Wednesday, 26th August
French Consumer Confidence (August)
French Jobseekers Total
Friday, 28th August
GfK German Consumer Climate (Sep)
French Consumer Spending (MoM) (Jul)
French GDP (QoQ) (Q2) Final
It was a mixed day for the European majors on Tuesday. The DAX30 and EuroStoxx600 slipped by 0.04% and by 0.30% respectively, with the CAC40 ended the day down by 0.01%.
Following the disappointment of August’s private sector PMIs, economic data was skewed to the positive on Tuesday.
Optimism towards successful treatment of COVID-19 and easing tensions between the U.S and China were also positive.
Concerns over the Eurozone economy, however, limited the upside on the day.
It was a relatively busy day on the Eurozone economic calendar. Key stats included 2nd estimate GDP numbers for the 2nd quarter and IFO Business Climate figures from Germany.
According to Destatis,
- The German economy contracted by 9.7% in the 2nd quarter, revised up from a 10.1% contraction. In the 2nd quarter, the economy had contracted by 2%.
- Household final consumption slumped by 10.9%, with the gross fixed capital formation in machinery and equipment down by 19.6%.
- Gross fixed capital formation in construction fell by 4.2%, reversing most of a 5.1% increase from the 1st
- Providing support, however, was a 1.5% rise in the final consumption expenditure of the general government.
- Trade with foreign countries also weighed. Exports of goods and services slid by 20.3%, with imports down by 16.0%.
- In the same quarter, a year earlier, the economy contracted by 11.3%, which was revised up from an 11.7% contraction.
From the IFO, the Business Climate Index rose from 90.4 to 92.6. Economists had forecast a decline to 92.2.
According to the August survey,
- In manufacturing, the business climate saw improvement, supported by a pickup in company assessment of their current situation. While many companies still considered their current situation as poor, their outlook improved.
- The Business Climate Index for the service sector saw a large increase in August. Both the current situation and outlook sub-indexes were on the rise.
- By contrast, the upward trend in trade’s business climate index flattened. While companies were more satisfied with their current situation, pessimism over their outlook remained.
- The IFO Business Expectations sub-index rose from 97.0 to 97.5, with the Current Assessment sub-index rising from 84.5 to 87.9.
From the U.S
It was a relatively quiet day on the economic calendar. Key stats included August consumer confidence figures and housing sector numbers for June and July.
In August, the CB Consumer Confidence Index fell from 91.7 to 84.8. Economists had forecast a rise to 93.0.
From the housing sector:
- New home sales rose by 13.9% in July, following a 15.1% jump in June. Economists had forecast a 1.3% rise.
- On an annualized basis, new home sales stood at 901k, up from 791k in June. Economists had forecast 785k new home sales.
- Year-on-year, the S&P/CS HPI Composite – 20 n.s.a rose by 3.5% in June, following a 3.6% rise in May.
The housing sector numbers had a muted impact on the European majors, however.
The Market Movers
For the DAX: It was a mixed day for the auto sector on Tuesday. Continental rose by 0.94% to buck the trend on the day. BMW and Daimler fell by 0.26% and by 0.64% respectively, with Volkswagen declining by 0.13% on the day.
It was another bullish day for the banks, however. Deutsche Bank and Commerzbank ended the day with gains of 0.59% and 0.66% respectively.
From the CAC, it was a mixed day for the banks. Soc Gen fell by 0.30%, while BNP Paribas and Credit Agricole rose by 0.21% and by 0.26% respectively.
It was also a mixed day for the French auto sector. Peugeot slipped by 0.67%, while Renault rose by 0.14%.
Air France-KLM rose by 1.29%, following on from Monday’s 2.09% gain, while Airbus SE ended the day down by 0.75%.
On the VIX Index
It was a 3rd consecutive day in the red for the VIX. Following on from a 0.75% loss on Monday, the VIX fell by 1.52% to end the day at 22.03.
The S&P500 and NASDAQ rose by 0.36% and by 0.76% respectively, while the Dow fell by 0.21%.
A combination of easing tensions between the U.S and China and positive COVID-19 news provided support for the majors.
An easing in the number of new COVID-19 cases and hopes of successful treatment and vaccine were positives.
On the geopolitical risk front, there was also news of the U.S and China making progress on trade talks and reaffirming commitment to the phase 1 trade agreement.
The Day Ahead
It’s a relatively quiet day ahead on the Eurozone economic calendar. Key stats include French consumer confidence and job seeker totals.
We can expect both sets of numbers to have an influence on the CAC40 in the early part of the European session.
Later in the day, durable goods and core durable goods orders from the U.S will also influence the European majors.
Away from the economic calendar, chatter from Beijing and Washington and COVID-19 news will also need monitoring.
In the futures markets, at the time of writing, the DAX was up by 2.5 points, while the Dow was down by 51 points.
For a look at all of today’s economic events, check out our economic calendar.