European Equities: Policy Uncertainty and Brexit to Test the Majors

Economic Calendar:

Tuesday, 10th September

  • French Non-Farm Payrolls (q/q (Q2)
  • French Industrial Production m/m (Jul)
  • Italian Industrial Production m/m (Jul)

Thursday, 12th September

  • German CPI m/m (Aug) Final
  • French CPI m/m (Aug) Final
  • French HICP m/m (Aug) Final
  • Eurozone Industrial Production m/m (Jul)
  • Deposit Facility Rate (Sep)
  • ECB Interest Rate Decision (Sep)

Friday, 13th September

  • Spanish CPI y/y (Aug) Final
  • Spanish HICP y/y (Aug) Final
  • Wages in eurozone y/y (Q2)
  • Eurozone Trade Balance (Jul)

The Majors

It was a 4th consecutive day in the green for the DAX30 on Monday. Following last week’s gains, the DAX30 led the way on Monday, rising by 0.28%. Support for the DAX30 came off the back of better than expected July trade data out of Germany and from talk of a German fiscal stimulus package.

Seeing red, however, were the CAC40 and EuroStoxx600, which fell by 0.27% and 0.28% respectively.

Uncertainty over what stimulus the ECB will deliver on Thursday and how far the FED will go next week left the markets in limbo.

On the geopolitical front, Brexit and political chaos in the UK were also in focus, testing market risk appetite on Monday.

The Stats

It was a relatively quiet day on the Eurozone economic calendar on Monday. July trade data, out of Germany provided direction in the early part of the day.

According to Destatis,

  • Germany’s trade surplus widened from a revised €18.1bn to €20.2bn in July. In July 2018, the surplus stood at €16.4bn.
  • Exports rose to €115.2bn in July. Month-on-month, exports increased by 0.7% and by 3.8% year-on-year.
    • Germany exported goods to the value of €64.2bn to EU member states. Year-on-year, exports to EU member states fell by 0.5%.
    • Goods to the value of €41.3bn (-0.2%) were exported to Euro-area countries.
    • Exports of goods to countries outside of the EU rose by 9.8%, year-on-year, to €51.0bn.
  • Imports fell to €93.7bn. Month-on-month imports slid by 1.5% and by 0.9% year-on-year.
    • Germany imported €52.8bn worth of goods from EU member states. Year-on-year imports from EU member states fell by 1.6%.
    • The value of goods imported from Euro-area countries was €34.9bn (-3.4%).
    • Imports from outside of the EU fell by 0.1%.

From the U.S, there were no material stats to influence later in the day.

The Market Movers

From the DAX, the auto sector was amongst the best performers on the day. Continental led the way, rallying by 3.95%. Volkswagen (+2.54%), Daimler (+2.22%), and BMW (+1.76%) were also at the top of the table.

Bank stocks joined auto stocks on the day, with Deutsche Bank and Commerzbank rallying by 3.75% and 3.44% respectively.

From the CAC, it was a bullish day for the banks. Soc Gen led the way, rallying by 4.10%. BNP Paribas and Credit Agricole gained 2.97% and 2.75% respectively. It was also a solid day for the auto sector, Renault rose by 2.25%, with Peugeot gaining 3.48%.

On the VIX Index

It was a 1st day in the green in 5 for the VIX Index, which rose by 2% to end the day at 15.3.

With economic data on the lighter side on the day, market uncertainty over monetary policy and a lack of chatter on trade led to the gain on the day.

VIX 10/09/19 Daily Chart

The Day Ahead

It’s a relatively quiet day ahead on the Eurozone economic calendar. 2nd quarter non-farm payroll figures are due out of France. Barring particularly dire numbers, the figures will likely have a muted impact on the majors.

The lighter day on the stats will give French and Italian industrial production figures greater weighting.

From the U.S, stats are also on the lighter side, with economic data limited to July’s JOLTs job openings. Following disappointing August nonfarm payroll figures on Friday, we can expect the numbers to have an impact late in the session.

Outside of the stats, geopolitical risk will continue to provide direction through the day. UK politics and Brexit will likely be the main area of focus.

On the monetary policy front, uncertainty over how far the ECB will go also needs considering. The markets are expecting the kitchen sink and the ECB may not be yet willing to throw in the last of its ammunition just yet.

The good news is that the German government’s latest steps to shore up the economy could spur a wave of fiscal stimulus programs. Draghi will finally get his wish. The ECB President had called on governments to deliver stimulus for years.

In the futures markets, at the time of writing, the DAX was up by 21 points, with the Dow Mini was up by 52 points.

European Equities: Trade Data, Stimulus and UK Politics in Focus

Economic Calendar:

Monday, 9th September

  • German Trade Balance (Jul)

Tuesday, 10th September

  • French Non-Farm Payrolls (q/q (Q2)

Thursday, 12th September

  • German CPI m/m (Aug) Final
  • French CPI m/m (Aug) Final
  • French HICP m/m (Aug) Final
  • Eurozone Industrial Production m/m (Jul)
  • Deposit Facility Rate (Sep)
  • ECB Interest Rate Decision (Sep)

Friday, 13th September

  • Spanish CPI y/y (Aug) Final
  • Spanish HICP y/y (Aug) Final
  • Wages in Eurozone y/y (Q2)
  • Eurozone Trade Balance (Jul)

The Majors

It was a third day in the green for the majors on Friday, as the majors found further support from an easing in geopolitical risk and expectations of monetary policy easing.

On the geopolitical front, renewed hope of a resolution to the U.S – China trade war and the UK Parliament’s blocking of a no-deal Brexit also provided support.

Leading the way on Friday was the DAX30, which gained 0.54% to close out the week up by 2.11%. The CAC40 and EuroStoxx600 rose by 0.19% and 0.32% respectively. In spite of the CAC’s modest gains on the day, the index led the way for the week, rising by 2.2%, with the EuroStoxx600 up by 2.02%.

The Stats

It was a relatively quiet day on the Eurozone economic calendar on Friday. July industrial production figures, out of Germany were in focus in the early part of the day.

According to Destatis,

  • Industrial production fell by 0.6%, month-on-month, in July, following a 1.1% fall in June.
  • Production excluding energy and construction was down by 0.8%.
  • Within the industry, the production of intermediate goods fell by 0.7%, with production of capital goods falling by 1.2%.
  • Bucking the trend, the production of consumer goods increased by 0.6%.
  • Year-on-year, production fell by 4.2% in July, following a 4.7% fall in June.

From the U.S, it was a mixed bag on the day. While the unemployment rate held steady and wage growth continued to rise at 3.2%, nonfarm payrolls disappointed.

A 130k in nonfarm payrolls continued to support the market expectation of a FED rate cut next week, in spite of mixed chatter from the FED.

Late in the day, FED Chair Powell talked of the FED’s commitment to supporting the U.S economy. Powell’s comments continue to support a priced-in rate cut despite the FED Chair holding back from affirming an actual cut.

The Market Movers

From the DAX, the positive news on trade talks continued to support ThyssenKrupp, which rallied 3.88% off the back of a 6.36% gain on Thursday.

Bank stocks held onto Thursday’s gains, with Deutsche Bank and Commerzbank rising by 0.03% and 0.49% respectively.

For the auto sector, it was a mixed end to the week. Continental bucked the trend on the day, rising by 0.45%. It was red for the rest. Daimler fell by 0.57%, with BMW and Volkswagen declining by 0.61% and 0.74% respectively.

From the CAC, it was a mixed day for the banks. Credit Agricole led the way, rising by 0.42%. BNP Paribas and Soc Gen fell by 0.02% and 0.10% respectively. It was also a mixed day for the auto sector, Renault slipped by 0.43%, while Peugeot rose by 2.98%.

On the VIX Index

The VIX Index saw red for a 4th consecutive day on Friday, falling by 7.98% to end the week down 21.05% at 15.0.

Another day of disappointing economic data failed to rile the markets, with geopolitical risk and expectation of a FED rate cut placating the markets.

VIX 09/09/19 Daily Chart

The Day Ahead

It’s a relatively quiet start to the week on the Eurozone economic calendar. July trade data is due out of Germany in the early part of the day. Disappointing trade figures from elsewhere suggests a further narrowing in the trade deficit.

While we can expect the trade data to have some influence, chatter from the UK Parliament and any further comments from Beijing and Washington need monitoring.

There are no material stats due out of the U.S later in the day to provide direction.

From the weekend, trade data out of China failed to impress. In US Dollar terms, the trade surplus narrowed from $44.58bn to $34.84bn, with exports falling by 1%. An announcement last week of further stimulus from the PBoC muted the impact of the numbers, however.

In the futures markets, at the time of writing, the DAX was up by 36.5 points, with the Dow Mini was up by 52 points.

European Equities: Will the Stats Spoil the Party? It’s Nonfarm Payrolls…

Economic Calendar:

Friday, 6th September

  • German Industrial Production m/m (Jul)
  • Eurozone GDP y/y (Q2) 3rd Estimate
  • Eurozone GDP q/q (Q2) 3rd Estimate

The Majors

It was a second day in the green for the majors, as a combination of easing in geopolitical risk and positive economic data spurred the majors on.

Leading the way on Thursday was the CAC40, which rallied by 1.11%. The DAX30 and EuroStoxx600 rose by 0.85% and 0.72% respectively.

The stars were aligned on the geopolitical front. News of trade talks resuming next month and Parliament’s blocking of a no-deal Brexit were key to the upswing.

From Italy, the aversion of a snap general election was also a plus, supporting the Italian markets mid-week.

The Stats

It was a relatively quiet day on the Eurozone economic calendar on Thursday. July factory orders figures, out of Germany, were in focus in the early part of the day.

According to Destatis,

  • Factory orders tumbled by 2.7% in July, month-on-month, reversing a revised 2.7% rise in June. Economists had forecasted for orders to fall by 1.5%.
  • Domestic orders fell by 0.5%, whilst foreign orders slid by 4.2%, month-on-month.
  • New orders from the euro area were up 0.3%. New orders from other countries, however, were down by 6.7%.
  • For consumer goods, new orders fell by 2.4%, with orders for capital goods falling by 3%. New orders for intermediate goods also saw red, falling by 2.2%.
  • Year-on-year, new orders tumbled by 5.6%.

From the U.S, ADP nonfarm employment change, July factory orders, and August ISM Non-Manufacturing PMI figures provided direction.

ADP numbers impressed, with nonfarm payrolls rising by 195K in August.

Factory orders also provided support, with orders up by 1.4% in July following a 0.6% rise in June.

Of greater significance, however, was a jump in the ISM Non-Manufacturing PMI. The PMI rose from 53.7 to 56.4 in August.

Positive numbers out of the U.S and the material shift in the geopolitical landscape were enough to offset the dire numbers out of Germany.

The Market Movers

From the DAX, positive news on trade talks supported ThyssenKrupp and Infineon Tech, which led the way on the day. The pair rallied by 6.36% and 5.4% respectively. Bank stocks were also at the top of the index supported by better than expected economic data. Deutsche Bank and Commerzbank jumped by 4.84% and 3.92% respectively.

For the auto sector, Continental and Daimler led the way with the pair rising by 4.98% and 3.36%. BMW and Volkswagen saw more modest gains of 1.81% and 1.66% respectively.

From the CAC, it was also a bullish day for the banks. Soc Gen led the way, rallying by 3.49%. Credit Agricole and BNP Paribas weren’t far behind with gains of 2.79% and 2.92% respectively. From the auto sector, Renault and Peugeot rose by 3.26% and 3.62% respectively.

On the VIX Index

The VIX Index saw red for a 3rd consecutive day on Thursday, falling by 6.12% to end the day at 16.3.

While economic data provided support, geopolitics was the story of the day, providing much-needed market relief.

Risks remain but have certainly eased as the week progressed.

VIX 06/09/19 Daily Chart

The Day Ahead

It’s a relatively busy day ahead on the Eurozone economic calendar. July industrial production figures are due out of Germany in the early part of the day. Later in the session, 3rd estimate GDP numbers for the Eurozone are also due out.

Barring deviation from 2nd estimates, Germany’s industrial production figures will have the greatest influence on the majors.

Later in the day, economic data out of the U.S will also provide direction. Nonfarm payroll and wage growth figures will be in focus later this afternoon.

Outside of the stats, it’s Friday and, while Trump traditionally shocks the markets, the news wires may well do the talking.

From the UK, legislation to block a no-deal Brexit is expected to be approved ahead of next week’s suspension of Parliament. The question, however, is whether the British PM will go to the EU and request an extension. There’s also the possibility of the EU refusing the extension… A passing of the Bill would, at least, open the door for another motion for a 15th October general election, but even that is up in the air…

In the futures markets, at the time of writing, the DAX was up by 10.5 points, with the Dow Mini was up by 73 points.

European Equities: Economic Data and Brexit Remain in Focus

Economic Calendar:

Thursday, 5th September

  • German Factory Orders m/m (Jul)

Friday, 6th September

  • German Industrial Production m/m (Jul)
  • Eurozone GDP y/y (Q2) 3rd Estimate
  • Eurozone GDP q/q (Q2) 3rd Estimate

The Majors

Wednesday delivered a rebound for the European majors. Leading the way was the CAC40, which rose by 1.21%, with the DAX30 and EuroStoxx600 gaining 0.96% and 0.89% respectively.

Outside of the economic data, which was market positive, a shift in sentiment towards geopolitical risk provided further support.

On Tuesday, MPs took control of Parliament, which yielded legislation to prevent the British PM to pull Britain out without a deal.

From the EU, news of Five Star Movement members voting, by a vast majority, in favor of a coalition with the Democratic Party was also a positive.

And from Asia, news hitting the wires of HK Leader Carrie Lam announcing plans to withdraw the extradition bill got things moving in the early part of the day.

The Stats

It was a particularly busy day on the Eurozone economic calendar on Wednesday. August service sector PMI numbers out Spain and Italy and finalized numbers out of France, Germany, and the Eurozone provided direction.

Service PMIs

Spain’s service PMI rose from 52.9 to 54.3, coming in well ahead of a forecasted 53.0.

The Italian service PMI fell from 51.7 to 50.6, which was worse than a forecasted 51.6.

France’s finalized PMI came in at 53.4, upwardly revised from a prelim 53.3. In July, the PMI had stood at 52.6.

The German service PMI came in at 54.8, upward revised from a prelim 54.4 and up from a July 54.5.

At the Eurozone level, the service PMI came in at 53.5, upwardly revised from a prelim 53.4. The Eurozone composite was also revised upwards, from 51.8 to 51.9. In July, the composite had stood at 51.5. According to the finalized August composite PMI survey,

  • France performed the best at a national level, with the August composite PMI hitting a 9-month high 52.9.
  • Spain also saw solid growth with the composite rising to a 4-month high 52.6.
  • Ireland and German ranked 3rd and 4th respectively, with the two seeing modest growth.
  • Italy trailed, with the composite PMI falling to a 3-month low 50.3.
  • The euro area private sector reported both an increase in new work and a 6th consecutive monthly fall in backlogs.
  • While new work increased, the rise was only marginal, with manufacturers and economies exposed to trade continuing to suffer.
  • Hiring across the private sector was at its slowest pace since March 2016.

Consumer Spending

Eurozone July retail sales figures failed to pin back the majors on the day, in spite of retail sales falling by 0.6%, month-on-month. Retail sales had risen by 1.1% in June.

According to Eurostat,

  • The volume of retail trade decreased by 1% for non-food products and by 0.3% for food, drinks, and tobacco.
  • Automotive fuel sales remained unchanged.
  • By member state, Germany (-2.2%) and Belgium (-1.4%) reported the largest fall in sales, while Ireland (+1.9%), Slovenia (+1.2%), and Malta (+1.0%) reported the largest increases.
  • Year-on-year, retail sales increased by 2.2%, with only Slovakia (-0.8%) seeing a fall in sales.

From the U.S, July trade data had a muted impact on the majors late in the session.

The Market Movers

From the DAX, Wirecard and ThyssenKrupp led the way in the rebound, surging by 4.16% and by 3.82% respectively. From the auto sector, Continental and Daimler were also amongst the leading stocks, rising by 3.57% and 2.23% respectively. BMW and Volkswagen saw more modest gains of 1.36% and 1.56% respectively.

The shift in risk sentiment also provided strong support for the banks. Deutsche Bank rose by 2.08%, with Commerzbank up by 2.62%.

From the CAC, it was also a bullish day for the banks. Soc Gen and BNP Paribas led the way, with gains of 1.68% and 1.00% respectively. Credit Agricole trailed with a 0.83% rise on the day. From the auto sector, Renault and Peugeot both rallied by 2.42%.

On the VIX Index

The VIX Index reversed two consecutive gains on Wednesday, sliding 11.85% to end the day at 17.3.

Geopolitical risk eased throughout the day as news from HK to London alleviated market tensions.

VIX 05/09/19 Daily Chart

The Day Ahead

It’s a relatively busy day ahead on the Eurozone economic calendar. July factory orders figures are due out of Germany in the early part of the day. While the forecast is negative for the majors, the latest shift in market risk appetite may have more legs in the day ahead.

Later in the day, economic data out of the U.S include August ADP nonfarm employment change figures, factory orders and August service sector PMIs.

We can expect the markets to be particularly sensitive to the factory orders, ISM non-manufacturing PMI and ADP numbers. The weekly jobless claims, nonfarm productivity, and unit labor cost figures will likely have a muted impact.

Outside of the stats, updates on Brexit will also influence. It’s a race against time, as the House of Lords receives the Bill to block a no-deal Brexit ahead of next week’s suspension of Parliament.

While geopolitical risk has abated, the U.S – China trade war continues and requires monitoring.

In the futures markets, at the time of writing, the DAX was up by 43.5 points, with the Dow Mini up by 53 points.

European Equities: Service Sector PMIs and Geopolitics in Focus

Economic Calendar:

Wednesday, 4th September

  • Spanish Services PMI (Aug)
  • Italian Services PMI (Aug)
  • French Services PMI (Aug) Final
  • German Services PMI (Aug) Final
  • Eurozone Markit Composite PMI (Aug) Final
  • Eurozone Services PMI (Aug) Final
  • Eurozone Retail Sales m/m (Jul)

Thursday, 5th September

  • German Factory Orders m/m (Jul)

Friday, 6th September

  • German Industrial Production m/m (Jul)
  • Eurozone GDP y/y (Q2) 3rd Estimate
  • Eurozone GDP q/q (Q2) 3rd Estimate

The Majors

It was a day in the red for the majors, bringing to an end 3 consecutive days in the green. On the day, the CAC40 led the way down, falling by 0.49%, with the DAX30 and EuroStoxx600 declining by 0.36% and by 0.32% respectively.

With no material stats from the Eurozone to provide direction, the focus on the day was on U.S data and geopolitics.

Negative sentiment towards the U.S – China trade war weighed from the start of the day, as the markets responded further to the fresh tariffs on China.

On the Brexit front, an anticipated vote to force the British PM to request an extension until January 2020 left the markets cautious. The Pound fell to sub-$1.20 levels through the session, with the negative sentiment pinning the European makers back.

From Italy, there was some good news. Five Star Movement members voted in favor of forming a coalition government with the Democratic Party. A reported 79.3% of voters favored a coalition over a return to the polls.

One political crisis averted, while another brewed in Spain, however, as Prime Minister Sanchez looked to avoid yet another general election.

The Stats

It was a quiet day on the Eurozone economic calendar on Tuesday, with no material stats out of the Eurozone to provide direction.

While there were no material stats out of the Eurozone, U.S manufacturing PMI numbers provided direction late in the session.

The ISM Manufacturing PMI fell from 51.2 to 49.1 in August, which was worse than a forecasted fall to 51.0. According to the August ISM Survey,

  • New orders fell by 3.6 percentage points to 47.2, with the New Export Orders Index sliding by 4.8 percentage points to 43.3.
  • Off the back of a 4.3 percentage point fall in the Employment Index to 47.4, the Production Index fell by 1.3 percentage points to 49.5.
  • August’s contraction brought to an end 35 consecutive months of expansion within the manufacturing sector.

Of less influence was the Markit’s Manufacturing PMI. August’s finalized PMI came in at 50.3, up from a prelim 49.9. The PMI had stood at 50.4 in July.

The Market Movers

From the DAX, it was a mixed bag for the auto sector. Daimler led the way with a 1.14% gain. In contrast, Continental was amongst the worst-performing stocks, sliding by 1.39%. BMW eked out a 0.13% gain, while Volkswagen slipped by 0.25% on the day.

For the banks, it was also a mixed day. Deutsche Bank slipped by 0.17%, while Commerzbank gained 0.35%.

From the CAC, it was also a bearish day for the banks. Credit Agricole led the way down with a 0.58% fall. Soc Gen and BNP Paribas fell by 0.33% and 0.49% respectively. From the auto sector, it was mixed. Renault gained 0.83%, while Peugeot slipped by 0.05%.

On the VIX Index

The VIX Index was on the rise once more on Tuesday, gaining 3.58% to end the day at 19.7.

Geopolitical risk coupled with disappointing manufacturing numbers out of the U.S tested the markets on the day.

Expectations are for the VIX to reflect a pickup in market volatility as trading volumes rise following the summer break.

VIX 04/09/19 Daily Chart

The Day Ahead

It’s a busy day ahead on the Eurozone economic calendar. August service sector PMIs are due out of Spain and Italy. Finalized August service PMIs are also due out of France, Germany, and the Eurozone, along with the Eurozone’s Composite PMI.

We would expect the Eurozone’s Composite PMI to garner the most attention.

From the Eurozone, July retail sales figure will also provide direction.

Consumer spending continues to be a key component to economic growth in the Eurozone. Weak numbers out of Germany last week suggest a slide in spending in July, which would be negative for the majors.

With stats out of the U.S limited to trade data, FOMC member chatter and geopolitical risk will influence later in the day.

In the futures markets, at the time of writing, the DAX was up by 19.5 points, with the Dow Mini was up by 44 points.

European Equities: Brexit, Italy and Trade Put Geopolitics Front and Center

Economic Calendar:

Wednesday, 4th September

  • Spanish Services PMI (Aug)
  • Italian Services PMI (Aug)
  • French Services PMI (Aug) Final
  • German Services PMI (Aug) Final
  • Eurozone Markit Composite PMI (Aug) Final
  • Eurozone Services PMI (Aug) Final
  • Eurozone Retail Sales m/m (Jul)

Thursday, 5th September

  • German Factory Orders m/m (Jul)

Friday, 6th September

  • German Industrial Production m/m (Jul)
  • Eurozone GDP y/y (Q2) 3rd Estimate
  • Eurozone GDP q/q (Q2) 3rd Estimate

The Majors

It was a positive start to the month of September for the majors. The EuroStoxx600 led the way, gaining 0.32%, with the CAC40 and DAX30 rising by 0.23% and 0.12% respectively.

Outside of the stats, it was a slow start to the week in spite of China’s manufacturing sector returning to growth in August. China’s Caixin Manufacturing PMI reflected a return to expansion. This was in contrast to China’s NBS Manufacturing PMI from the weekend that continued to reflect a contraction in the sector.

The U.S rolled out fresh tariffs over the weekend that tested market resolve in the early part of the day. In response to weak stats over the weekend and the latest tariffs, the PBoC set the midpoint at CNY7.0883 against the Greenback in response. This was the lowest level since a previous low 7.0879 set back in 2008.

On the geopolitical front, Brexit and UK politics grabbed the headlines through the day. Boris Johnson announced that a General Election would be held on 14th October should MPs block a no-deal Brexit later today.

The Stats

It was a busy day on the Eurozone economic calendar on Monday.

Key stats included August manufacturing PMI figures out of Spain and Italy, together with finalized numbers out of France, Germany, and the Eurozone.

Spain’s Manufacturing PMI rose from 48.2 to 48.8 in August, coming in ahead of a forecasted 48.5.

Italy’s Manufacturing PMI increased from 48.5 to 48.7 in August, coming in ahead of a forecasted 48.5.

Also on the positive was an upward revision to the French PMI. The finalized PMI came in at 51.1, up from a prelim and forecast 51.0 and July 49.7.

On the negative front, Germany’s manufacturing PMI was revised downwards from 43.6 to 43.5. In July, the PMI stood at 43.2.

The Eurozone’s Manufacturing PMI came in at 47.0, which was in line with prelim and forecast. In July the PMI had stood at 46.5.

According to the finalized Markit Survey,

  • Employment declined for a 4th consecutive month in August, as production and new orders fell further and confidence fell to the lowest level since Nov-12.
  • France, Greece and the Netherlands were the only member states to report an increase in new orders. In contrast, Germany reported the largest decline in new orders.
  • Greece’s manufacturing PMI hit a 4-month high 54.9 to sit at the top of the PMI table.
  • The Netherlands and France came 2nd and 3rd respectively, with 3-month and 2-month highs.
  • Ireland’s PMI slid to a 76-month low 48.6, while Germany’s 2-month high 43.5 left the Eurozone’s economic powerhouse at the bottom of the table.

With the U.S markets closed on Monday, there were no material stats to provide direction late in the session.

The Market Movers

From the DAX, Deutsche Bank was amongst the top performers on the day, gaining 0.9%, while Commerzbank fell by 1.05%.

It was also a mixed day for the auto sector. BMW (-0.76%), Continental (-0.16%) and Daimler (-0.36%) saw red, whilst Volkswagen eked out a 0.15% gain. The sector responded to the fresh tariffs on Chinese goods.

From the CAC, it was also a mixed day for the banks. BNP Paribas closed out the day with a 0.02% gain. Credit Agricole and Soc Gen fell by 0.34% and 0.02% respectively. From the auto sector, Renault and Peugeot fell by 0.49% and 0.31% respectively.

On the VIX Index

The VIX was closed on Monday, with the U.S on holiday in recognition of Labor Day.

VIX 03/09/19 Daily Chart

The Day Ahead

It’s a quiet day ahead on the Eurozone 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 in the hands of economic data out of the U.S, which includes August manufacturing PMI numbers.

Outside of the numbers geopolitics will continue to influence as will sentiment towards the global economic outlook.

Throughout the day, the markets will need to monitor any chatter from Beijing and Washington, Italy, and the UK Parliament.

Doubts over whether trade talks will take place weighed on the U.S futures markets early this morning. In the UK Parliament, Pro-Remainers will look to block a no-deal Brexit that would lead to a snap general election if successful. Italian politics is also in focus. The Five Star Movement is voting on whether to form a coalition government with the Democratic Party.

In the futures markets, at the time of writing, the DAX was up by 16.5 points, while the Dow Mini was down by 80 points.

European Equities: Manufacturing PMIs and Geopolitics in Focus

Economic Calendar:

Monday, 2nd September

  • Spanish Manufacturing PMI (Aug)
  • Italian Manufacturing PMI (Aug)
  • French Manufacturing PMI (Aug) Final
  • German Manufacturing PMI (Aug) Final
  • Eurozone Manufacturing PMI (Aug) Final

Wednesday, 4th September

  • Spanish Services PMI (Aug)
  • Italian Services PMI (Aug)
  • French Services PMI (Aug) Final
  • German Services PMI (Aug) Final
  • Eurozone Markit Composite PMI (Aug) Final
  • Eurozone Services PMI (Aug) Final
  • Eurozone Retail Sales m/m (Jul)

Thursday, 5th September

  • German Factory Orders m/m (Jul)

Friday, 6th September

  • German Industrial Production m/m (Jul)
  • Eurozone GDP y/y (Q2) 3rd Estimate
  • Eurozone GDP q/q (Q2) 3rd Estimate

The Majors

It was a positive end to a bullish week for the European majors on Friday. Leading the way on the day was the DAX, which rose by 0.85% to end the week up by 2.82%. Gains from the week were not enough to pull the index into the green for the month, however. The DAX ended August down by 2.05%.

For the CAC40 and EuroStoxx600, the pair rose by 0.56% and by 0.73% respectively. A 2.88% weekly gain left the CAC40 down by just 0.7% for August. The EuroStoxx600 gained 2.19% to end the month down by 1.63%.

Support for the majors continued into Friday following comments from the Chinese government on Thursday, assuring the markets that they would not escalate the trade war with the U.S.

The Stats

It was a busy day on the Eurozone economic calendar on Friday.

Key stats included German retail sales figures and prelim August inflation figures out of France, Italy, and Germany.

A larger than expected 2.1% slide in retail sales did little to peg back the DAX on the day. A lack of inflationary pressure across the Eurozone provided further support to the majors on the day.

The Eurozone’s core annual rate of inflation held steady at 0.9%, coming up short of a forecasted pick up to 1%.

From the U.S, the FED’s preferred Core PCE Price Index also held steady at 1.6%, falling well short of the FED’s target, supporting a September rate cut.

On the positive, personal spending rose by 0.6% following a 0.3% rise in June, with the Chicago manufacturing sector seeing expansion once more. The PMI rose from 44.4 to 50.4 in August.

The Market Movers

From the DAX, The German auto sector was amongst the leading sectors on the day. Daimler and Continental led the way with gains of 1.76% and 1.03% respectively. Volkswagen and BMW weren’t far behind with gains of 0.77% and 1% respectively.

Deutsche Bank and Commerzbank also benefited from the upward momentum on the day. The pair rose by 0.75% and by 0.39% respectively.

From the CAC, it was also a positive day for the banks. Credit Agricole gained 1.17%, with Soc Gen and BNP Paribas up by 0.88% and 0.51% respectively. From the auto sector, Renault and Peugeot gained 0.68% and 1.83% respectively.

While the majors found support on the day, a late pullback limited the day gains. Negative comments from Italy on the anticipated Five Star Movement and Democratic Party coalition weighed late in the day.

The FTSEMIB hit reverse late in the session to end the day with a 0.35% loss. The leader of the Five Star Movement said on Friday that a snap election could still take place as he laid out his party demands to the Democratic Party.

UniCredit S.p.A was amongst the heavy losers on the day, falling by 1.14%.

On the VIX Index

The VIX Index bounced back on Friday, rising by 6.15% to end the month at 19. For August, a weekly loss of 4.52% left the Index up by 18%.

While the markets found continued support from China’s assurances that it would not escalate the trade war with the U.S, Italian politics hit the markets late on.

VIX 02/09/19 Daily Chart

The Day Ahead

It’s a busy start to the week on the Eurozone economic calendar. August Private Sector PMIs are due out for Spain, Italy, France, Germany, and the Eurozone.

Barring a deviation from prelim figures for France and Germany, the focus will likely be on Italy and the Eurozone’s PMI numbers.

Weak economic data out of Italy, coupled with political uncertainty would test the majors at the start of the week.

With the U.S markets closed on the day, geopolitical risk will also influence. There’s the U.S – China trade war and fresh tariffs on $112bn worth of China goods to consider, coupled with Brexit.

Earlier in the day, China’s manufacturing sector returned to expansion in August. The Caixin Manufacturing PMI came in at 50.4, providing much-needed support to the markets early on in the day.

In the futures markets, at the time of writing, the DAX was up by 13 points, while the Dow Mini was down by 74 points. China’s PMI pulled the DAX into positive territory, whilst also reducing the Dow Mini’s early losses.

European Equities: Economic Data, Brexit and Trump’s Twitter in Focus

Economic Calendar:

Friday, 30th August

  • German Retail Sales (MoM) (Jul)
  • Italian CPI (MoM) (Aug) Prelim
  • Eurozone CPI (YoY) (Aug) Prelim
  • Eurozone Unemployment Rate (Jul)

The Majors

It was back in the green for the European majors on Thursday. Leading the way was the CAC40, which rallied by 1.51%. The DAX30 and EuroStoxx600 weren’t far behind, with gains of 1.18% and 1.04% respectively.

U.S Treasury yields were on the rise, providing support to the European majors, as trade optimism returned to the markets.

In spite of the improved optimism, the 10-yr – 2-year U.S Treasury yield curve remained inverted at the day’s end.

The improved sentiment towards trade came off the back of comments from Beijing. From Beijing, the government said that it was willing to resolve the trade war in a calm manner. Beijing also confirmed that the September face-to-face trade talks were still on. From Washington, the U.S President also stated that there had been calls with Beijing.

There’s still a long way to go, however. Much will depend on whether the U.S will be willing to remove existing tariffs to allow negotiations to progress.

The Stats

It was a busy day on the Eurozone economic calendar on Thursday.

From France, consumer spending rose by 0.4% in July, coming in ahead of a forecast of 0.3%. In June, spending had fallen by 0.2%. Also positive was an upward revision to GDP numbers. The French economy grew by 0.3% in the 2nd quarter, quarter-on-quarter, revised from 0.2%. Economists had forecast a 0.2% growth.

From Germany, unemployment increased by 4,000, which was in line with forecast. The marginal increased left Germany’s unemployment rate at 5% in August. On the negative side, German consumer prices fell by 0.2% in August, according to prelim figures, which was worse than a forecasted 0.1% fall. In July, consumer prices had risen by 0.5%.

From Spain, inflation figures were also disappointing. The annual rate of inflation eased from 0.5% to 0.3%, which was worse than a forecasted 0.4%. The annual rate of core inflation eased from 0.6% to 0.4%, which was also worse than a forecast of 0.6%.

From the U.S, there were no major shocks to rock the boat. The U.S economy grew by 2% in the 2nd quarter, which was softer than the 1st estimate 2.1%. This was in line with forecast, however.

On the trade front, the goods trade deficit narrowed from $74.16bn to $72.34bn.

The Market Movers

From the DAX, ThyssenKrupp led the way, supported by the shift in trade sentiment, with a 4.16% gain. Germany’s auto sector also found support. Volkswagen led the way, rising by 1.28%. Continental (+1.12%), Daimler (+1.00%) and BMW (+0.99%) weren’t far behind.

Deutsche Bank and Commerzbank also benefited from the upward momentum on the day. The pair rose by 1.18% and by 3.13% respectively.

From the CAC, it was a solid day for the banks. Soc Gen gained 2.01%, with Credit Agricole and BNP Paribas up by 1.68% and 1.55% respectively. From the auto sector, Renault and Peugeot gained 0.54% and 1.78% respectively.

While the majors found strong support on the day, ECB chatter on monetary policy was mixed on the day. ECB’s Klaas Knot was reported to have stated that the Eurozone economy was not yet weak enough to warrant a return to QE.

Comments from incoming ECB President Lagarde were more dovish. While stating that the ECB still had room for rate cuts, she also noted that financial stability risk would need considering.

The majors took a brief hit from what could be considered less dovish commentary from Klaas Knot.

On the VIX Index

The VIX Index saw red for a 3rd day in 4 as the market sentiment towards trade improved. Last Friday’s escalation that had led to a 19.1% jump in the index. On Thursday, the VIX ended the day down by 7.6% to 17.88.

While on the decline, the effects of the ongoing U.S – China trade war on the global economy continue to be reflected in the current levels.

VIX Daily 30/08/19

The Day Ahead

It’s another busy day ahead on the Eurozone economic calendar. Ahead of the European open, German retail sales figures and prelim August inflation figures from France will provide direction.

Forecasts are for German retail sales to slide in July, which would be negative for the markets. With inflationary pressures easing, there’s unlikely to be too much influence from the numbers out of France.

Of greater interest will be the Eurozone’s prelim inflation numbers and unemployment rate due out later in the day.

From the U.S, the FED’s preferred Core PCE Price Index figures are due out, which will influence. U.S personal spending numbers and Chicago’s August PMI are also there for consideration.

Finalized consumer sentiment figures for August should have a muted impact on the day.

Outside of the stats, it’s Friday, so the markets will need to monitor Trump’s Twitter account and there’s Brexit to also consider.

In the futures markets, at the time of writing, the DAX was up by 10.5 points, while the Dow Mini was down by 22 points.

European Equities: Economic Data and Bonds Yields To Influence

Economic Calendar:

Thursday, 29th August

  • French Consumer Spending (MoM) (Jul)
  • French GDP (QoQ) (Q2)
  • Spanish HICP (YoY) (Aug) Prelim
  • German Unemployment Change (Aug)
  • German Unemployment Rate (Aug)
  • German CPI (MoM) (Aug) Prelim

Friday, 30th August

  • German Retail Sales (MoM) (Jul)
  • Italian CPI (MoM) (Aug) Prelim
  • Eurozone CPI (YoY) (Aug) Prelim
  • Eurozone Unemployment Rate (Jul)

The Majors

It was a day in the red for the European majors on Wednesday. Leading the way down was the CAC40, which fell by 0.34%. The DAX30 and EuroStoxx600 weren’t far behind, with losses of 0.25% and 0.20% respectively.

U.S Treasury yields pressured the European majors through the early part of the day. The 10-year and 2-year U.S yield curve inversion hit levels not seen since 2007.

The yield curve inversion continues to signal an upcoming recession and the deepening to levels not seen since before the GFC was quite an alarm bell…

Adding further pressure on the European majors was news of British Prime Minister Johnson requesting the Queen to suspend Parliament. Closure of the UK Parliament would raise the stakes of a no-deal Brexit.

On the positive, news of the Five Star Movement making progress to form a coalition government was a positive, albeit minor… Late on Wednesday news hit the wires of the Five Star Movement and the Democratic Party reaching an agreement to form a coalition government. The two sides also agreed to leave Conte on as Prime Minister.

For the League Party and Salvini, last week’s vote of no confidence and call for a snap election backfired… Salvini and the League Party may well have won a snap election. He hadn’t counted on two rival parties uniting to scupper his plans.

The Stats

It was a relatively quiet day on the Eurozone economic calendar on Wednesday. Economic data was limited to consumer confidence figures out of Germany.

According to the GfK Consumer Climate Study,

  • Consumer confidence held steady in August, with the indicator holding steady at 9.7. Economists had forecast a fall to 9.6,
  • While the headline figure remained steady, the devil was in the details. The economic expectation indicator fell by 8.3 points to -12 in August.
  • Year-on-year, the sub-index was down by 30 points to leave the index at its lowest level since Jan-13.
  • Negative sentiment towards the U.S – China trade war, the threat of tariffs on German exports and Brexit remain negatives.
  • The income expectations sub-index also fell in August, falling by 0.7 points to 50.1.
  • On the plus side, the propensity to buy indicator rose by 2.5 points to 48.8 points, leaving the index down by less than 6 points year-on-year.

From the U.S, there were no material stats to provide direction later in the day.

The Market Movers

From the DAX, Daimler and BMW were amongst the best performers, ending the day with gains of 0.54% and 0.18% respectively.  Continental and Volkswagen saw red, however, with the pair falling by 0.2% and 0.07% respectively.

While it was mixed for the auto sector, bank stocks bounced back late in the day. Deutsche Bank rose by 0.31%, with Commerzbank up by 0.57%.

The DAX had been down by as much as 1.33% before finding support later in the day

From the CAC, it was a mixed day for the banks. Credit Agricole rose by 0.20%, while BNP Paribas and Soc Gen fell by 0.31% and 0.09% respectively. From the auto sector, Renault and Peugeot fell by 0.25% and 0.38% respectively.

The CAC40 also recovered from losses of 1.19%, with support kicking in late in the session.

The Day Ahead

It’s a busy day ahead on the Eurozone economic calendar. Economic data due out of France include consumer spending and 2nd quarter GDP ahead of the open.

Later in the morning, Germany’s August unemployment change figures and unemployment rate are due out.

Following Wednesday’s GfK consumer confidence figures, labor market conditions will need to hold steady to support consumer spending.

Barring any marked pick up in inflationary pressures, we would expect prelim August inflation figures out of Spain and Germany to be brushed aside.

Out of the U.S 2nd estimate GDP numbers for the 2nd quarter and July trade figures will also provide direction.

With the U.S Treasury yield curve inversion on Wednesday, any downward revision to growth will likely spook the markets further.

Outside of the stats, expect Brexit chatter and any further comments from the Washington and Beijing on trade to also influence.

In the futures markets, at the time of writing, the DAX was down by 67 points, while the Dow Mini was down by 92 points.

European Equities: Geopolitics and Consumer Confidence in Focus

Economic Calendar:

Wednesday, 28th August

  • GfK German Consumer Climate (Sep)

Thursday, 29th August

  • French Consumer Spending (MoM) (Jul)
  • French GDP (QoQ) (Q2)
  • Spanish HICP (YoY) (Aug) Prelim
  • German Unemployment Change & Rate (Aug)
  • German CPI (MoM) (Aug) Prelim

Friday, 30th August

  • German Retail Sales (MoM) (Jul)
  • Italian CPI (MoM) (Aug) Prelim
  • Eurozone CPI (YoY) (Aug) Prelim
  • Eurozone Unemployment Rate (Jul)

The Majors

The European majors spent the 2nd day in the green on Tuesday. Leading the way on the day was the CAC40, which rose by 0.67%. Close behind were the EuroStoxx600 and DAX30, which gained 0.63% and 0.62% respectively.

Economic data continued to have a muted impact on the majors as the markets reacted further to the softening in trade war rhetoric.

On the day, the Chinese government announced that it may relieve restrictions on auto purchases to support domestic consumption.

From Italy, trouble in politics pinned back the majors as the Five Star Movement struggled to form a new coalition government. Talks are set to continue despite the passing of the Tuesday deadline.

The Stats

It was a relatively quiet day on the Eurozone economic calendar on Monday. Economic data was limited to Germany’s 2nd estimate GDP numbers for the 2nd quarter and 2nd quarter jobseeker numbers out of France.

According to Destatis,

  • The German economy shrank by 0.1%, quarter-on-quarter, affirming 1st estimate numbers,
  • In the 1st quarter of 2019, the economy had grown by 0.4%.
  • A shift on foreign trade weighed on the German economy, with exports sliding by 1.3%, while imports fell by just 0.3%.
  • On the upside, support came from household consumption (+0.1%) and government final consumption expenditure (+0.5%).

Out of France, the total number of job seekers increased from 3,382.6k to 3,393.4k.

From the U.S, support came from better than anticipated consumer confidence figures. While the U.S – China trade war wages on, consumers appear to remain confident in the current labor market conditions…

The CB consumer confidence index rose slipped from 135.8 to 135.1 in August. Whilst weaker, the marginal decline was considered a positive considering the deterioration in market risk appetite.

The Market Movers

From the DAX, it was a mixed day for the auto sector. Volkswagen rose by 0.96%, supported by the Chinese government’s announcement on relaxing regs on autos. BMW (0.23%), Continental (-0.65%), and Daimler (-0.07%) saw red, however.

The shift in sentiment towards trade also delivered mixed results for bank stocks. Deutsche Bank rose by 0.97%, while Commerzbank ending the day down by 0.36%.

From the CAC, bank stocks saw red on the day. BNP Paribas fell by 0.55%. Credit Agricole and Soc Gen also saw red, with losses of 0.59% and 0.51% respectively. From the auto sector, Renault and Peugeot rose by 1.63% and 2.69% respectively.

The Day Ahead

It’s another relatively busy day ahead on the Eurozone economic calendar. Germany’s GfK September consumer confidence figures are due out.

Weaker than forecasted numbers would be negative for the majors as the German economy heads towards a recession.

Outside of the numbers, the markets will need to monitor how political parties in Italy progress to form government. Failure to form government would be considered negative for the majors.

Following the latest comments from both sides on Trade, any chatter from Beijing or the Oval Office will also need consideration…

In the futures markets, at the time of writing, the DAX was up by 9.5 points, while the Dow Mini was up by 69 points.

European Equities: Italy and the Trade War to Drive the Majors

Economic Calendar:

Tuesday, 27th August

  • German GDP (YoY) (Q2) 2nd Estimate
  • German GDP (QoQ) (Q2) 2nd Estimate

Wednesday, 28th August

  • GfK German Consumer Climate (Sep)

Thursday, 29th August

  • French Consumer Spending (MoM) (Jul)
  • French GDP (QoQ) (Q2)
  • Spanish HICP (YoY) (Aug) Prelim
  • German Unemployment Change / Rate (Aug)
  • German CPI (MoM) (Aug) Prelim

Friday, 30th August

  • German Retail Sales (MoM) (Jul)
  • Italian CPI (MoM) (Aug) Prelim
  • Eurozone CPI (YoY) (Aug) Prelim
  • Eurozone Unemployment Rate (Jul)

The Majors

The European majors saw their first day in the green since last Wednesday, as the markets reacted to trade war chatter on the day.

Leading the way was the CAC40, which rebounded from early losses to end the day up by 0.45%. While the DAX30 was close behind, rising by 0.4%, the EuroStoxx600 ended the day flat.

It was a choppy session that saw the majors in the red early on before rallying to intraday highs by late morning.

U.S President Trump’s latest comments on trade provided much-needed support. Following last week’s escalation that riled the markets, Trump said that trade negotiations were set to continue.

There’s still a long way to go before any kind of agreement is likely, but the change in mood was good enough for the markets.

Also providing support was news of political parties in Italy nearing an agreement to form government ahead of today’s deadline. Failure to form a government would mean a snap general election and more uncertainty for the world’s 8th largest economy.

The Stats

It was a relatively quiet day on the Eurozone economic calendar on Monday. Economic data was limited to Germany’s IFO Business Climate Index figures.

According to the August IFO report,

  • The ifo Business Climate Index fell from 95.8 to 94.3, its lowest level since Nov-12.
  • German companies were also less satisfied with current conditions and the economic outlook.
  • The Current Assessment sub-index fell 99.6 to 97.3, with the Business Expectations Index falling from 92.1 to 91.3.
  • By sector, the Business Climate Indexes were all on the slide.
    • The manufacturing sub-index fell from -4.3 to -6.1, with the trade sub-index falling from 1.4 to -2.4.
    • Pessimism in the manufacturing sector reached levels last seen back in 2009.
    • Things were not much better for the service sector, where the index fell from 18 to 13. The ECB placed a lot of hope on support from the services sector. The deterioration in August, weighed by sentiment towards current conditions was ominous.
    • In construction, the sub-index fell from 23.1 to 21.4.

From the U.S, durable goods orders were mixed. While core durable goods orders fell by 0.4% in July, durable goods orders rose by 2.1%.

While the stats were negative, sentiment towards the U.S – China trade war overshadowed the numbers on the day.

The Market Movers

From the DAX, the auto sector led the way on the day. Daimler and BMW were the top performers rallying by 2.59% and 2.33% respectively. Continental and Volkswagen weren’t far behind with gains of 2.3% and 1.59% respectively.

The tech sector also found support, with Infineon Tech gaining 2.07%. The shift in sentiment towards trade also supported bank stocks. Deutsche Bank rose by 1.71%, with Commerzbank ending the day up by 1.43%.

From the CAC, BNP Paribas led the way for the banks, rising by 1.21%. Credit Agricole and Soc Gen saw more modest gains of 0.55% and 0.92% respectively. From the auto sector, Renault and Peugeot rose by 0.71% and 1.48% respectively.

The Day Ahead

It’s a relatively busy day ahead on the Eurozone economic calendar. Germany’s 2nd estimate GDP numbers and French jobseeker figures are due out later this morning.

Barring any revisions to Germany’s 2nd quarter GDP numbers, we would expect the stats to have a relatively muted impact on the majors.

Recent economic data out of Germany continues to point towards a recession. Any upward revision to the quarterly GDP number would be a boon for the majors.

From the U.S, we can expect August consumer confidence numbers to also provide direction later in the day.

Outside of the numbers, the markets will need to monitor how political parties in Italy progress to form government. Parties have until today to avoid a snap general election. Failure to form government would be considered negative for the majors.

Following Trump’s comments on trade from the G7 Summit, any further chatter will also need consideration…

In the futures markets, at the time of writing, the DAX was up by 13 points, while the Dow Mini was down by 55 points.

European Equities: Trade War Angst to Hit the Majors

Economic Calendar:

Monday, 26th August

  • German Ifo Business Climate Index (Aug)

Tuesday, 27th August

  • German GDP (YoY) (Q2) 2nd Estimate
  • German GDP (QoQ) (Q2) 2nd Estimate

Wednesday, 28th August

  • GfK German Consumer Climate (Sep)

Thursday, 29th August

  • French Consumer Spending (MoM) (Jul)
  • French GDP (QoQ) (Q2)
  • Spanish HICP (YoY) (Aug) Prelim
  • German Unemployment Change and Unemployment Rate (Aug)
  • German CPI (MoM) (Aug) Prelim

Friday, 30th August

  • German Retail Sales (MoM) (Jul)
  • Italian CPI (MoM) (Aug) Prelim
  • Eurozone CPI (YoY) (Aug) Prelim
  • Eurozone Unemployment Rate (Jul)

The Majors

The European majors saw red for a 2nd consecutive day on Friday. Leading the way down was the DAX, which slid by 1.15%, with the CAC40 close behind, falling by 1.14%. The EuroStoxx600 saw a more modest 0.78% loss on the day.

Friday’s sell-off left the majors with minor gains for the week. The CAC40 and EuroStoxx600 rose by 0.49% and by 0.47% respectively, with the DAX30 ending the week up 0.42%.

It’s been a bearish month, however. The DAX was down by 4.74% for the current month, with the CAC40 and EuroStoxx600 down by 3.48% and 3.74% respectively.

The Friday sell-off came off the back of an escalation in the U.S – China trade war.

While the markets were preparing to receive FED Chair Powell’s scheduled speech from Jackson Hole, China announced fresh tariffs on U.S goods. $75bn worth of U.S goods, including autos and crude, will come into effect on 1st September and 15th December. The tariffs will range from 5% to 10%. China announced a 25% tariff on U.S cars and 5% on auto parts.

China’s announcement muted any possible impact of Powell’s speech on the financial markets but failed to mute the U.S President. China’s announcement and Powell’s unwillingness to slash interest rates resulted in a Twitter tantrum. Trump not only lambasted Powell but also ordered the U.S to stop doing business with China.

Trump’s remarks that included the promise of retaliation to China’s latest move ultimately sunk the majors. Powell’s speech had been considered positive for the majors.

The Stats

It was a particularly quiet day on the Eurozone economic calendar on Friday. There were no material stats out of the Eurozone to provide direction on the day.

A lack of stats had left the market focus on the Jackson Hole Symposium that ultimately ended up being a non-event.

The Market Movers

From the DAX, BMW and Daimler were the worst performers on the day, sliding by 4.08% and 3.83% respectively. Continental and Volkswagen saw more modest losses of 2.7% and 2.41% respectively as the markets reacted to China’s retaliation to fresh U.S tariffs.

The tech sector also slumped, with Infineon Tech sliding by 3.81%. Market jitters over the global economy and an escalation in the extended trade war were also a bad combo for the banking sector. Deutsche Bank fell by 2.99%, with Commerzbank ending the day with a 2.31% loss.

From the CAC, Credit Agricole and Soc Gen fell by 1.66% and 1.09% respectively, while BNP Paribas slid by 2.14%. Things were not much better in the auto sector, with Renault and Peugeot falling by 1.35% and 1.77% respectively.

The Day Ahead

It’s a relatively quiet day ahead on the Eurozone economic calendar. German business sentiment figures for August, due out later this morning, will influence.

While the stats will provide direction, we can expect further chatter on the U.S – China trade war that would have a greater impact than the stats.

Updates from the G7 Summit in France will also need to be factored in as world leaders react to the latest escalation in the U.S – China trade war.

In the futures markets, at the time of writing, the DAX was down by 131 points, while the Dow Mini was down 231 points.

European Equities: A Lack of Stats Leaves the Focus on Jackson Hole

The Majors

The European majors saw red for the 2nd time in the week. Leading the way down was the CAC40, which fell by 0.87%. For the DAX30 and EuroStoxx600, the pair saw more modest losses of 0.47% and 0.4% respectively on the day.

In spite of better than expected economic data out of the Eurozone on the day, recession fears plagued the European markets.

Yet another yield curve inversion added to the negative sentiment towards the economy, supported by the ECB’s monetary policy meeting minutes that signaled a call for action. Thursday’s 2-year – 10-year yield curve inversion came off the back of a brief inversion on Wednesday in response to the FOMC meeting minutes.

On the geopolitical front, sentiment towards the U.S – China trade war continued to weigh. There was some respite on Brexit, however, with Macron leaving the door ajar on further talks to tinkle with the agreement…

The Stats

It was a particularly busy day on the Eurozone economic calendar on Thursday. Key stats included prelim August private sector PMI numbers out of France, Germany, and the Eurozone.

According to the latest Markit surveys,

  • The French Manufacturing PMI bounced from 49.7 to 51.0, which was better than a forecasted fall to 49.5.
  • France’s Services PMI rose from 52.6 to 53.3, which was better than a forecasted fall to 52.4.
  • Germany’s manufacturing PMI rose from 43.2 to 43.6, which was better than a forecasted fall to 43.1.
  • The German Services PMI fell from 54.5 to 54.4. Economists had forecast a fall to 54.0.
  • For the Eurozone, the Composite PMI came in at 51.8, which was up from a July 51.5.

According to the August Eurozone Markit Survey,

  • The Eurozone’s manufacturing PMI Output Index rose from 46.9 to a 2-month high 47.8, supporting a 2-month high Manufacturing PMI of 47.0.
  • Out of Germany, new orders fell by the greatest extent since Apr-13, with pessimism at its worst in the manufacturing sector in over 7-years. Across the Eurozone, the sentiment was at its weakest since May-13.
  • For the Eurozone, new export orders, which continued to pin back overall new orders, were down for an 11th consecutive month.
  • France provided some support, with both output and new orders in the manufacturing sector returning to growth.
  • There was reportedly little change across the rest of the Eurozone, where falling manufacturing output outweighed service sector expansion.

Later in the day, the ECB released its monetary policy meeting minutes from 25th July meeting.

Talk of delivering stimulus and concerns over the economic outlook were in line with market expectation. There was some debate over how to deliver a stimulus, however. From the minutes, it was evident that easing is on its way next month.

From the U.S, August private sector PMI numbers also provided direction. The U.S manufacturing sector joined Germany in contraction, the PMI fell from 50.4 to 49.9. Service sector activity also slowed, with the PMI falling from 53.0 to 50.9. The PMI figures were yet more red flags for the FED to consider…

The Market Movers

From the DAX, Deutsche Bank was amongst the best performers on the day, rising by 1.83% in spite of recession fears. Commerzbank was close behind with a 1.81% gain. From the auto sector, Continental and Daimler led the way with gains of 1.36% and 0.68% respectively. Volkswagen and BMW saw more modest gains of 0.48% and 0.40% respectively.

On the day, ThyssenKrupp was the leader of the pack, however, surging by 6.96%. The bounce came in response to news of the company filing a complaint against EU’s attempts to block a planned JV with Tata Steel.

From the CAC, the banking sector also found support despite a sea of red. Soc Gen led the way with a 2.08% rally. Credit Agricole and BNP Paribas trailed with 0.84% and 0.83% gains respectively.

Renault and Peugeot also found support. The pair ended the day up by 1.17% and 0.31% respectively.

The Day Ahead

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

A lack of stats will leave the markets to respond to speeches from the Jackson Hole Symposium and to consider what lies ahead, politically and economically. FED Chair Powell’s scheduled speech from Jackson Hole is the main event of the day.

While the markets are expecting the FED Chair to want to avoid riling the markets, the promise of further easing will be needed to support the majors.

From the U.S, economic data is on the lighter side and unlikely to provide direction, with new home sales figures due out.

Ahead of the FED Chair Powell Speech, U.S Treasury yield spreads will need monitoring…

In the futures markets, at the time of writing, the DAX was up by 48 points, while the Dow Mini was up by 37 points.

Asian Equities: The FED and Geopolitics Drive the Majors

The Key Drivers

In spite of last month’s 25 basis point rate cut, the dollar found support off the back of minutes release and clung on to Wednesday’s gains. At the time of writing, the Greenback was up by just 0.01% off the back of a 0.11% rise from Wednesday.

U.S Treasury yields also held relatively steady suggesting that the FED’s unlikely to be delivering a series of rate cuts, despite the U.S President’s demands.

The FOMC meeting minutes failed to point to further rate cuts down the road. The rate cut was described as a recalibration of the stance of policy or mid-cycle adjustment. The first rate cut since 2008 was delivered to better position the overall stance of policy to help counter the effects of weak global growth, trade policy uncertainty and to promote faster inflation.

While the FED delivered on the rate cut, members had noted that there had been some improvement in economic conditions.

In spite of the more optimistic sentiment towards the economy, 2-year and 10-year Treasury yields had briefly inverted before reversing.

The FED may not have delivered what markets had been in search of, but, the minutes did suggest a more adaptable stance towards the economic environment.

It wasn’t just the minutes that influenced through the early part of the session, however. A reiteration of Tump’s lack of interest in reaching a trade deal with China also influenced. There was also talk of further U.S tax reforms to support the U.S economy.

The Stats

On the data front, prelim August Private Sector Composite PMI out of Japan provided direction early on.

The Manufacturing PMI disappointed, in spite of a marginally slower rate of contraction in August. A more material fall in new export orders weighed on the Nikkei. The Nikkei had been up by as much as 0.55% ahead of the numbers.

If anything, the fall in new export orders was a reminder of the effects of the ongoing trade war.

It wasn’t all doom and gloom, however. Service sector activity picked up midway through the 3rd quarter.

The Majors

The ASX200 index and Nikkei index closed out the day in positive territory, with gains of 0.29% and 0.05% respectively.

The prospects of an extended U.S – China trade war, the addition of Huawei affiliates to the blacklist and political unrest in HK continued to weigh on the Hang Seng.

From the bond markets, spreads between 10-yr and 2-yr Treasury yields failed to widen. The lack of movement also tested the market’s resolve.

At the time of writing, the Hang Seng was down by 0.89%, while the CSI300 was up by  0.29%. Stocks with revenue derived primarily from HK weighed on the Hang Seng on the day.

The article was written by Bharat Gohri, Chief Market Analyst at easyMarkets

European Equities: PMI Numbers and ECB Minutes in Focus

Economic Calendar:

Thursday, 22nd 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
  • ECB Publishes Account of Monetary Policy Meeting

The Majors

It was a bullish day for the European majors on Wednesday, with the CAC40 leading the way with a 1.7% gain. The DAX30 and EuroStoxx600 weren’t far behind, rising by 1.3% and by 1.21% respectively.

Market sentiment towards FED monetary policy fuelled the rally on the day as the markets awaited the release of the FOMC meeting minutes.

On the political front, Conte’s resignation and the beginning of talks between Italy’s President and party leaders seemed to settle the Italian market, supporting the 600.

From the U.S, Trump delivered a mixed bag for the markets to consider. The markets were able to brush aside Trump’s unwillingness to make a trade deal with China. It was nothing new to rile the markets. On the positive, Trump intimated that more reforms, in the form of tax cuts, were on the horizon to boost economic growth.

The Stats

It was a particularly quiet day on the Eurozone economic calendar on Wednesday. There were no material stats out of the Eurozone to provide direction.

With stats out of the U.S limited to housing sector data, the markets looked ahead to the FOMC meeting minutes that were due out after the European close.

Late in the U.S session, the FOMC meeting minutes failed to point to further rate cuts down the road. The rate cut was described as a recalibration of the stance of policy or mid-cycle adjustment. The move was in response to the shift in the global economic outlook.

The minutes also noted that there is no pre-set course. Incoming data and the anticipated impact on the economic outlook would guide the Committee.

In spite of the rate cut, the minutes also revealed that members noted that there had been some improvement in economic conditions. It was also noted that, while the overall outlook remained favorable, significant risks and uncertainties remained.

Members who voted in favor of the rate cut attributed the decision to better position the overall stance of policy to help counter the effects of weak global growth and trade policy uncertainty and to promote faster inflation.

Looking ahead to future adjustments, the Committee would assess realized and expected economic conditions relative to the Committee’s maximum employment and 2% inflation objectives.

The assessment would include the monitoring of:

  • Labour market conditions.
  • Indicators of inflation pressures and expectations.
  • Readings on financial and international developments.

The Market Movers

From the DAX, the auto sector found strong support. Continental and Volkswagen were amongst the best-performing stocks on the day. The pair rose by 2.11% and 1.55% respectively. BMW and Daimler weren’t far behind, with gains of 1.53% and 1.45% respectively.

It was a mixed bag for the banking sector, however. Deutsche Bank rose by 0.94%, whilst Commerzbank fell by 0.51%.

From the CAC, it was a sea of green on the day, with no components closing out the day in the red. From the banking sector, Credit Agricole was the best performers on the day, rising by 0.39%. BNP Paribas and Soc Gen saw more modest gains of 0.19% and 0.07% respectively.

Renault was the story of the day, rallying by 3.77% on news that the merger with Fiat Chrysler remained possible. Peugeot gained just 0.42%.

The Day Ahead

It’s a particularly busy day ahead on the Eurozone economic calendar. Key stats due out of the Eurozone include August prelim private sector PMI numbers out of France, Germany, and the Eurozone. Later in the day, the ECB monetary policy meeting minutes are also due out.

While we will expect the markets to be particularly sensitive to Germany’s manufacturing PMI and the Eurozone’s Composite, the ECB monetary policy meeting minutes will also have a material impact on the day.

Following on from the FED’s meeting minutes released after the European close on Wednesday, expectations are for the ECB to follow the FED…

Going into the European open, expect the majors to respond to the FOMC meeting minutes. The minutes suggested a willingness to support should the need arise, but fell short of signaling any rate hikes.

From the U.S

August private sector PMI numbers and any chatter from the Jackson Hole Symposium will provide direction later in the day.

In the futures markets, at the time of writing, the DAX was up by 5 points, while the Dow Mini was up by 38 points.

European Equities: Geopolitics and Monetary Policy to Influence

Economic Calendar:

Thursday, 22nd 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
  • ECB Publishes Account of Monetary Policy Meeting

The Majors

The European majors saw red on Tuesday. While in the red, the trio saw relatively modest losses on the day. The DAX30 and CAC40 fell by 0.55% and 0.50% respectively, with the EuroStoxx600 falling by 0.68%.

Economic data had a muted impact on the majors, leaving geopolitics to provide direction on the day.

From the EU, Italian Prime Minister Conte’s resignation announcement weighed on the majors. The resignation came in response to Salvini’s call for a vote of no confidence last week.

On the trade war front, news of the U.S administration adding an additional 46 Huawei-linked entities to the existing blacklist was also negative. The move came in spite of Huawei receiving the 90-day extension.

The Stats

On the data front, economic data out of the Eurozone was limited to German wholesale inflation figures for July.

Producer prices of industrial products rose by 0.1% in July, partially reversing a 0.4% slide in June. Economist had forecast the index to remain unchanged.

According to Destatis,

  • Compared with June 2018, producer prices of industrial products increased by 1.1%.
    • Rising electricity prices had the greatest contribution, rising by 8.4% year-on-year. (Month-on-month, electricity prices rose by 2.2%.
    • Year-on-year, energy prices as a whole increased by 2.1% and by 0.7%, month-on-month.
    • Excluding energy, the index was up by 0.7% y/y, while down by 0.1% m/m.
    • Prices of non-durable consumer goods increased by 1.7% y/y, while down by 0.2% m/m.
    • Food prices rose by 2.2%, with prices of capital goods and durable consumer goods rising by 1.5% and 1.3% respectively, year-on-year.

The figures had a muted impact on the European majors, however.

There were no material stats out of the U.S on the day to influence the European majors.

The Market Movers

From the DAX, Adidas bucked the trend on the day, rising by 0.19% as the rest of the index components saw red. From the auto sector, Daimler was the worst performer, sliding by 2.06%. Continental and BMW weren’t far behind with losses of 1.26% and 1.14% respectively. Volkswagen fell by 1.07%.

In the banking sector, Deutsche Bank declined by 1.01%, while Commerzbank slid by 1.97%.

From the CAC, things were not much better, with just 3 components in the green. Airbus led the way, rising by 1.14%.

For the banking sector, Credit Agricole and Soc. Gen were the worst performers sliding by 1.46% and by 1.23% respectively. BNP Paribas saw a more modest 0.65% decline. Autos also struggled with Renault and Peugeot falling by 0.9% and by 1.39% respectively on the day.

The Day Ahead

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

A lack of stats will leave the markets to look ahead to the FOMC meeting minutes that are due out after the European close.

There’s a lot resting on a dovish FED and the expectation of a rate cut as early as next month, which could test market resolve through the session.

Out of the U.S, economic data is limited to July existing home sales, which will have a muted impact on the European markets late on.

On the geopolitical front, the trade war continues to send mixed messages to the markets, with any further chatter likely to influence on the day. Political chatter from Italy and updates from Boris Johnson’s scheduled meeting with German Chancellor Merkel will also have an impact.

In the futures markets, at the time of writing, the DAX was down by 16.5 points, while the Dow Mini was up by 27 points.

European Equities: Another Quiet Day on the Stats Could Test the Majors

Economic Calendar:

Tuesday, 20th August

  • German PPI m/m (Jul)

Thursday, 22nd 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
  • ECB Publishes Account of Monetary Policy Meeting

The Majors

The European majors kicked off the week with a bang. Leading the way was the CAC40, which rallied by 1.34% to reverse last week’s 0.51% loss. Close behind was the DAX30, which rose by 1.32%, reversing last week’s 1.12% slide. The EuroStoxx600 saw a more modest 1.14% gain on the day.

With economic data on the lighter side throughout the day, the market focus was on trade, with sentiment toward monetary policy playing a hand.

News of the U.S administration giving Huawei a 90-day extension gave the majors a boost. The extension allows the telco giant to continue to buy from U.S companies.

As central banks look to deliver much-needed support, governments also stepped in. German finance minister Scholz talked of fiscal support to avert any economic crisis late in the weekend.

With the German government delivering much-needed support, China’s PBoC also delivered, with reform to lending rates. Lower interest rates will reduce the cost of funds for Chinese firms, easing pressure on cash flow.

Monetary policy stimulus, fiscal stimulus, and a U.S administration taking a softer approach in the U.S – China trade war also delivered strong gains in the U.S.

The NASDAQ and S&P500 led the way with 1.35% and 1.21% gains. It was a more modest 0.96% rise for the Dow.

The Stats

On the data front, the Eurozone’s July inflation figures provided direction in the early part of the European session. The annual rate of core inflation came in at 0.9%, which was in line with prelim and forecast. The annual rate of inflation slipped to 1.0%, falling short of a prelim and forecast 1.1%.

Month-on-month, consumer prices fell by 0.5%, reversing a 0.2% rise in June. Economists had forecast a 0.4% decline.

According to Eurostat,

  • The lowest annual rates of inflation were registered in Portugal (-0.7%), Cyprus (0.1%) and Italy (0.3%).
  • Latvia and Slovakia reported the highest annual rate of inflation, both at 3.0%.
  • In July, Services contributed 0.53 percentage points to inflation, with food, alcohol & tobacco contributing 0.37 percentage points.
  • The annual rate of inflation was down from 2.2% a year ago…
  • Month-on-month, the annual rate of inflation fell in 15 member states while rising in 11.

With the annual rate of core inflation continuing to sit well below the ECB’s target, the door remains open for policy easing next month.

From the U.S there were no material stats released to influence the majors on the day.

The Market Movers

From the DAX, Infineon Tech led the way, rallying by 3.14% off the back of the Huawei 90-day extension. An easing in trade tensions also supported ThyssenKrupp, which rose by 1.93%.

Deutsche Bank was amongst the top performers for a 2nd consecutive day, gaining 1.77%. Commerzbank saw a more modest 1.08% gain.

For the auto sector, Daimler and Volkswagen were the best performers. The pair rose by 1.50% and by 1.38% respectively. BMW and Continental ended the day up by 0.85% and 0.43% respectively.

From the CAC, the banking sector found further support. Soc Gen led the way, rallying by 1.4%. Credit Agricole and BNP Paribas saw more modest gains of 0.49% and 0.46% respectively.

Renault and Peugeot found strong support on the day, with gains of 1.76% and 1.89% respectively.

The Day Ahead

It’s a relatively quiet day ahead on the Eurozone economic calendar. Key stats on the day are limited to the German wholesale inflation figures.

We would expect the figures to have a muted impact on the European majors on the day.

With no material stats due out of the U.S later in the day, the focus will continue to be on the U.S – China trade war, and fiscal and monetary policy.

China had threatened retaliatory measures following the U.S administration’s delay on trade tariffs last week. It remains to be seen whether the Huawei extension will incentivize the Chinese government to ramp up agri imports from the U.S…

In the futures markets, at the time of writing, the DAX was down by 33.5 points, while the Dow Mini was down by 34 points.

European Equities: Futures Point to a Positive Start to the Week…

Economic Calendar:

Monday, 19th August

  • Eurozone Core CPI (YoY) (Jul)
  • Eurozone CPI (MoM) (Jul)
  • Eurozone CPI (YoY) (Jul)

Tuesday, 20th August

  • German PPI (MoM) (Jul)

Thursday, 22nd 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
  • ECB Publishes Account of Monetary Policy Meeting

The Majors

The European majors bounced back on Friday. Leading the way was the DAX30, which rallied by 1.31%. The CAC40 and EuroStoxx600 were closed behind with gains of 1.22% and 1.24% respectively.

For the week, Friday’s gains were not enough to reverse losses from earlier in the week, however. The DAX30 led the way down, falling by 1.12%. For the EuroStoxx600 and CAC40, the pair saw more modest losses of 0.52% and 0.51% respectively.

The bounce back on Friday came in spite of China threatening retaliatory measures in spite of a delay in tariffs on certain Chinese goods. Market sentiment towards the extended trade war and the global economic outlook remained negatives.

Hopes of central bank support contributed to the upside at the end of the week, as did a string of better than expected stats.

The Stats

On the data front, the Eurozone’s June trade data provided direction in the early part of the European session.

The Eurozone’s trade surplus narrowed from €22.6bn to €20.6bn in June, which was far better than a forecasted narrowing to €16.3bn.

According to Eurostat,

  • Exports of goods to the rest of the world stood at €189.9bn in June, down by 4.7% year-on-year.
  • Imports from the rest of the world stood at €169.3bn, falling by 4.1%.
  • Intra-euro area trade fell by 6.6% to €160.5bn.
  • Year-to-date, euro area exports to the rest of the world increased by 3.2% to €1,163.3bn compared to the same period in 2018.
  • Euro area imports rose by 3.7% to €1,061.2bn, leading to a narrowing of the trade surplus from €103.6bn to €102.2bn.
  • Intra-euro area trade rose by 1.8% to €1,001.4bn.

From the U.S, housing sector data and softer consumer sentiment figures had a muted impact on the majors late in the day.

The Market Movers

From the DAX, Deutsche Bank led the market rebound on the day, rallying by 7.08%. Commerzbank came in a distant second, with a 5.95% gain.

For the auto sector, Daimler and BMW were the best performers. The pair rose by 2.12% and by 1.91% respectively. Continental and Volkswagen weren’t far behind with gains of 1.82% and1.74% respectively.

From the CAC, the banking sector also found support, though trailed the likes of Deutsche Bank. Soc Gen and Credit Agricole were the best performers on the CAC40 on the day. The pair rallied by 3.25% and 3.23% respectively. BNP Paribas trailed with a 2.55% rise.

Renault and Peugeot also trailed their German counterparts, with gains of 1.13% and 0.64% respectively on the day.

The Day Ahead

It’s a relatively quiet day ahead on the Eurozone economic calendar. Key stats on the day are limited to the Eurozone’s June inflation figures.

Barring any deviation from prelim numbers, the focus will be on the headline month-on-month number.

Following some bearish ECB chatter late last week, however, inflation will need to accelerate to pressure the majors.

With no material stats due out of the U.S, any chatter on trade will continue to be the key driver.

In the futures markets, at the time of writing, the DAX was up by 38 points, with the Dow Mini up by just 112 points.

European Equities: Trade Data and Geopolitics in Focus

Economic Calendar:

Friday, 16th August

  • Eurozone Trade Balance (Jun)

The Majors

The European majors saw red for a 2nd consecutive day on Thursday. Leading the way down was the DAX30, which fell by 0.7% to leave the index down by 2.4% for the current week.

For the CAC40 and EuroStoxx600, the pair saw more modest losses of 0.27% and 0.29% respectively on the day.

Market sentiment towards the U.S – China trade war weighed on the European equity markets once more. Rising fears of a global recession pinned back the majors. Ahead of the European session, chatter from Beijing reversed any attempts at a rebound. China responded to the latest Trump olive branch saying that the delay in tariffs was not enough to hold back retaliatory measures.

The Stats

There were no material stats out of the Eurozone on Thursday to provide the majors with direction on the day. A lack of stats left the European majors in the hands of geopolitical risk ahead of the U.S session.

From the U.S, key stats included July retail sales, industrial production and manufacturing numbers out of NY State and Philly.

With the manufacturing sector activity waning globally, domestic consumption is key across the major economies. The numbers out of the U.S provided much-needed support to the European majors on the day. It was not enough on the day, however, with the recovery in response to the numbers brief.

The Market Movers

From the DAX, Lufthansa was the worst performer, sliding by 4.92%. Negative sentiment towards trade and the economy also weighed on Infineon Technologies and ThyssenKrupp, which fell by 3.32% and by 1.99% respectively.

From the banking sector, Deutsche Bank and Commerzbank slid by 3.35% and by 1.90% respectively.

Across the auto sector, it was also a sea of red. Continental and Daimler led the way down with losses of 3.09% and 2.37% respectively. Volkswagen and BMW saw more modest losses of 0.75% and by 0.69% respectively.

From the CAC, it was a mixed bag for the banking sector. BNP Paribas bucked the trend on the day, gaining 0.71%. Credit Agricole and Soc. Gen saw red, however, with the pair ending the day down by 0.22% and 0.42% respectively.

Renault and Peugeot joined their German peers deep in the red, with both sliding by 1.92% on Thursday.

The Day Ahead

It’s a relatively quiet day ahead on the Eurozone economic calendar. Key stats on the day include are limited to the Eurozone’s June trade data.

While we can expect the stats to provide direction in the early part of the day, sentiment towards the global economy and any chatter on trade will remain the key drivers.

From the U.S, any material fall in consumer sentiment figures due out later today and expect the European majors to come under pressure.

In the Futures Markets, at the time of writing, the DAX was up by 11.5 points, while the Dow Mini was up by 45 points.

European Equities: U.S Data and Bond Yields in Focus on the Day

Economic Calendar:

Friday, 16th August

  • Eurozone Trade Balance (Jun)

The Majors

The European majors saw red on Wednesday, with Tuesday’s respite all too brief for the market bulls.

Leading the way down mid-week was the DAX30, which slid by 2.19%, with the CAC40 close behind, falling by 2.08%. For the EuroStoxx600, it was a more modest 1.68% decline on the day.

Disappointing economic data weighed Government Bond yields, leading to a slide across the European and U.S equity markets on the day.

Bond yield curves inverted in response to GDP numbers out of Germany. Germany joined the UK, contracting in the 2nd quarter.

For the broader market, reality hit home on Wednesday. The U.S President’s trade war with China has ultimately had its effect, not only on China but on the broader global economy.

The Stats

It was another busy day on the Eurozone economic calendar on Thursday. Key stats on the day included German and Eurozone 2nd quarter GDP numbers. The Eurozone’s June industrial production figures also provided direction. Finalized July inflation figures out of France had a muted impact on the majors, however.

Out of Germany

According to Destatis,

  • Quarter-on-quarter, the economy shrank by 0.1%, which was in line with forecast.
  • Contribution to GDP came from household final consumption expenditure and government final consumption expenditure.
  • Gross fixed capital formation in construction fell, with trade also weighing on exports, which fell by a greater extent than imports.
  • Year-on-year, the economy stagnated, which was better than a forecasted 0.3% contraction.

The Eurozone

For the Eurozone, the economy grew by 0.2% in the 2nd quarter, according to 2nd estimate numbers. This was in line with forecast and 1st estimate figures, whilst down from the 1st quarter of 0.4%. Year-on-year, the economy grew by 1.1%, which was also in line with forecast and 1st estimate figures. The Eurozone economy had grown by 1.2% in the 1st quarter, according to figures released by Eurostat.

While the Eurozone GDP numbers avoided a downward revision, Industrial production took a hit in June, sliding by 1.6%, which was worse than a forecasted 1.3% fall.

According to Eurostat,

  • Production of capital goods tumbled by 4.0%, with non-durable goods and durable consumer goods production falling by 2.8% and 1.2% respectively.
  • The production of intermediate goods and energy fell by 0.8% and 0.2% respectively.
  • Among the member states, Ireland (-8.8%) and Portugal (-4.5%) recorded the largest monthly declines.
  • Bucking the trend in June, both Lithuania and Malta recorded a 1.8% rise in production, with Latvia registering a 1.5% increase.
  • Year-on-year, industrial production was down by 2.6%, with Germany leading the way down. In Germany, industrial production tumbled by 6.2%.

Out of China

Ahead of the European open, July industrial production and fixed asset investments out of China set the tone.

Fixed asset investments rose by 5.7% in July, year-on-year, falling short of a forecast and June 5.8% rise. Of greater significance, however, were industrial production figures. Year-on-year, industrial production increased by 4.8%, down from 6.3% in June. Economists had forecast a 6.0% rise. Year-to-date, production was up by 5.8% to July, year-on-year, also falling short of a forecasted and June 6% rise.

With economic data out of the U.S limited to import and export price figures, the bond markets provided direction late on.

The Market Movers

From the DAX, Deutsche Bank was the worst performer on the day, sliding by 6.16%, with Commerzbank not far behind, falling by 5.14%.

The auto sector, tech, and resource stocks also saw deep red on a day where no component of the index saw green.

Continental and Daimler slid by 4.98% and by 3.78% respectively. BMW and Volkswagen also saw heavy losses. The pair ended the day down by 3.43% and by 3.28% respectively.

From the CAC, the banking sector also saw red on the day. Soc Gen led the way down once more, sliding by 4.09%. BNP Paribas and Credit Agricole fell by 2.6% and by 1.95% respectively. Renault also joined its German peers in the red with a 3.64% decline.

The Day Ahead

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

A lack of stats will leave the European majors in the hands of geopolitical risk and sentiment towards the global economy ahead of the U.S open.

Out of the U.S, manufacturing sector and retail sales figures will have an influence on the European majors late in the down, however. Any weak retail sales figures and expect more pain across the majors.

In the Futures Markets, at the time of writing, the DAX was up by 6 points, while the Dow Mini was up by 90 points.