices rose by just 0.5% in July. In June, consumer prices had risen by 0.9%.

Weekly jobless claims fell from 387k to 375k in the week ending 6th August. Economists had forecast a decline to 365k.

All in all, the numbers looked to have eased pressure on the FED following the impressive NFP numbers from the week prior.

At the end of the week, consumer sentiment added further downward pressure on the greenback.

According to prelim figures, the Michigan Consumer Sentiment Index slid from 81.2 to 702. Economists had forecast an increase to 81.5. The Michigan Consumer Expectations Index also took a hit, falling from 79.0 to 65.2.

Out of the UK

Economic data was on the busier side, with GDP numbers for the 2nd quarter the key stats of the week.

In the 2nd quarter, the economy expanded by 4.8%, quarter-on-quarter, versus a forecasted 5.1%. The economy had contracted by 1.6% in the previous quarter.

Year-on-year, the economy expanded by 22.2%, falling short of a forecasted 22.5%. In the 1st quarter, the economy had contracted by 6.1%.

Manufacturing and industrial production figures also fell short of forecasts.

Manufacturing production was up 13.9%, year-on-year, versus a forecasted 14.0%. Industrial production was up 8.3%, falling short of a forecasted 10.8%.

Trade data also failed to impress, with the trade deficit widening from £0.2bn to £2.5bn in June.

Ahead of the stats, sentiment towards monetary policy and the UK government had weighed on the Pound.

News of Boris Johnson threatening to sack Rishi Sunak was Pound negative. There was also talk of MPC member Saunders being the only hawk, raising doubts of an imminent move on policy.

In the week, the Pound slipped by 0.04% to end the week at $1.3866. In the week prior, the Pound had fallen by 0.23% to $1.3872.

The FTSE100 ended the week up by 1.34%, following a 1.29% gain from the previous week.

Out of the Eurozone

It was a mixed set of numbers on the economic data front.

German and Eurozone trade and economic sentiment figures drew plenty of attention.

Germany’s trade surplus widened from €12.5bn to €16.3bn, with the Eurozone’s widening from €12.3bn to €18.1bn.

Economic sentiment figures were disappointing, however.

Germany’s ZEW Economic Sentiment Index fell from 63.3 to 40.4 in August. The Eurozone’s Index slid from 61.2 to 41.7.

Also negative was an unexpected fall in Eurozone industrial production, which declined by 0.3% in June. Production had fallen by 1.1% in May.

For the week, the EUR rose by 0.30% to $1.1797. In the week prior, the EUR had fallen by 0.91% to $1.1762.

The CAC40 rose by 1.16%, with the DAX30 and the EuroStoxx600 ending the week up by 1.37% and by 1.25% respectively.

For the Loonie

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

There were no major stats out of Canada to provide the Loonie with direction in the week.

In the week ending 13th August, the Loonie rose by 0.31% to C$1.2515. In the week prior, the Loonie had fallen by 0.63% to C$1.2554.

Elsewhere

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

The Aussie Dollar rose by 0.19% to $0.7370, with the Kiwi Dollar ending the week up by 0.46% to $0.7042.

For the Aussie Dollar

Business and consumer confidence figures were in focus in the week.

The stats were skewed to the negative, with fresh lockdown measures weighing on sentiment.

In July, the NAB Business Confidence Index fell from 11 to -8. For August, the Westpac Consumer Confidence Index fell by 4.4% to 104.1.

While consumer confidence weakened, this was still considered a solid number, limiting the impact on the Aussie Dollar.

For the Kiwi Dollar

It was a quiet week, with the July Business PMI the key stat of the week.

In July, the Business PMI rose from 60.7 to 62.6, coming in ahead of a forecasted fall to 60.0.

Looking at the sub-components, a pickup in the pace of hiring and a more marked increase in new orders were key.

For the Japanese Yen

It was a particularly quiet week, with no major stats from Japan to provide direction.

The Japanese Yen rose by 0.60% to ¥109.59 against the U.S Dollar. In the week prior, the Yen had fallen by 0.48% to ¥110.25.

Out of China

Inflation figures were in focus at the start of the week.

In July, the annual rate of inflation softened from 1.1% to 1.0%, while consumer prices rose by 0.3% in the month. Consumer prices had fallen by 0.4% in June.

Wholesale inflationary pressures continued to pick up, however.

The annual rate of wholesale inflation accelerated from 8.8% to 9.0% in July. July’s figures suggested that a further pickup in inflationary pressures could be on the horizon.

In the week ending 13th August, the Chinese Yuan rose by 0.03% to CNY6.4774. In the week prior, the Yuan had ended the week down by 0.34% to CNY6.4831.

The CSI300 and the Hang Seng ended the week up by 0.81% and by 0.50% respectively.