Friday, 28th August
GfK German Consumer Climate (Sep)
French Consumer Spending (MoM) (Jul)
French GDP (QoQ) (Q2) Final
After a flat Tuesday, it was a bullish day for the European majors on Wednesday. The DAX30 and EuroStoxx600 rose by 0.98% and by 0.91% respectively, with the CAC30 gaining 0.80%.
Once more, the markets brushed aside the latest COVID-19 figures from Europe, with government fiscal support plans driving the majors.
News of the German government extending its COVID-19 relief package was positive for riskier assets on the day.
From France, Prime Minister Castex announced the government’s intentions to roll out a relief package of its own next month. This was also positive for riskier assets.
On the geopolitical risk front, positive updates from talks between the U.S and China on trade added further support, as did COVID-19 vaccine news.
It was a relatively busy day on the Eurozone economic calendar. Key stats included French consumer confidence and job seeker total numbers.
In August, consumer confidence remained steady in August, with the Consumer Confidence Index remaining unchanged at 94.
According to Insee,
- The share of households considering it is a suitable time to make a major purchase fell by 4 points from July. August’s balance continued to sit below its long-term average.
- Household’s opinion on their past financial situation rose by 1 point, holding above its long-term average.
- The balance related to their future financial situation remained unchanged and slightly below its long-term average.
- Household’s opinion balance relating to their expected saving capacity fell by 4 points while holding well above its long-term average. In August, the household’s balance of their opinion on their current saving capacity fell by 2 points.
- Both remained well above its long-term average.
- The share of households considering it is a suitable time to save increased by 1. The balance remained well above its long-term average.
Employment conditions improved in the summer, with the job seekers total falling from 3,964.7k to 3,792.5k.
From the U.S
It was also a relatively busy day on the economic calendar. Key stats included July’s durable goods and core durable goods orders.
Following a 4.0% rise in June, core durable goods orders rose by 2.4% in July. Economists had forecast a 2.0% increase.
Durable goods orders jumped by 11.2%, following a 7.7% rise in June. Economists had forecast a 4.3% rise.
The Market Movers
For the DAX: It was a bullish day for the auto sector on Wednesday. BMW rallied by 2.58% to lead the way. Continental, Daimler, and Volkswagen saw more modest gains of 1.40%, 1.39%, and 1.58% respectively.
It was yet another bullish day for the banks. Deutsche Bank and Commerzbank ended the day with gains of 1.65% and 2.69% respectively.
From the CAC, it was a bullish day for the banks. BNP Paribas rose by 1.49% to lead the way, with Credit Agricole and Soc Gen rising by 0.81% and by 0.75% respectively.
It was another mixed day for the French auto sector, however. Peugeot rose by 0.81%, while Renault fell by 0.39%.
Air France-KLM fell by 0.73%, with Airbus SE ended the day down by 1.84%.
On the VIX Index
It was back into the green for the VIX, which ended a run of 3 consecutive days in the red. Reversing a 1.52% fall from Tuesday, the VIX rose by 5.63% to end the day at 23.27.
The S&P500 and NASDAQ rallied by 1.02% and by 1.73% respectively, with the Dow gaining 0.30% on the day.
Tech stocks were on the move once more, delivering more record highs for the NASDAQ and the S&P500.
Positive updates from U.S and China trade talks and progress towards a COVID-19 vaccine provided a boost to the indexes.
Following Trump’s announcement to fast track Oxford University’s COVID-19 vaccine, Moderna delivered upbeat news on Wednesday. The company announced that it’s trial COVID-19 vaccine showed effective results amongst elderly patients.
On the economic data front, positive durable and core durable goods orders for July added to the upside on the day.
In spite of the fresh record highs for the NASDAQ and the S&P500, the VIX moved northwards ahead of today’s speeches from Jackson Hole.
With the majors sitting at record highs, there are plenty of downside risks that continue to linger. A lengthy trial period for an effective COVID-19 vaccine could put the economic recovery at risk as winter approaches.
Tensions between the U.S and China could also flare up at any time as Trump looks to narrow the gap against Biden.
The Day Ahead
It’s a particularly quiet day ahead on the Eurozone economic calendar. There are no key stats from the Eurozone to provide the European majors with direction.
The lack of stats will leave the majors in the hands of economic data from the U.S and speeches from the Jackson Hole Symposium. FED Chair Powell’s speech will be the keynote speech of the day.
Economic data from the U.S include 2nd estimate GDP numbers for the 2nd quarter and the weekly jobless claims figures.
The markets will be looking for an upward revision of the GDP numbers. More importantly, however, initial jobless claims will need to fall back to sub-1m levels.
Away from the economic calendar, geopolitics, Brexit, and COVID-19 news will also need monitoring.
In the futures markets, at the time of writing, the Dow was down by 20 points.
For a look at all of today’s economic events, check out our economic calendar.