European Equities: Capitol Hill, COVID-19, and Brexit Remain Key Areas of Focus

Economic Calendar:

Tuesday, 20th October

German PPI (MoM) (Sep)

Thursday, 22nd October

GfK German Consumer Climate (Nov)

Eurozone Consumer Confidence Flash

Friday, 23rd October

French Manufacturing PMI (Oct) Prelim

French Services PMI (Oct) Prelim

German Manufacturing PMI (Oct) Prelim

German Services PMI (Oct) Prelim

Eurozone Manufacturing PMI (Oct) Prelim

Eurozone Markit Composite PMI (Oct) Prelim

Eurozone Services PMI (Oct) Prelim

The Majors

It was a bearish start to the week for the European majors on Monday. The DAX30 fell by 0.42%, with the CAC40 and EuroStoxx600 seeing losses of 0.13% and 0.18% respectively.

A lack of economic data from the Eurozone left Brexit, COVID-19, and updates from Capitol Hill in focus on the day.

While hopes of a COVID-19 Stimulus package had provided early support, concerns over COVID-19 and Brexit weighed.

A reintroduction of lockdown measures in Europe raised concerns over the economic outlook, as did Brexit.

Following the British PM’s decision to end negotiations, the EU had yet to deliver a meaningful compromise in response to Johnson’s announcement. Downing Street had left the door ajar for further talks but not if the EU’s stance remained unchanged.

The Stats

It was a particularly quiet day on the Eurozone economic calendar. There were no material stats from the Eurozone to provide the majors with direction on Monday.

Ahead of the European open, economic data from China had provided the European majors some support going into the open.

The stats from China reflected the continued economic recovery from the COVID-19 shutdown, though GDP numbers fell short of forecasts.

From the U.S

It was also a particularly quiet day on the economic calendar, with no stats from the U.S to influence.

The Market Movers

For the DAX: It was a mixed day for the auto sector on Monday. Continental bucked the trend, rising by 0.48%, while Daimler slid by 2.32% to lead the way down. BMW and Volkswagen saw modest losses of 0.03% and 0.06% respectively.

It was a bullish day for the banks, however. Deutsche Bank rose by 0.38%, with Commerzbank rallying by 1.99%

From the CAC, it was a bullish day for the banks. BNP Paribas and Credit Agricole rose by 1.23% and by 0.60% respectively. Soc Gen led the way once more, however, with a 1.96% gain.

It was a mixed day for the French auto sector, with Peugeot rising by 0.16%, while Renault slipped by 0.25%.

Air France-KLM rallied by 7.36%, with Airbus SE gaining by 2.14%.

On the VIX Index

It was a 6th consecutive day in the green for the VIX. Following a 1.63% gain on Friday, the VIX rose by 6.46% on Monday to end the day at 29.18.

Hopes of a stimulus deal, following chatter from the weekend, faded on the day, sending the U.S majors into the red.

The Dow and S&P500 fell by 1.44% and by 1.65% respectively, with the NASDAQ ending the day down by 1.65%.

VIX 20/10/20 Daily Chart

The Day Ahead

It’s a relatively quiet day on the Eurozone economic calendar. German wholesale inflation figures for September are due out going into the European open.

The numbers are unlikely to influence, however, with COVID-19, geopolitics, and PBoC monetary policy in focus.

From the U.S, economic data is limited to housing sector figures for September. We would expect the markets to brush aside the numbers, with all eyes on Capitol Hill.

Democrat Nancy Pelosi had set a Tuesday deadline to reach a stimulus agreement before the Presidential Election. Negative sentiment towards the chances of a stimulus package weighed on the U.S majors on Monday. We can expect the European majors to come under pressure early on.

Ahead of the European, the PBoC is in action. The markets are expecting the PBoC to leave loan prime rates unchanged. Economic data from Monday supported a hold on monetary policy.

The Futures

In the futures markets, at the time of writing, the Dow was up by 158 points, while the DAX was down by 33.5 points.

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

European Equities: China Stats, COVID-19, and Geopolitics in Focus

Economic Calendar:

Tuesday, 20th October

German PPI (MoM) (Sep)

Thursday, 22nd October

GfK German Consumer Climate (Nov)

Eurozone Consumer Confidence Flash

Friday, 23rd October

French Manufacturing PMI (Oct) Prelim

French Services PMI (Oct) Prelim

German Manufacturing PMI (Oct) Prelim

German Services PMI (Oct) Prelim

Eurozone Manufacturing PMI (Oct) Prelim

Eurozone Markit Composite PMI (Oct) Prelim

Eurozone Services PMI (Oct) Prelim

The Majors

It was a bullish end to the week for the European majors on Friday. The CAC40 rallied by 2.03%, with the DAX30 and EuroStoxx600 seeing gains of 1.62% and 1.26% respectively.

Corporate earnings gave the European majors a much-needed boost on Friday to reverse most of Thursday’s losses.

Impressive earnings results for Daimler and LVMH contributed to the upside on the day.

The upside on the day came in spite of the continued spike in new COVID-19 cases, Brexit woes, and a lack of progress on Capitol Hill.

On Friday, Boris Johnson announced that trade talks with the EU are over following a failure to find common ground at the EU Summit.

From the U.S, lawmakers failed to agree on a COVID-19 stimulus bill, with the chances of a pre-election stimulus bill diminishing by the day.

Of greater immediate significance to the Eurozone’s economic recovery is the upward trend in new COVID-19 cases.

In France alone, more than 30,000 new cases had been reported in a single day as the government began reintroducing lockdown measures. As a result of the latest spike, the WHO warned that COVID-19 deaths could be 5 times higher than in April. The WHO’s projections come in response to the impact of governments easing containment measures in the summer.

The Stats

It was a relatively quiet day on the Eurozone economic calendar. Key stats included Eurozone trade data and finalized September inflation figures.

The Eurozone’s trade surplus narrowed from €27.9bn to €14.7bn.

According to Eurostat,

  • Exports of goods to the rest of the world fell by 12.2%, compared with August 2019, to €156.3bn.
  • Imports from the rest of the world fell by 13.5%, compared with August 2019, to €141.6bn.
  • In August 2019, the trade surplus had stood at €14.4bn.
  • For the period January to August 2020, exports to the rest of the world fell by 12.4%, with imports down by 13.1%.
  • Intra-euro area trade fell by 12.3% when compared with the same period in 2019.

Inflation figures for the Eurozone also failed to impress at the end of the week, with annual inflation down by 0.3% in September. In August, annual inflation had been down by 0.2%.

According to Eurostat,

  • Greece (-2.3%), Cyprus (-1.9%), and Estonia (-1.3%) had the lowest annual rates of inflation.
  • The highest contribution to the annual euro area inflation came from food, alcohol, & tobacco (+0.34 pp) and services (+0.24pp).

From the U.S

It was a busier day on the economic calendar. Key stats included October consumer sentiment figures and September retail sales and industrial production figures.

In September, core retail sales rose by 1.5%, with retail sales jumping by 1.9%. Economists had forecast increases of 0.5% and 0.7% respectively.

Consumer sentiment also improved in October, with the Michigan Consumer Sentiment Index rising from 80.4 to 81.2. The improved sentiment came in spite of the dire labor market conditions.

Concerns over slowing employment growth, a jump in COVID-19 infections, and the absence of federal relief payments weighed on sentiment towards current conditions.

The Michigan Consumer Current Conditions Index, fell while the Expectations Index rose from 75.6 to 78.8, leading to the pickup in consumer sentiment.

The Market Movers

For the DAX: It was a bullish day for the auto sector on Friday. Daimler jumped by 4.63%, supported by impressive earnings results. Continental and Volkswagen saw gains of  2.51% and 2.17% respectively. BMW trailed, with a 1.60% rise.

It was a mixed day for the banks. Deutsche Bank rose by 2.01%, while Commerzbank fell by 1.26%

From the CAC, it was a bullish day for the banks. BNP Paribas and Credit Agricole rose by 1.71% and by 1.32% respectively. Soc Gen led the way, however, rising by 1.96%.

It was a much better day for the French auto sector, with Peugeot and Renault seeing gains of 5.49% and 5.18% respectively.

Air France-KLM reversed Thursday’s 1.90% loss, with a 1.97% gain, with Airbus SE rallying by 4.13%.

On the VIX Index

It was a 5th consecutive day in the green for the VIX. Following a 2.16% gain on Thursday, the VIX rose by 1.63% to end the day at 27.41.

The Dow and S&P500 rose by 0.39% and by 0.01% respectively, while the NASDAQ ending the day down by 0.36%.

VIX 19/10/20 Daily Chart

The Day Ahead

It’s a particularly quiet day 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 updates on COVID-19 and Brexit to influence.

From the U.S, there are also no material stats to provide direction late in the session. A lack of stats will leave the majors in the hands of chatter from Capitol Hill and the latest election polls.

Ahead of the European, 3rd quarter GDP figures from China will also set the tone.

The Futures

In the futures markets, at the time of writing, the Dow was up by 131 points, with the DAX up by 15.5 points.

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

European Equities: A Week in Review – 06/10/20

The Majors

It was a bearish week for the European majors in the week ending 16th October.

The DAX fell by 1.09% to lead the way down, with the CAC40 and EuroStoxx600 seeing losses of 0.22% and 0.77% respectively.

With economic data on the lighter side in the week, it was geopolitics and COVID-19 that weighed on the majors.

A continued rise in new COVID-19 cases across the EU weighed heavily on the European majors in the week. The reintroduction of lockdown measures delivered greater uncertainty over the economic outlook.

Brexit woes also tested market risk sentiment, with the EU and the UK failing to progress towards a Brexit deal.

From the U.S, fading hopes of a COVID-19 stimulus Bill ahead of the U.S Presidential Election was also market negative.

It could have been much worse, however, with a Friday rally paring some of the losses from earlier in the week.

The Stats

It was a relatively busy week on the Eurozone economic calendar.

In the early part of the week, ZEW Economic Sentiment figures for the Eurozone and Germany were in focus. Concerns over Brexit and the U.S Presidential Election led to a slide in the respective indicators for October.

Germany’s Economic Sentiment Indicator fell from 77.4 to 56.1, with the Eurozone’s falling from 73.9 to 52.3.

The focus then shifted to economic data from the Eurozone that included industrial production, inflation, and trade data.

In August, industrial production rose by just 0.7%, following a 5% jump in July. More significantly, however, was a marked narrowing in the Eurozone’s trade surplus. The surplus narrowed from €27.9bn to €14.7bn.

According to Eurostat,

  • Exports of goods to the rest of the world fell by 12.2%, compared with August 2019, to €156.3bn.
  • Imports from the rest of the world fell by 13.5%, compared with August 2019, to €141.6bn.
  • In August 2019, the trade surplus had stood at €14.4bn.
  • For the period January to August 2020, exports to the rest of the world fell by 12.4%, with imports down by 13.1%.
  • Intra-euro area trade fell by 12.3% when compared with the same period in 2019.

Inflation figures for the Eurozone also failed to impress at the end of the week, with annual inflation down to 0.3% in September. In August, annual inflation had been down by 0.2%.

According to Eurostat,

  • Greece (-2.3%), Cyprus (-1.9%), and Estonia (-1.3%) had the lowest annual rates of inflation.
  • The highest contribution to the annual euro area inflation came from food, alcohol, & tobacco (+0.34 pp) and services (+0.24pp).

From the U.S

It was a busy week on the economic data front.

Key stats included September’s inflation and retail sales figures, October manufacturing data, and the weekly jobless claims.

It was a mixed bag for the Dollar in the week. The annual rate of core inflation held steady at 1.7%. Month-on-month increases in consumer prices, however, were softer than in August.

Wholesale inflation was marginally better, with the producer price index rising by 0.4% in September. In August, wholesale prices had risen by 0.3%.

For October, the NY Empire State Manufacturing Index fell from 17.0 to 10.5, while the Philly Manufacturing Index rose from 15.0 to 32.3.

At the end of the week, retail sales and consumer sentiment figures were positive, supporting riskier assets.

In September, core retail sales rose by 1.5%, with retail sales jumping by 1.9%. Economists had forecast increases of 0.5% and 0.7% respectively.

Consumer sentiment also improved in October, with the Michigan Consumer Sentiment Index rising from 80.4 to 81.2. The improved sentiment came in spite of dire labor market conditions.

In the week ending 9th October, initial jobless claims came in at 898k, which was up from 845k from the week prior.

The Market Movers

From the DAX, it was a mixed week for the auto sector. Continental and Daimler rose by 0.25% and by 2.12% respectively, with Volkswagen eking out a 0.01% gain. BMW bucked the trend, however, sliding by 2.48%.

It was a bearish week for the banking sector. Commerzbank slid by 8.09, with Deutsche Bank ending the week down by 0.25%.

From the CAC, it was a particularly bearish week for the banks. BNP Paribas and Credit Agricole slid by 3.62% and by 4.30% respectively. Soc Gen saw a more modest 2.90% loss following last week’s 12.5% rally.

The French auto sector saw green, however. Peugeot rose by 3.22%, with Renault rallying by 4.74%.

Air France-KLM partially reversed an 11.25% gain from the previous week with a 6.07% slide, while Airbus fell by 3.65%.

On the VIX Index

It was the 3rd week in the green from 4 for the VIX. In the week ending 16th October, the VIX rose by 9.64%. Reversing a 9.52% loss from the previous week, the VIX ended the week at 27.41.

A lack of progress towards a U.S Stimulus Bill, rising COVID-19 cases, and uncertainty over the U.S Presidential Election supported the VIX.

Economic data delivered mixed signals, also raising concerns over the pace of the economic recovery.

In spite of the risks being tilted to the downside and the rise in the VIX, it was a positive week for the U.S majors. In the week ending 16th October, the S&P500 and the Dow rose by 0.07% and by 0.19% respectively. The NASDAQ led the way, however, gaining 0.79%.

VIX 17/10/20 Weekly Chart

The Week Ahead

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

After a quiet start to the week, consumer confidence figures for Germany and the Eurozone are in focus on Thursday.

With the latest spike in new COVID-19 cases, a marked decline in confidence will raise concerns regarding consumption.

At the end of the week, the focus will shift to October’s prelim private sector PMIs. Another fall in the services PMIs will be a test for the majors, with the ECB looking for a consumption-driven economic recovery.

We can expect manufacturing PMI numbers to also influence…

From elsewhere, 3rd quarter GDP numbers due out of China on Monday will set the tone for the week.

From the U.S, it’s a relatively quiet week on the economic data front. The weekly jobless claims on Thursday and private sector PMIs on Friday will influence.

Away from the economic calendar, U.S politics, COVID-19 news, and Brexit will also continue to provide direction.

European Equities: Brexit, COVID-19, U.S Economic Data and Stimulus Talks in Focus

Economic Calendar:

Friday, 16th October

Italian CPI (MoM) (Sep) Final

Eurozone Inflation (Sep) Final

Eurozone Trade Balance (Aug)

The Majors

It was a particularly bearish day for the European majors on Thursday. The DAX30 slid by 2.49%, with the CAC40 and EuroStoxx600 falling by 2.11% and by 2.08% respectively.

Market sentiment towards the latest spike in new COVID-19 cases and government measures to contain the spread weighed.

In Europe, France introduced curfews, with other EU member states closing schools and canceling surgeries.

The moves come ahead of winter without a COVID-19 vaccine, with another member statewide lockdown likely to derail the Eurozone’s economic recovery.

Adding to the negative sentiment was fresh concerns over the risk of political deadlock should Biden fail to win by a landslide.

Joe Biden will need to win and win decisively for Trump to have little to no grounds to contest the results.

The Stats

It was a relatively quiet day on the Eurozone economic calendar. Key stats included finalized September inflation figures from France.

The stats were in line with prelim, affirming market concerns over a pickup in deflationary pressures across the Eurozone.

In September, consumer prices fell by 0.5%, month-on-month, with the harmonized consumer price index falling by 0.6%. In August, consumer prices had fallen by 0.1%.

From the U.S

It was a busier day on the economic calendar. Key stats included October manufacturing numbers and the weekly jobless claims.

The NY Empire State Manufacturing Index slipped from 17.0 to 10.5, while the Philly FED Manufacturing Index jumped from 15.0 to 32.3.

Economists had forecasted the respective indexes to come in at 15.0 and 14.0 respectively.

While the manufacturing numbers were mixed, labor market figures disappointed. In the week ending 9th October, initial jobless claims came in at 898k.

This was up from a previous week 845k, raising further concerns over the labor market recovery.

The Market Movers

For the DAX: It was a particularly bearish day for the auto sector on Thursday. BMW and Volkswagen slid by 2.58% and by 2.83% respectively to lead the way down. Continental and Daimler saw more modest losses of 0.41% and 1.86% respectively.

It was also a bearish day for the banks. Deutsche Bank fell by 0.04%, while Commerzbank slid by 3.40%

From the CAC, it was a bearish day for the banks. BNP Paribas fell by 2.72%, with Credit Agricole and Soc Gen sliding by 3.23% and by 4.03% respectively.

It wasn’t much better for the French auto sector, with Peugeot and Renault seeing losses of 2.62% and 1.97% respectively.

Air France-KLM fell by 1.90%, while Airbus SE ended the day with a 0.58% loss.

On the VIX Index

It was the 4th consecutive day in the green for the VIX. Following a 1.27% gain on Wednesday, the VIX rose by 2.16% to end the day at 26.97.

The U.S equity markets had kicked off the day in the red. A lack of progress towards a stimulus package, disappointing economic data, and COVID-19 weighed.

From the labor market, the latest jobless claims figures provided further evidence that the labor market recovery had stalled.

On the earnings front, Morgan Stanley beat 3rd quarter estimates, while United Airlines disappointed.

The Dow and S&P500 fell by 0.07% and by 0.15% respectively, with the NASDAQ ending the day down by 0.47%. Late supported pared losses from earlier in the day, as Trump looked to progress stimulus talks.

VIX 16/10/20 Daily Chart

The Day Ahead

It’s a relatively quiet day on the Eurozone economic calendar. Economic data includes finalized September inflation figures and August trade figures for the Eurozone and inflation figures for Italy.

We don’t expect too much influence from the numbers, however.

Updates on the COVID-19 stimulus bill, COVID-19 news, and Brexit will remain the key areas of focus. On the Brexit front, Boris Johnson is expected to respond to the lack of progress from the EU Summit on Thursday. A decision to pull the plug on further negotiations would rattle the markets.

From the U.S, it’s another busy day ahead on the economic calendar. Key stats include retail sales, industrial production, and prelim consumer sentiment figures.

The Futures

In the futures markets, at the time of writing, the Dow was up by 19 points.

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

European Equities: COVID-19, U.S Stats, and the EU Summit and Brexit in Focus

Economic Calendar:

Thursday, 15th October

French CPI (MoM) (Sep) Final

French HICP (MoM) (Sep) Final

ECB President Lagarde Speaks

Friday, 16th October

Italian CPI (MoM) (Sep) Final

Eurozone Inflation (Sep) Final

Eurozone Trade Balance (Aug)

The Majors

It was a mixed day for the European majors on Wednesday. The DAX30 eked out a 0.07% gain, while the CAC40 and EuroStoxx600 fell by 0.12% and 0.09% respectively.

Following negative news on COVID-19 vaccine and treatment trials earlier in the week, the market attention returned to the COVID-19 numbers.

A continued rise in new COVID-19 cases across Europe weighed on market risk sentiment on the day. A lack of progress towards an effective vaccine leaves the markets to consider the possibility of another global lockdown.

News of a reintroduction of containment measures across EU member states weighed on the majors midweek.

On the economic data front, industrial production figures for the Eurozone failed to provide support early in the session.

From the U.S, fading hopes of a COVID-19 stimulus bill before the New Year also tested risk sentiment on the day.

The Stats

It was a relatively quiet day on the Eurozone economic calendar. Key stats included industrial production figures for the Eurozone and finalized inflation figures from Spain.

In August, industrial production increased by 0.7%, coming up short of a forecasted 0.8% rise. In July, production had surged by 5.0%.

According to Eurostat,

  • Compared with July 2020, production of durable consumer goods rose by 6.8%, intermediate goods by 3.1%, and energy by 2.3%.
  • The production of both capital goods and non-durable consumer goods fell by 1.6%, however.
  • Member states with the highest increases in industrial production included Portugal (+10.0%) and Italy (+7.7%).
  • By contrast, Ireland (-13.4%), Estonia (-2.1%), and Luxembourg (-1.2%) registered the largest decreases in production.
  • Compared with August 2019, industrial production declined by 7.2%. Only Portugal and Ireland registered increases in production. Both saw production rise by 2.1%.
  • Luxembourg (-15.8%), Germany (-11.2%), and France (-7.3%) reported the largest falls in production.

Inflation figures from Spain were in line with prelim figures, with deflationary pressures persisting in September.

From the U.S

September wholesale inflation figures had a muted impact on the majors. The producer price index rose by 0.4% in September, following a 0.3% increase in August. Economists had forecast a 0.2% rise. The core producer price index also increased by 0.4%, following a 0.4% increase in August. Economists had forecast a 0.2% rise.

The Market Movers

For the DAX: It was a mixed day for the auto sector on Wednesday. Continental and Volkswagen rose by 0.84% and by 0.42% respectively, while BMW and Daimler fell by 0.69% and by 1.54% respectively.

It was also a mixed day for the banks. Deutsche Bank fell by 0.52%, while Commerzbank gained 0.09%

From the CAC, it was a relatively bullish day for the banks. BNP Paribas rose by 1.17%, with Credit Agricole and Soc Gen seeing gains of 0.97% and 0.92% respectively.

It was a bullish day for the French auto sector, however. Peugeot rose by 1.30%, with Renault rallying by 3.46%.

Air France-KLM found much-needed support, rising by 0.94%, while Airbus SE slid by 2.40%.

On the VIX Index

It was a 3rd consecutive day in the green for the VIX. Following a 3.99% gain on Tuesday, the VIX rose by 1.27% to end the day at 26.40.

A lack of progress towards a coronavirus stimulus bill weighed on market risk sentiment on Wednesday. With new COVID-19 cases spiking and a lack of progress towards a vaccine, the focus was on government aid.

U.S Treasury Secretary Mnuchin spoke on Wednesday, stating that the chances of a deal before the election would be slim.

On the earnings front, Goldman Sachs and Bank of American delivered solid results, while Wells Fargo disappointed.

The Dow and S&P500 fell by 0.58% and by 0.66% respectively, with the NASDAQ ending the day down by 0.80%.

VIX 15/10/20 Daily Chart

The Day Ahead

It’s a relatively quiet day on the Eurozone economic calendar. Economic data includes finalized September inflation figures from France. Barring any material downward revision, however, the stats should have a muted impact on the majors.

From the U.S, it’s a busier day ahead on the economic calendar. Key stats include Philly and New York State manufacturing PMI numbers and the weekly jobless claims figures.

Other stats due out include import and export price figures that will likely have a muted impact on the majors.

On the monetary policy front, ECB President Lagarde is scheduled to speak late in the European session. Expect any chatter on monetary policy or the economic outlook to also influence.

Away from the economic calendar, U.S politics, the EU Summit and Brexit, and COVID-19 news will also influence.

On the Brexit front, failure for both sides to find common ground today could lead to a no-deal Brexit at the end of the year.

Ahead of the European open, inflation figures out of China, reaction to U.S corporate earnings from Wednesday, and the lack of progress on Capitol Hill will influence.

The Futures

In the futures markets, at the time of writing, the Dow was down by 21 points, with the DAX down by 61 points.

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

European Equities: Futures Point Northwards with Geopolitics in Focus

Economic Calendar:

Wednesday, 14th October

Spanish CPI (YoY) (Sep) Final

Spanish HICP (YoY) (Sep) Final

ECB President Lagarde Speaks

Eurozone Industrial Production (MoM) (Aug)

Thursday, 15th October

French CPI (MoM) (Sep) Final

French HICP (MoM) (Sep) Final

ECB President Lagarde Speaks

Friday, 16th October

Italian CPI (MoM) (Sep) Final

Eurozone Inflation (Sep) Final

Eurozone Trade Balance (Aug)

The Majors

It was a bearish day for the European majors on Tuesday. The DAX30 fell by 0.91%, with the CAC40 and EuroStoxx600 seeing losses of 0.64% and 0.55% respectively.

Economic data, COVID-19 updates, and a continued impasse on Capitol Hill weighed on the majors.

On the political front, the ZEW survey for Germany reflected a lack of progress towards a Brexit deal and jitters over the U.S Presidential Election. The sentiment indicator fell by more than expected in October.

While there were plenty of negatives, it wasn’t all doom and gloom.

In the IMF’s Global Financial Stability Report, the IMF projects the global economy to grow by 5.2% in 2021. While positive, the IMF did note, however, that the outlook remains highly uncertain, with vulnerabilities rising.

The Stats

It was a relatively quiet day on the Eurozone economic calendar. Germany and the Eurozone’s ZEW Economic Sentiment figures for October were in focus.

Germany’s finalized inflation figures had a muted impact on the day.

In October, Germany’s Economic Sentiment indicator fell from 77.4 to 56.1. By contrast, the current conditions indicator rose from -66.2 to –59.5. Economists had forecast the sentiment indicator and current conditions indicator to come in at 73.0 and -60.0.

For the Eurozone, the Economic Sentiment Indicator fell from 73.9 to 52.3. Economists had forecast a fall to 72.0.

From Germany, consumer prices fell by 0.2%, which was in line with prelim figures. In August, consumer prices had fallen by 0.1%.

According to Destatis,

  • Compared with August 2020, energy prices fell by 0.7%, with the prices of goods declining by 0.3%.
  • Prices paid for clothing and footwear jumped by 5.6% and by 3.6% respectively.
  • Consumer prices also fell by 0.2% compared with the same month a year earlier.

From the U.S

September inflation figures had a muted impact on the majors. The annual core rate of inflation held steady at 1.7%. In September, core consumer prices rose by just 0.2%. In August, core consumer prices had risen by 0.4%.

The Market Movers

For the DAX: It was a bearish day for the auto sector on Tuesday. Continental slid by 2.15%, with BMW and Daimler seeing losses of 1.48% and 1.00% respectively. Volkswagen ended the day down by just 0.76%.

It was also a bearish day for the banks. Deutsche Bank fell by 1.78%, with Commerzbank sliding by 4.40%.

From the CAC, it was a particularly bearish day for the banks. BNP Paribas slid by 4.07%, with Credit Agricole and Soc Gen falling by 3.79% and 3.95% respectively.

It wasn’t much better for the French auto sector. Peugeot and Renault ended the day with losses of 2.06% and 2.61% respectively.

Air France-KLM slid by 4.31%, with Airbus SE declining by 3.50%.

On the VIX Index

It was a 2nd consecutive day in the green for the VIX. Following a 0.28% gain on Monday, the VIX rose by 3.99% to end the day at 26.07.

A negative market reaction towards the news of Johnson & Johnson pausing clinical trials of its COVID-19 vaccine weighed. Following J&J’s announcement, Eli Lilly announced on Tuesday that it would also be pausing its coronavirus antibody treatment trial.

A continued deadlock on Capitol Hill didn’t help, as Congress failed to make progress on the COVID-19 relief Bill.

Earnings were also in focus. While JPMorgan and Citigroup delivered better than expected results, Delta reported a slump in revenue.

The Dow and S&P500 fell by 0.55% and by 0.63% respectively, with the NASDAQ ending the day down by 0.10%.

VIX 14/10/20 Daily Chart

The Day Ahead

It’s a relatively busy day on the Eurozone economic calendar.

Key stats include finalized inflation figures for Spain and August industrial production figures for the Eurozone.

Following disappointing numbers out of Germany, a pickup in production would provide the broader market with support.

Inflation figures from Spain should have a muted impact on the majors, however.

From the U.S, September’s wholesale inflation figures will garner some interest. Softer wholesale inflationary pressures would raise further concerns over the economic recovery.

Away from the economic calendar, Brexit and U.S politics will continue to influence. Any further COVID-19 news updates will also draw interest.

On the corporate earnings front, Bank of America, Goldman Sachs, United Airlines, and Wells Fargo are in focus from the U.S.

The Futures

In the futures markets, at the time of writing, the Dow was up by 36 points, with the DAX up by 21 points.

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

European Equities: Economic Data, Geopolitics, and U.S Earnings in Focus

Economic Calendar:

Tuesday, 13th October

German CPI (MoM) (Sep) Final

German ZEW Current Conditions (Oct)

German ZEW Economic Sentiment (Oct)

Eurozone ZEW Economic Sentiment (Oct)

Wednesday, 14th October

Spanish CPI (YoY) (Sep) Final

Spanish HICP (YoY) (Sep) Final

ECB President Lagarde Speaks

Eurozone Industrial Production (MoM) (Aug)

Thursday, 15th October

French CPI (MoM) (Sep) Final

French HICP (MoM) (Sep) Final

ECB President Lagarde Speaks

Friday, 16th October

Italian CPI (MoM) (Sep) Final

Eurozone Inflation (Sep) Final

Eurozone Trade Balance (Aug)

The Majors

It was a relatively bullish start to the week for the European majors on Monday. The EuroStoxx600 rose by 0.72% to lead the way, with the CAC40 and DAX300 gaining 0.66% and 0.67% respectively.

There were no major stats to provide the majors with direction on the day, leaving U.S politics, COVID-19, and Brexit to influence.

Hopes of Congress agreeing on a COVID-19 relief bill provided support, though the prospect of a pre-Election agreement is fading. While pre-Election hopes are fading, the markets are now pricing in the Democrats to win both houses. That should deliver stimulus by the New Year at the latest.

A reintroduction of lockdown measures in parts of the EU also limited the upside for the European majors on the day.

The Stats

It was a particularly quiet day on the Eurozone economic calendar. There were no material stats from the Eurozone or the U.S to provide direction.

The Market Movers

For the DAX: It was a mixed day for the auto sector on Monday. Daimler rallied by 2.04% to lead the way, the upside coming off the back of a Goldman Sachs upgrade to “Buy”. BMW and Volkswagen ended the day with gains of 0.70% and 1.09% respectively, while Continental fell by 0.49%

It was a relatively bullish day for the banks. Deutsche Bank eked out a 0.03% gain, with Commerzbank rising by 0.70%.

From the CAC, it was a positive day for bank stocks. BNP Paribas and Credit Agricole rose by 0.36% and by 0.52% respectively. Soc Gen rallied by 2.38%, however, supported by a Jefferies upgrade to “Buy”.

It was also a bullish day for the French auto sector. Peugeot and Renault ended the day with gains of 1.29% and 0.83% respectively.

Air France-KLM fell by 2.69%, with travel stocks under pressure due to the latest spike in new COVID-19 cases. Airbus SE fell by a more modest 1.18%.

On the VIX Index

The VIX ended a run of 3 consecutive days in the red on Monday. Partially reversing a 5.16% loss from Friday, the VIX rose by 0.28% to end the day at 25.07.

There were no material stats to provide the U.S majors with direction, which left U.S politics to influence on the day.

Market expectation of further stimulus by the New Year and easing concerns over post-Election Day political deadlock remained positives.

The Dow and S&P500 rose by 0.88% and by 1.64% respectively, with the NASDAQ rallying by 2.56%.

VIX 13/10/20 Daily Chart

The Day Ahead

It’s a relatively quiet day on the Eurozone economic calendar.

Key stats from the Eurozone include ZEW Economic Sentiment figures for Germany and the Eurozone. The markets will be looking for a pickup in sentiment to ease concerns over the continued rise in new COVID-19 cases.

Finalized inflation figures from Germany, which are also due out, should have a muted impact on the majors on the day.

From the U.S, September inflation figures will garner some interest. Any softening in inflationary pressures would raise more concerns over the economic recovery.

From Capitol Hill, any progress towards a COVID-19 stimulus bill would soften the effects of any weak numbers. The impasse looks set to continue, however.

Also away from the economic calendar, Brexit and the U.S Presidential Election chatter will need monitoring. With the markets eyeing a “Blue Wave”, the chances of a no-deal Brexit have picked up following Macron’s demands that fishing rights remain the same after Brexit. Enforcement rules also remain an issue, both of which are deal-breakers for the British PM.

With Prime Minister Johnson’s 15th October deadline looming, time is running out. It remains to be seen, however, whether Johnson would agree to stretch the deadline amidst the impasse.

On the corporate earnings front, Blackrock, Citigroup, Delta Airlines, JPMorgan, and Johnson & Johnson are due to release earnings today.

The Futures

In the futures markets, at the time of writing, the Dow was down by 98 points, with the DAX down by 7.5 points.

European Equities: Brexit and U.S Politics in Focus, with no Stats to Influence

Economic Calendar:

Monday, 12th October

ECB President Lagarde Speaks

Tuesday, 13th October

German CPI (MoM) (Sep) Final

German ZEW Current Conditions (Oct)

German ZEW Economic Sentiment (Oct)

Eurozone ZEW Economic Sentiment (Oct)

Wednesday, 14th October

Spanish CPI (YoY) (Sep) Final

Spanish HICP (YoY) (Sep) Final

ECB President Lagarde Speaks

Eurozone Industrial Production (MoM) (Aug)

Thursday, 15th October

French CPI (MoM) (Sep) Final

French HICP (MoM) (Sep) Final

ECB President Lagarde Speaks

Friday, 16th October

Italian CPI (MoM) (Sep) Final

Eurozone Inflation (Sep) Final

Eurozone Trade Balance (Aug)

The Majors

It was a bullish end to the week for the European majors on Friday. The CAC40 rose by 0.71% to lead the way, with the DAX300 and EuroStoxx600 gaining 0.07% and 0.55% respectively.

There were no major stats to provide the majors with direction on the day, leaving U.S politics and Brexit to provide direction.

Positive updates from U.S President Trump and Speaker of the House Pelosi on progress towards a U.S stimulus package provided support.

For the broader market, Biden’s widening lead in the polls also eased concerns over political uncertainty next month. The markets are beginning to price in a blue wave and a clean sweep that would eliminate any Trump contention over the outcome. A clean sweep would also deliver more stimulus to support the economic recovery.

The Stats

It was a particularly quiet day on the Eurozone economic calendar. There were no material stats from the Eurozone or the U.S to provide direction.

While updates from Capitol Hill were market positive, a fresh pike in new COVID-19 cases pinned back the majors.

A reintroduction of containment measures in France and other member states could undo the economic recovery…

The Market Movers

For the DAX: It was a bearish day for the auto sector on Friday. Continental slid by 1.72% to lead the way down, with, BMW and Daimler seeing losses of 1.63% and 1.56% respectively. Volkswagen ended the day down by a more modest 0.12%.

It was also a bearish day for the banks. Deutsche Bank and Commerzbank fell by 1.22% and by 0.80% respectively.

From the CAC, it was a bearish day for bank stocks. Credit Agricole and Soc Gen slid by 1.39% and by 1.41% respectively, while BNP Paribas fell by a more modest 0.89%.

It was also a bearish day for the French auto sector. Peugeot and Renault ended the day with losses of 1.83% and 3.35% respectively.

Air France-KLM reversed Thursday’s 1.76% gain with a 2.8% slide, with Airbus SE falling by 0.21%.

On the VIX Index

It was a 3rd consecutive day in the red for the VIX on Friday. Following a 6.06% slide from Thursday, the VIX fell by 5.16% to end the day at 25.00.

With no material stats from the U.S, updates from Capitol Hill and market sentiment towards the U.S Presidential Election weighed on the VIX.

The Dow and S&P500 rose by 0.57% and by 0.88% respectively, with the NASDAQ gaining 1.39%.

VIX 12/10/20 Daily Chart

The Day Ahead

It’s a particularly quiet start to the week on the Eurozone economic calendar.

There are no material stats due out of the Eurozone or the U.S to provide the majors with direction.

We can expect the majors to take their cues from any weekend chatter from Washington and updates on Brexit.

The EU and Britain go into final talks this week that could deliver a much-needed EU-Britain trade agreement. Boris Johnson has threatened to walk away if there is no deal in sight by the 15th October Summit, however.

Later in the day, expect updates from Capitol Hill and the U.S Presidential Election polls to also influence.

For the European majors and the economic outlook, however, a continued rise in new COVID-19 cases could also test support.

The Futures

In the futures markets, at the time of writing, the Dow was down by 52 points, while the DAX was up by 10.5 points.

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

European Equities: A Week in Review – 09/10/20

The Majors

It was another bullish week for the European majors in the week ending 9th October.

The CAC40 and EuroStoxx600 rose by 2.53% and by 2.11% respectively, with the DAX30 rallying by 2.85%.

Events in the U.S took center stage throughout the week, driving the European majors.

Support kicked in from the start of the week following news of Trump’s return to the White House.

With the markets focused on progress towards a U.S COVID-19 stimulus bill, Trump’s call to end negotiations until after the election came after the European close early in the week.

Avoiding a retreat alongside the U.S majors, Trump then announced plans to deliver aid for airlines and other stimulus measures.

Hopes of a piecemeal plan delivered a 4th consecutive day in the green for the European majors on Thursday.

At the end of the week, continued hope of a stimulus bill delivered 5 consecutive days in the green for the DAX30.

On the economic data front, private sector PMI numbers from Germany and Italy, impressed, while France and Spain struggled.

Germany’s composite PMI hit a 2-month high, driven by manufacturing sector output rising at the fastest pace in over two-and-a-half years. The positive PMIs supported the upside in the DAX for the week.

The Stats

It was a particularly busy week on the Eurozone economic calendar.

In the early part of the week, September’s private sector PMIs for Italy and Spain and Eurozone retail sales figures were in focus.

Finalized PMIs for France, Germany, and the Eurozone also influenced, however.

The PMIs were skewed to the positive, with better than expected numbers from Italy. There were also upward revisions to Germany and the Eurozone’s services and composite PMIs.

Over the remainder of the week, the focus remained on Germany. August factory orders, industrial production, and trade data were in focus.

While factory orders impressed, industrial production and trade data disappointed. The impact was muted, however, with the jump in factory orders aligned with Germany’s PMI numbers for September.

On the monetary policy front, the ECB monetary policy meeting minutes provided little influence late in the week.

From the U.S

It was a quieter week on the economic data front.

Key stats included September’s ISM Non-Manufacturing PMIs, August JOLTs job openings, and the weekly jobless claims figures.

While the stats were skewed to the negative, a pickup in non-manufacturing sector activity was a plus for the majors. In September, the ISM Non-Manufacturing PMI rose from 56.9 to 57.8.

On the labor market numbers, there was some concern, however, with the weekly jobless claims figures raising yet more red flags.

In the week ending 2nd October, initial jobless claims came in at 840k, down only marginally from the previous week’s 849k. The figures suggested that the labor market recovery may have stalled going into the 4th quarter.

Ultimately, however, it was U.S politics that offset the effects of the negative stats in the week.

The Market Movers

From the DAX, it was a bullish week for the auto sector. Continental and Volkswagen rallied by 4.08% and by 4.14% respectively to lead the way. BMW and Daimler weren’t far behind, with gains of 3.90% and 3.06% respectively.

It was another bullish week for the banking sector. Commerzbank and Deutsche Bank rallied by 9.21% and by 8.25% respectively.

From the CAC, it was a bullish week for the banks. BNP Paribas and Credit Agricole rallied by 9.61% and by 5.79% respectively. Soc Gen led the way, however, surging by 12.5%.

The French auto sector also saw green. Peugeot rose by 2.17%, with Renault ended the week up by 7.50%.

Air France-KLM managed to claw back some recent losses with an 11.25% gain, while Airbus rose by a more modest 3.34%.

On the VIX Index

It was the 1st week in the red from 3 for the VIX. In the week ending 9th October, the VIX fell by 9.52%. Reversing a 4.74% gain from the previous week, the VIX ended the week at 25.00.

U.S politics drove demand for riskier assets at the expense of the VIX.

Progress towards further U.S stimulus, Trump’s return to the White House, and hopes of an uncontested election result were the key drivers.

For the week ending 9th October, the S&P500 and the Dow ended the week up by 3.84% and by 3.27% respectively. The NASDAQ led the way, however, rallying by 4.56%.

The Week Ahead

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

Key stats include Germany and the Eurozone ZEW Economic Sentiment figures for October.

Industrial production and trade data for the Eurozone are also due out. Barring particularly dire numbers, however, the stats along with finalized inflation figures should have a muted impact on the majors.

From China, trade data and industrial production figures will influence, in what is a busy week for the U.S.

September inflation, October manufacturing PMIs, retail sales, consumer sentiment, and the weekly jobless claims are in focus from the U.S.

There is also Trump, a possible 2nd Presidential debate, and election campaigning to consider in the week.

From Europe, Brexit will also take center stage as the EU and Britain enter their final round of talks. Failure to close out an agreement would be negative for the European majors in the week…

European Equities: U.S Politics and Stimulus Talk to Test the Majors

The Majors

It was a bullish day for the European majors on Thursday. The DAX30 rose by 0.88% to lead the way, with the CAC40 and EuroStoxx600 gaining 0.61% and 0.78% respectively.

Economic data took a back seat on the day, with the markets responding to Trump chatter once more. Following Tuesday’s announcement to postpone negotiations, Trump tweeted of plans to support airlines and deliver other stimulus measures on Wednesday.

The news had hit the wires after the European close, leaving the European majors to respond on Thursday.

The Stats

It was a relatively quiet day on the Eurozone economic calendar.

Key stats included August trade data from Germany.

In August, Germany’s trade surplus narrowed from €18.0bn to €15.7bn. Economists had forecast a widening to €18.2bn.

According to Destatis,

  • Exports increased by 2.4% from the previous month to €91.2bn, coming in ahead of a forecasted 1.4% rise.
    • Germany exported goods to the value of €48.2bn to EU member states, which was down by 7% compared with August 2019.
    • Exports to Euro countries fell by 8.3% to €32.4bn.
    • To countries outside of the EU, exports slid by 13.6% to €43.0bn when compared with August 2019.
    • Exports to China fell by 1.1% when compared with August 2019, while exports to the U.S tumbled by 21.1%.
  • Imports increased by 5.8% on the previous month to €78.5bn, coming in well ahead of a forecasted 1.4% increase.
    • German imported goods to the value of €41.6bn from EU member states. Compared with August 2019, imports fell by 5.4%
    • Imports from Eurozone member states fell by 6.5% to €28.0bn.
    • From countries outside of the EU, imports declined by 10.5% to €36.9bn when compared with August 2019.

On the monetary policy front, the ECB monetary policy meeting minutes were also in focus later in the day.

There were no major surprises, however, with the markets focused on Trump, COVID-19 stimulus, and U.S stats

From the U.S

It was a relatively quiet day on the economic calendar. The weekly jobless claims figures were in focus late in the European session.

In the week ending 2nd October, initial jobless claims came in at 840k, which was down marginally from 849k in the week prior. Economists had forecast a fall to 820k.

Ahead of the European open, the Vice Presidential debate had little influence, while hopes of an interim COVID-19 stimulus package provided support.

Late on Wednesday, the U.S President had tweeted that there was support on its way for airlines along with other stimulus measures. The tweet had led to a bounce-back in the U.S equity markets, following Tuesday’s losses.

The Market Movers

For the DAX: It was a mixed day for the auto sector on Thursday. BMW and Continental avoided the red, with modest gains of 0.06% and 0.15% respectively. Daimler and Volkswagen ended the day down by 0.21% and by 0.63% respectively.

It was a bullish day for the banks, however. Deutsche Bank and Commerzbank rose by 1.74% and by 1.57% respectively.

From the CAC, it was a bullish day for bank stocks. Soc Gen and BNP Paribas rose by 2.09% and by 1.86% respectively. Credit Agricole ending the day with a more modest 1.46% gain.

It was also a bullish day for the French auto sector. Peugeot and Renault saw gains of 0.38% and 0.83% respectively.

Air France-KLM rose by 1.76% off the back of a 3.23% rally on Wednesday, while Airbus SE eked out a 0.33% gain.

On the VIX Index

It was a 2nd consecutive day in the red for the VIX on Thursday. Following a 4.82% decline from Wednesday, the VIX fell by 6.06% to end the day at 26.36.

Trump’s 2nd tweet of plans to deliver aid to airlines and other stimulus measures continued to provide support to the U.S majors.

While House Speaker Pelosi rejected the notion of a smaller scale interim airline aid package, hopes of further stimulus in the new year remained.

For the U.S equity markets, Biden’s lead in the U.S Presidential Election polls has also failed to spook the markets.

The NASDAQ and S&P500 rose by 0.55% and by 0.62% respectively, with the Dow gaining a more modest 0.34%.

The Day Ahead

It’s a particularly quiet day on the Eurozone economic calendar.

There are no material stats due out of the Eurozone or the U.S to provide the majors with direction.

While we can expect the majors to take their cues from any chatter from Washington overnight, the service sector PMI from China will also influence. September’s Caixin Service PMI is due out later this morning.

Through the day, expect any updates on Brexit to also influence. Updates from talks this week were market positive, leaving talks next week to decide Britain’s fate.

The Futures

In the futures markets, at the time of writing, the Dow was up by 123 points, with the DAX up by 22 points.

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

European Equities: U.S Politics, Economic Data, and the ECB Minutes to Influence

Economic Calendar:

Thursday, 8th October

German Trade Balance (Aug)

ECB Monetary Policy Meeting Minutes

The Majors

It was a mixed day for the European majors on Wednesday. The DAX30 rose by 0.17%, whilst the CAC40 and EuroStoxx600 slipped by 0.27% and 0.12% respectively.

Economic data from Germany in the week continued to provide support to the DAX. While industrial production numbers disappointed, more than a 2-year composite PMI for September was good enough.

Market reaction to Trump’s announcement to postpone COVID-19 stimulus bill negotiations weighed, however.

After the European close on Tuesday, Trump had called off negotiations until after the Presidential Election. There mixed signals on Wednesday, however, when Trump tweeted that there would be support for airlines and other stimulus measures. The 2nd tweet led to a rebound in the U.S equity markets on Wednesday.

The Stats

It was a relatively quiet day on the Eurozone economic calendar.

Key stats included August industrial production figures from Germany.

In August, industrial production fell by -0.20%, following a 1.40% rise in July. Economists had forecast a 1.50% increase.

According to Destatis,

  • Production in industry excluding energy and construction was down 0.7%.
  • Within industry, the production of intermediate goods increased by 3.3%. The production of consumer goods fell by 1.3%, with the production of capital goods down by 3.6%.
  • Outside industry, energy production was up by 6.7%, while production in construction was down by 0.3%.
  • Production in the automotive industry slid by 12.5% from the previous month, reversing an 8.9% jump in July. The slide left production just under 25% below the level in Feb-2020.
  • Year-on-year, industrial production was down by 9.6%.

From the U.S

It was a particularly quiet day on the economic calendar. There were no material stats to provide the European majors with direction late in the day.

While there were no stats, the European majors responded to Trump’s decision to end stimulus negotiations until after the election.

The markets had found plenty of support on the hopes that Congress would reach an agreement…

On the monetary policy front, the FOMC meeting minutes were released after the European close. The U.S markets, however, responded to Trump’s tweets of more stimulus that should influence the European majors on Thursday.

The Market Movers

For the DAX: It was a bullish day for the auto sector on Wednesday. Continental and Daimler rallied by 4.10% and by 3.53%. BMW and Volkswagen saw more modest gains of 2.25% and 1.54% respectively.

It was a mixed day for the banks, however. Deutsche Bank rose by 1.86%, while Commerzbank slipped by 0.13%.

From the CAC, it was a mixed day for bank stocks. Soc Gen and BNP Paribas rose by 1.51% and by 0.21% respectively. Credit Agricole ending the day with a 1.34% loss, however.

It was another mixed day for the French auto sector. Peugeot ended the day flat, while Renault closed out the day with a 2.21% gain.

Air France-KLM found yet more support, rising by 3.23%, while Airbus SE fell by 1.58%.

On the VIX Index

A run of 6 consecutive days in the green came to an end on Wednesday. Following a 5.44% rise on Tuesday, the VIX fell by 4.82% to end the day at 28.06.

Trump’s tweet of planned stimulus for airlines and other stimulus measures drove support for the U.S majors on Wednesday. Hopes of a smaller, interim stimulus package drove demand for the U.S majors on the day.

The NASDAQ and S&P500 rose by 1.88% and by 1.74% respectively, with the Dow gaining by 1.91%.

VIX 08/10/20 Daily Chart

The Day Ahead

It’s another relatively quiet day on the Eurozone economic calendar.

Key stats include Germany’s trade data for August.

The markets will be looking for some upbeat stats following Germany’s pickup in private sector activity.

On the monetary policy front, the ECB monetary policy meeting minutes will also draw attention later in the day.

Away from the economic calendar, Brexit talks will likely garner plenty of attention. At a minimum, talks will need to continue next week…

From the U.S, the weekly jobless claims figures will provide direction later in the day. Ahead of the European open, the Vice Presidential debate will set the tone as Pence and Harris face off this morning.

Following Trump’s tweets on Wednesday, which led to a rebound in the U.S markets, there will be early support ahead of the European open.

The Futures

In the futures markets, at the time of writing, the Dow was up by 45 points, with the DAX up by 48 points.

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

European Equities: Economic Data, Brexit, and U.S Politics in Focus

Economic Calendar:

Wednesday, 7th October

German Industrial Production (MoM) (Aug)

ECB President Lagarde Speaks

Thursday, 8th October

German Trade Balance (Aug)

ECB Monetary Policy Meeting Minutes

The Majors

It was another bullish day for the European majors on Tuesday, with the DAX30 rising by 0.61% to lead the way. The CAC40 and EuroStoxx600 saw more modest gains of 0.48% and 0.07% respectively.

Economic data from Germany and Trump’s return to the Oval Office provided support. The upside was limited, however, with a rise in new COVID-19 cases and new containment measures in EU testing support.

Late in the day, news hit the wires of Trump ending relief bill negotiations on Capitol Hill until after the election. The European markets had closed, with the announcement sending the U.S majors into the red.

The Stats

It was a relatively quiet day on the Eurozone economic calendar.

Key stats included August factory orders and September’s construction PMI figures from Germany.

In August, factory orders jumped by 4.5%, coming in well ahead of a forecasted 2.6% rise. In July, factory orders had risen by 2.8%.

According to Destatis,

  • Domestic orders increased by 1.7% and foreign orders by 6.5%, month-on-month.
  • New orders from the euro area jumped by 14.6%, with orders from other countries rising by 1.5%.
  • The manufacturers of intermediate goods increased by 4.5%, with manufacturers of capital goods seeing a 4.7% rise.
  • Consumer goods producers saw new orders increase by 4.2%.
  • For the auto sector, orders increased by 0.9%, which took orders to above pre-crisis levels.
  • New orders in the manufacture of machinery and equipment rose by 11.4%. In spite of the increase, orders were still 5.8% below February 2020 levels.

While factory orders were positive, Germany’s construction PMI slipped from 48.0 to 45.5. The PMI had a muted impact on the DAX30, however, after impressive service and manufacturing PMIs and factory orders.

From the U.S

It was a relatively busy day on the economic calendar. Key stats included August trade figures and JOLTs job openings.

In August, the trade deficit widened from $63.4bn to $67.1bn. Economists had forecast a widening to $66.1bn.

  • While exports rose from $168.1bn to $171.9bn, imports increased from $231.7bn to $239.0bn.

JOLTs job openings were also disappointing, with openings coming in at 6.493m. This was below a forecasted 6.685m and down from 6.697m in July.

On the monetary policy front, FED Chair Powell was also in focus late in the European session. The FED Chair called for more help from the U.S government, warning of a weak economic recovery if more stimulus is not delivered.

The Market Movers

For the DAX: It was a mixed day for the auto sector on Tuesday. Volkswagen rose by 0.74% to buck the trend on the day. Daimler fell by 1.29%, to lead the way down, with BMW and Continental seeing losses of 0.22% and 0.55% respectively.

It was also another bullish day for the banks, however. Deutsche Bank and Commerzbank rallied by 4.55% and by 6.43% respectively.

From the CAC, it was a particularly bullish day for bank stocks. Soc Gen jumped by 6.71%, with BNP Paribas and Credit Agricole ending the day up by 5.02% and by 5.23% respectively.

It was also another bullish day for the French auto sector. Peugeot and Renault rose by 1.38% and by 5.00% respectively.

Air France-KLM rallied by 4.40% off the back of a 4.35% gain on Monday, with Airbus SE ending the day with a 2.99% gain.

On the VIX Index

It was a 6th consecutive day in the green for the VIX on Tuesday. Following a 1.19% gain from Monday, the VIX rose by 5.44% to end the day at 29.48.

Trump’s decision to end stimulus talks until after the U.S Presidential Election weighed on the U.S majors on Tuesday.

The decision came after Powell’s call for more support and warning of a slow economic recovery should Congress fail to pass a relief bill.

The Dow and S&P500 fell by 1.34% and by 1.40% respectively, while the NASDAQ declining by 1.57%.

The Day Ahead

It’s another relatively quiet day on the Eurozone economic calendar.

Key stats include Germany’s industrial production figures for August.

Following a string of impressive numbers, the markets will be expecting another solid rise in production.

On the monetary policy front, ECB President Lagarde is scheduled to speak, which could also influence later in the day.

Away from the economic calendar, Brexit talks resume and will likely garner plenty of attention.

From the U.S, there are no material stats due out to provide the majors with direction. After the European close, the FOMC minutes are due out. Apprehension ahead of the FOMC minutes could limit any upside on the day.

We can expect the majors to react to Trump’s call to end stimulus talks, however.

The Futures

In the futures markets, at the time of writing, the Dow was down by 47 points, with the DAX down by 96.5 points.

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

European Equities: Trump, Economic Data, COVID-19, and U.S Politics in Focus

Economic Calendar:

Tuesday, 6th October

German Factory Orders (MoM) (Aug)

German IHS Markit Construction PMI (Sep)

ECB President Lagarde Speaks

Wednesday, 7th October

German Industrial Production (MoM) (Aug)

ECB President Lagarde Speaks

Thursday, 8th October

German Trade Balance (Aug)

ECB Monetary Policy Meeting Minutes

The Majors

It was a bullish start to the week for the European majors on Monday, with the DAX30 rising by 1.10% to lead the way. The CAC40 and EuroStoxx600 weren’t far behind, with gains of 0.97% and 0.81% respectively.

Positive updates on U.S President Trump’s health delivered support to the majors on the day. Adding to the upside on the day was positive progress towards a COVID-19 relief Bill on Capitol Hill.

The Stats

It was a busy start to the week on the Eurozone economic calendar.

Key stats included September’s service PMIs for Italy and Spain and August retail sales figures for the Eurozone.

Finalized service and composite PMIs for France, Germany, and the Eurozone were also in focus.

The PMIs

In September, Spain’s Services PMI fell from 47.7 to 42.4. Economists had forecast a decline to 46.3.

Italy’s Services PMI increased from 47.1 to 48.8, which was better than a forecasted 46.6.

The finalized French PMI came in at 47.5, which was in line with prelim, while Germany’s came in at 50.6. This was up from a prelim 49.1. In August, the PMIs had stood at 51.5 and 52.5 respectively.

For the Eurozone, the September services PMI came in at 48.0, which was up from a prelim 47.6, while down from an August 50.5.

The Eurozone’s composite PMI came in at 50.4, which was up from a prelim 50.1. In August, the PMI had stood at 51.9.

According to the Eurozone’s September Composite Markit Survey,

  • While the German manufacturing sector activity impressed in September, the rest of the Eurozone struggled.
  • Private sector activity across the Eurozone was at its worst performance since May.
  • While Germany’s composite PMI hit a 2-month high, only Italy reported an expansion of private sector activity alongside Germany.
  • The rest contracted. France and Ireland hit 4-month and 3-month lows respectively.
  • Spain’s composite came in at a 4-month low 44.3 to leave it at the bottom of the table.
  • Incoming new business increased only slightly in September and at the slowest pace in the current 3-month period of growth.
  • The only good news was that export trade rose for the 1st time in over 2-years.
  • As a result of softer business growth, backlogs of work declined for a 19th consecutive month.
  • Employment numbers fell for a 7th consecutive month, albeit at a modest pace.
  • Business expectations picked up to the highest level in 7-months. Italian companies were the most confident.

Retail Sales

In August, retail sales jumped by 4.4%, reversing a 1.8% decline from July. Economists had forecast a 2.4% rise.

According to Eurostat,

  • Non-food product sales increased by 6.1%, with food, drinks, and tobacco sales rising by 2.4%. Automotive fuel sales rose by 2.1%.
  • By member state, Belgium (+9.6%), France (+6.2%), and Germany (+3.1%) reported the largest increases in total retail trade volume.
  • Slovenia (-1.6%) and Portugal (-1.4%) registered the largest declines.
  • In August 2020 compared with August 2019, retail sales increased by 3.7%.

From the U.S

It was a relatively busy day on the economic calendar. Key stats included the market’s preferred ISM Non-Manufacturing PMI.

In September, the ISM Non-Manufacturing PMI rose from 56.9 to 57.8. Economists had forecast a fall to 56.3.

The finalized Market survey services PMI came in at 54.6, which was in line with prelim figures. In August, the PMI had stood at 55.0.

The Market Movers

For the DAX: It was a bullish day for the auto sector on Monday. BMW jumped by 3.47% to lead the way, with Daimler rising by 2.68%. Continental and Volkswagen weren’t far behind, with gains of 2.14% and 2.59% respectively.

It was also a bullish day for the banks. Deutsche Bank and Commerzbank rose by 1.14% and by 1.98% respectively.

From the CAC, bank stocks found much-needed support. Credit Agricole rose by 1.82%, with BNP Paribas and Soc Gen ending the day up by 3.16% and by 3.17% respectively.

It was a bullish day for the French auto sector. Peugeot and Renault rose by 2.23% and by 2.78% respectively.

Air France-KLM rallied by 4.35%, with Airbus SE ending the day with a 1.83% gain.

On the VIX Index

It was a 5th consecutive day in the green for the VIX on Monday. Following a 3.48 gain from Friday, the VIX rose by 1.19% to end the day at 27.96.

While the risk appetite returned over the latest updates on Trump’s health, the upward trend in the VIX points to volatility ahead.

The upside came in spite of the U.S equity markets making gains on the day. Uncertainty over the U.S Presidential Election outcome contributed to the upside in the VIX.

The Dow and S&P500 rose by 1.68% and by 1.80% respectively, while the NASDAQ rallied by 2.32% to reverse Friday’s losses.

VIX 06/10/20 Daily Chart

The Day Ahead

It’s a relatively quiet day on the Eurozone economic calendar.

Key stats include Germany’s factory orders for August and September’s construction PMI.

Expect the factory orders to be the key driver on the day.

On the monetary policy front, ECB President Lagarde is also scheduled to speak. Expect any forward guidance or views on the economic outlook to influence.

From the U.S, economic data includes August trade and JOLTs job openings.

With recent labor market numbers raising questions over the labor market recovery, expect some sensitivity to the JOLTs numbers.

Also in focus late in the European session will be Fed Chair Powell who is scheduled to speak. There shouldn’t be too many surprises, however.

Away from the economic calendar, Brexit chatter, updates on Trump, and the COVID-19 relief Bill are also in focus.

Fresh spikes in COVID-19 cases and reintroduction of containment measures will also influence, however.

The Futures

In the futures markets, at the time of writing, the Dow was up by 65 points, with the DAX up by 26 points.

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

European Equities: Trump, Service PMIs, and Brexit Updates in Focus

Economic Calendar:

Monday, 5th October

Spanish Services PMI (Sep)

Italian Services PMI (Sep)

French Services PMI (Sep) Final

German Services PMI (Sep) Final

Eurozone Markit Composite PMI (Sep) Final

Eurozone Services PMI (Sep) Final

Eurozone Retail Sales (MoM) (Aug)

Tuesday, 6th October

German Factory Orders (MoM) (Aug)

German IHS Markit Construction PMI (Sep)

ECB President Lagarde Speaks

Wednesday, 7th October

German Industrial Production (MoM) (Aug)

ECB President Lagarde Speaks

Thursday, 8th October

German Trade Balance (Aug)

ECB Monetary Policy Meeting Minutes

The Majors

It was another mixed day for the European majors on Friday. The DAX30 fell by 0.33% to mark a 4th consecutive day in the red, while the CAC40 and EuroStoxx600 rose by 0.02% and by 0.25% respectively.

Economic data took a back seat at the end of the week. Market reaction to Trump’s positive COVID-19 test had weighed on the majors ahead of the open.

Progress towards a COVID-19 relief Bill on Capitol Hill and hopes of an end to the Brexit impasse provided support, however.

After a lack of progress but the promise of compromise in 3-days of talks, news of high-level talks planned for the weekend was positive.

Boris Johnson and EU Commission President Ursula von der Leyen were scheduled to speak on Saturday.

The Stats

It was a relatively quiet end to the week on the Eurozone economic calendar.

Key stats included the Eurozone’s prelim inflation figures for September. Following concerns over a pickup in deflationary pressures in August, September’s prelim figures would have provided little comfort.

The Eurozone’s annual rate of core inflation softened from 0.4% to 0.2%. More significantly, however, consumer prices fell by 0.3%, year-on-year, following a 0.2% decline in August.

According to Eurostat,

  • Food, alcohol, & tobacco is expected to have the highest annual rate in September (1.8% compared with 1.7% in August).
    • Services are expected to have an annual rate of 0.5% (August: 0.7%).
    • Non-energy industrial goods a rate of -0.3% (August: -0.1%).
    • Energy an annual rate of -8.2% (August -7.8%).
  • By member state, Cypress (-2.9%) and Greece (-2.3%) saw the greatest deflationary pressures at the end of the quarter.
  • Austria (+1.4%), Lithuania (+1.4%), and Slovakia (+1.4%) are estimated to have the highest annual rate of inflation amongst member states.

Month-on-month, consumer prices rose by 0.1%, partially reversing a 0.4% decline in August.

From the U.S

It was another busy day on the economic calendar. Key stats nonfarm payroll figures and the unemployment rate for September. Factory orders and finalized consumer sentiment figures were also in focus.

The stats were skewed to the negative. While the unemployment rate slipped from 8.4% to 7.9%, the participation rate fell from 61.7% to 61.4%.

In September, the U.S added 661k nonfarm payrolls, which fell short of a forecasted 850k, which was raised concerns over the recovery.

Factory orders also fell short of expectations in August. Orders rose by just 0.7%, following a 6.5% jump in July. Economists had forecast a 1% increase.

On the positive, however, was an upward revision to consumer sentiment and expectation figures.

The Michigan Consumer Sentiment Index was revised from a prelim 78.9 to 80.4. In August, the Index had stood at 74.1.

The Market Movers

For the DAX: It was a mixed day for the auto sector on Friday. Continental and Daimler rose by 1.50% and by 0.05% respectively. BMW and Volkswagen saw red, however, with losses of 0.16% and 1.34% respectively.

It was a bullish day for the banks. Deutsche Bank and Commerzbank rose by 2.44% and by 0.96% respectively.

From the CAC, bank stocks were in the red once more. Credit Agricole slid by 1.17%, with BNP Paribas and Soc Gen ending the day down by 0.54% and by 0.09% respectively.

It was a mixed day for the French auto sector. Peugeot fell by 0.65%, while Renault eked out a 0.07% gain.

Air France-KLM followed a 1.25% decline from Thursday, with a 1.81% fall, with Airbus SE ending the day with a 0.43% loss.

On the VIX Index

It was a 4th consecutive day in the green for the VIX on Friday. Following a 1.25% gain from Thursday, the VIX rose by 3.48% to end the day at 27.63.

News of Trump testing positive for COVID-19 led to the rise in the VIX on the day.

The Dow and S&P500 fell by 0.48% and by 0.96% respectively, while the NASDAQ slid by 2.22%.

VIX 04/10/20 Daily Chart

The Day Ahead

It’s a busy start to the week on the Eurozone economic calendar.

Key stats include September service sector PMIs for Italy and Spain and Eurozone retail sales figures for August.

Finalized composite and service PMIs are also due out of France, Germany, and the Eurozone.

Barring any major revisions from prelim, Italy and the Eurozone’s PMIs will be the main area of focus.

From the U.S, the market’s preferred ISM Non-Manufacturing PMI will also provide direction late in the session.

Away from the economic calendar, there is plenty for the markets to also consider.

Updates on Trump’s health after being admitted to the hospital will be a key driver alongside Brexit updates. There have been reports of doctors planning to release the President later today. Trump also briefly left the hospital to acknowledge supporters camped outside.

From the weekend, Boris Johnson and EU Commission President Ursula von der Leyen agreed to extend talks by a month. Hopes of compromise and Brexit agreement should provide support.

From Capitol Hill, the markets will also be looking for an agreement on the COVID-19 relief Bill.

The Futures

In the futures markets, at the time of writing, the Dow was up by 204 points, with the DAX up by 95 points.

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

European Equities: A Week in Review – 02/10/20

The Majors

It was a relatively bullish week for the European majors in the week ending 2nd October.

The CAC40 and EuroStoxx600 rose by 2.01% and by 2.02% respectively, with the DAX30 gaining by 1.76%.

A busy week on the economic calendar, Brexit, and U.S politics were in focus throughout the week.

Away from the economic calendar, the 1st televised presidential debate weighed on the European majors mid-week.

At the end of the week, news of Trump testing positive for COVID-19 also pinned the majors back

Providing support to the majors in the week, however, was progress towards a COVID-19 relief Bill on Capitol Hill.

The Stats

It was a particularly busy week on the Eurozone economic calendar.

Key stats included prelim inflation figures, retail sales, unemployment, and manufacturing PMI numbers.

It was a mixed bag on the economic data front. Retail sales figures from France and Germany and German unemployment figures were EUR positive.

Manufacturing PMIs were also skewed to the positive, with Germany’s PMI hitting a 26-month high. For the Euro bloc, a further pickup in activity and new orders drove the PMIs upwards.

Prelim inflation figures for September reflected a pickup in deflationary pressures, however.

The Eurozone’s annual rate of core inflation softened from 0.4% to 0.2%. More significantly, however, consumer prices fell by 0.3%, year-on-year, following a 0.2% decline in August.

Month-on-month, consumer prices rose by 0.1%, partially reversing a 0.4% decline in August.

From the U.S

It was also a particularly busy week on the economic data front.

Key stats included September consumer confidence, ADP nonfarm, Manufacturing PMIs, weekly jobless claims, and labor market data.

Also in focus on Friday, were factory orders for August.

Finalized 4th GDP and consumer sentiment figures, August inflation, trade, and personal spending data had a muted impact in the week.

The stats were skewed to the positive. Consumer confidence and ADP numbers impressed, with the weekly jobless claims seeing a decline in late September.

With personal spending on the rise, marginally softer growth in the manufacturing sector was the only negative ahead of Friday’s stats. The ISM Manufacturing PMI slipped from 56.0 to 55.4. While the headline figure was negative, the employment sub-index jumped from 46.4 to 49.6.

At the end of the week, the U.S labor market and factory order figures failed to support riskier assets.

Non-farm payrolls rose by 661K, following a 1,489k surge in August. This was well short of an expected 850k rise. The unemployment rate fell from 8.4% to 7.9%.

Wage growth and the participation rate also suggested that the labor market recovery was spluttering.

Factory orders also failed to impress at the end of the week. A 0.7% rise in August came up short of a forecasted 1% increase. In July, orders had jumped by 6.5%.

The Market Movers

From the DAX, it was a mixed week for the auto sector. Continental rallied by 7.48% to lead the way, with BMW and Daimler gaining 3.92% and 5.32% respectively. Volkswagen bucked the trend in the week, with a 1.87% loss.

It was a bullish week for the banking sector that rebounded from the previous week’s scandal-driven losses. Commerzbank and Deutsche Bank rallied by 7.50% and by 6.13% respectively.

From the CAC, it was a moderately bullish week for the banks. Credit Agricole and Soc Gen saw gains 1.26% and by 1.28% respectively, with BNP Paribas rising by 0.79%.

The gains in the week failed to make a dent into the heavy losses from the week prior, however.

The French auto sector also struggled in the week. While Peugeot rose by 0.13%, Renault ended the week down by 1.76%.

Air France-KLM followed last week’s 19.1% slump with a 2.97% loss, while Airbus rallied by 7.66%. In the previous week, Airbus had fallen by 12.51%.

On the VIX Index

It was a 2nd consecutive week in the green for the VIX. In the week ending 2nd October, the VIX rose by 4.74%. Following a 2.13% gain from the previous week, the VIX ended the week at 27.63.

The weekly gain came in spite of the U.S majors managing to reverse losses from the week prior. For the S&P500, a 1.52% gain brought to an end a run of 4 consecutive weeks in the red.

For the week ending 2nd October, the S&P500 and the Dow ended the week up by 1.87% and by 1.52% respectively. The NASDAQ wasn’t far behind, with a 1.48% gain.

VIX 03/10/20 Weekly Chart

The Week Ahead

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

Key stats include September service PMIs for Italy and Spain and finalized PMIs for France, Germany, and the Eurozone.

The focus will then shift to Germany. Economic data includes factory orders, industrial production, and trade data for August.

August figures will need to be on the rise to support the survey-based PMI numbers seen from the manufacturing sector.

From the U.S, the all-important ISM Non-Manufacturing PMI and the weekly jobless claims will also influence.

Away from the economic calendar, Brexit, COVID-19, and U.S politics will also be in focus in the week.

European Equities: U.S Nonfarms, the COVID-19 Relief Bill, and Brexit in Focus

Economic Calendar:

Friday, 2nd October

Eurozone Core CPI (YoY) September Prelim

Eurozone CPI (YoY) September Prelim

Eurozone CPI (MoM) September Prelim

The Majors

It was a mixed day for the European majors on Thursday. The DAX30 fell by 0.23%, while the CAC40 and EuroStoxx600 rose by 0.43% and by 0.20% respectively.

Economic data provided the majors with support on the day, with progress towards a COVID-19 relief Bill on Capitol Hill also market positive.

From Germany, Bayer AG slumped by 8.07%, which left the DAX30 in the red. The company downwardly revised its forward guidance and announced further impairment costs.

The Stats

It was another particularly busy end to the month on the Eurozone economic calendar.

Key stats included September manufacturing PMIs for Italy and Spain and unemployment numbers for the Eurozone. Finalized PMIs for France, Germany, and the Eurozone were also in focus.

The PMIs

In September, Spain’s Manufacturing PMI rose from 49.9 to 50.8. Economists had forecast a rise to 50.7.

Italy’s Manufacturing PMI rose from 53.1 to 53.2, which fell short of a forecasted 53.5.

The finalized French PMI came in at 51.2, which was up from a prelim 50.9 and August 49.8, while Germany’s came in at 56.4. This was down from a prelim 56.6. In August, the PMI had stood at 52.2.

For the Eurozone, the September PMI came in at 53.7. This was in line with prelim 53.7 and up from August’s 51.7.

According to the Eurozone’s September Markit Survey,

  • September marked the strongest growth in more than 2-years, with operating conditions improving for a 3rd consecutive month.
  • Consumer and intermediate goods categories saw solid gains. Investment goods saw the strongest growth in over 2-years, however.
  • Germany topped the table, with the PMI hitting a 26-month high. Italy came in 2nd, with a 27-month high PMI.
  • The Netherlands also saw solid improvement, while France and Austria reported modest growth.
  • Spain saw only a slight expansion, with Greece seeing no change and Ireland’s recovery stalling.
  • Overall, manufacturing output and new orders increased at accelerated rates.
  • Supported by strong new orders, the sector’s confidence hit its highest level since April 2018, with Italian manufacturers being the most confident.

On the unemployment front, there was nothing to alarm the markets. The Eurozone’s unemployment rate ticked up by 8.0% to 8.1%, which was in line with forecasts.

From the U.S

It was a busy day on the economic calendar. Key stats included the weekly jobless claims figures and the market’s preferred ISM Manufacturing PMI.

In the week ending 25th September, initial jobless claims came in at 837k, which was down from the previous week’s 873k. Economists had forecast initial claims of 850k.

For the month of September, the ISM Manufacturing PMI slipped from 56.0 to 55.4, which came up short of a forecasted 56.4.

Personal spending and inflation figures for August had a muted impact on the European majors on the day.

The Market Movers

For the DAX: It was a bullish day for the auto sector on Thursday. Continental and Daimler rose by 2.91% and by 1.68% respectively to lead the way. BMW and Volkswagen saw more modest gains 0.40% and 0.39% respectively.

It was a mixed day for the banks, however. Deutsche Bank fell by 0.59%, while Commerzbank rose by 1.62% on the day.

From the CAC, bank stocks were in the red once more. Soc Gen slid by 2.39%, with BNP Paribas and Credit Agricole ending the day down by 1.06% and by 1.79% respectively.

It was also another bearish day for the French auto sector. Peugeot fell by 1.16%, with Renault sliding by 4.60%.

Air France-KLM followed a 2.79% decline from Wednesday, with a 1.25% fall, while Airbus SE rallied by 4.56%.

On the VIX Index

It was a 3rd consecutive day in the green for the VIX on Thursday. Following a 0.38 gain from Wednesday, the VIX rose by 1.25% to end the day at 26.70.

Continued progress towards a relief Bill on Capitol Hill provided support to the U.S majors on the day.

The Dow and S&P500 rose by 0.13% and by 0.53% respectively, with the NASDAQ ending the day up by 1.42%.

VIX 02/10/20 Daily Chart

The Day Ahead

It’s a quieter day ahead on the Eurozone economic calendar.

Key stats include prelim Eurozone inflation figures for the Eurozone. We will expect some market sensitivity to the numbers.

With labor market figures due out of the U.S later in the day, any major moves will likely be on hold until the NFP numbers.

Away from the economic calendar, expect Brexit and chatter from Capitol Hill to also influence on the day.

The Futures

In the futures markets, at the time of writing, the Dow was down by 78 points, with the DAX down by 31.5 points.

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

European Equities: Private Sector PMIs and Geopolitics in Focus

Economic Calendar:

Thursday, 1st October

Spanish Manufacturing PMI (Sep)

Italian Manufacturing PMI (Sep)

French Manufacturing PMI (Sep) Final

German Manufacturing PMI (Sep) Final

Eurozone Manufacturing PMI (Sep) Final

Eurozone Unemployment Rate (Aug)

EU Leaders Summit

Friday, 2nd October

Eurozone Core CPI (YoY) September Prelim

Eurozone CPI (YoY) September Prelim

Eurozone CPI (MoM) September Prelim

The Majors

It was a relatively bearish day for the European majors on Wednesday. The CAC40 and DAX30 fell by 0.59% and by 0.51% respectively, with the EuroStoxx600 ending the day down by 0.11%.

Market reaction to the 1st of the U.S Presidential Election live debates weighed on market risk appetite on the day.

The futures had been in the green ahead of the debate that kicked off in the early hours, European time. For the markets, a Trump victory is the favored outcome. While spending would be drastically cut, there would not be the tax hikes as promised by the Democrats. A lack of a clear winner from the debate and Biden’s lead in the polls was ultimately enough to leave the majors in the red.

Economic data were skewed to the positive on the day, supporting a brief bounce back into the green before a late reversal.

The Stats

It was a particularly busy end to the month on the Eurozone economic calendar.

Through the early part of the day, key stats included French and German retail sales figures for August and French inflation numbers.

Later in the session, German unemployment and prelim September inflation figures for Italy were in focus.

Consumer Spending

In Germany, retail sales rose by 3.1%, reversing a 0.20% decline from July. Economists had forecast a 0.4% rise.

From France, spending increased by 2.3%, reversing a 0.9% decline in July. Economists had forecast a 0.1% fall.

While the figures were positive, the pickup in new COVID-19 cases in September is expected to impact spending at the end of the quarter, however.

Unemployment

German Labor market conditions improved in September, with the unemployment rate falling from 6.4% to 6.3%. Economists had forecast for the unemployment rate to hold steady at 6.4%.

Unemployment fell by 8K, following a 9k decline in August, which was in line with forecasts.

Inflation

French and Italian inflation figures had a muted impact on the majors in spite of a pickup in deflationary pressures.

In France, consumer prices fell by 0.5% in September, according to prelim figures, following a 0.1% decline in August. The harmonized consumer price index fell by 0.6%, following a 0.1% slip in August.

From Italy, inflation figures were no better, with consumer prices falling by 0.6%. In August, consumer prices had risen by 0.3%.

The figures reaffirmed recent concern over a pickup in deflationary pressures and coincided with talk of a possible adjustment to the ECB’s policy objectives. ECB President Lagarde talked of the need to adjust the ECB’s objective on price stability.

From the U.S

It was a relatively busy day on the economic calendar. Key stats included finalized 2nd quarter GDP, Chicago PMI, and ADP nonfarm employment change figures.

According to finalized figures, the U.S economy contracted by 31.4% in the 2nd quarter. This was revised up from a prelim 31.7% contraction and forecasts.

Looking at the ADP numbers, non-farm employment increased by 749k, following a 481k rise in August. Economists had forecast a 650k increase.

Of less influence on the day was Chicago’s PMI for September, which jumped from 51.2 to 62.4.

In the early part of the day, the 1st U.S presidential debate garnered plenty of attention. The negative sentiment towards the debate also overshadowed upbeat economic data from China. Private sector activity in China continued to reflect a solid economic recovery from the COVID-19 lockdown early in the year.

The Market Movers

For the DAX: It was another mixed day for the auto sector on Wednesday. Continental slipped by 0.15% to buck the trend on the day. BMW and Volkswagen saw modest gains of 0.19% and 0.17% respectively, while Daimler rallied by 1.03%.

It was a bullish day for the bank. Deutsche Bank and Commerzbank rose by 1.49% and by 2.09% respectively.

From the CAC, it was also a mixed day for the banking sector. Credit Agricole and Soc Gen rose by 0.95% and by 2.63% respectively, while BNP Paribas slipped by 0.06%.

It was a mixed day for the French auto sector. Peugeot rose by 1.01%, while Renault ended the day with a 0.20% loss.

Air France-KLM rose by 2.28%, while Airbus SE fell by 0.83%.

On the VIX Index

The VIX saw green for a 2nd consecutive day on Wednesday, with the upside coming in spite of the gains across the U.S majors.

Following on from a 0.31% rise on Tuesday, the VIX gained 0.38% on Wednesday to end the day at 26.37.

The U.S majors managed to brush off the negative sentiment towards the U.S presidential debate. Hopes of a COVID-19 relief package delivered support for the majors on the day. Upbeat economic data also contributed, as nonfarm payroll and manufacturing data from Chicago impressed.

The Dow and S&P500 rose by 1.20% and by 0.83% respectively, with the NASDAQ ending the day up by 0.74%.

VIX 01/10/20 Daily Chart

The Day Ahead

It’s another busy day ahead on the Eurozone economic calendar.

On the economic data front, manufacturing PMIs from Italy and Spain will provide direction going into the European open.

Finalized manufacturing PMIs for France, Germany, and the Eurozone will also be in focus later this morning.

Barring any revisions to prelim numbers, however, expect Italy and the Eurozone’s PMI to have the greatest influence.

Eurozone unemployment figures due out later in the day should have a muted impact on the majors…

From the U.S, key stats include inflation, personal spending, weekly jobless claims, and the market’s preferred ISM manufacturing PMI.

Expect the ISM manufacturing PMI and the weekly jobless claims to have the greatest impact later in the day.

On the geopolitical risk front, U.S politics and Brexit will also be key drivers on the day.

The Futures

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

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

European Equities: A Month in Review – September 2020

The Majors

It was a relatively bearish end to the quarter for the European majors in September, with the downside coming off a bullish month of August.

A final week reversal left the majors in the red for the month. The DAX30 had been up by more than 2% before a downward trend kicked in from mid-month.

The DAX30 fell by 1.43%, partially reversing a 5.13% gain from August. Things were not much better for the CAC40 and EuroStoxx600, which ended the month down by 2.91% and by 1.48% respectively. In August, the CAC40 and EuroStoxx600 had risen by 3.42% and by 2.86% respectively.

September’s pullback left the CAC40 (-2.69%) in the red for the quarter. The DAX30 and EuroStoxx600 rose by 3.65% and by 0.21% respectively, however.

Mixed economic data once more tested market sentiment towards the global and Eurozone economic recovery.

Fresh spikes in new COVID-19 cases across the EU sounded the alarm bells as the summer came to an end. Concerns over the reintroduction of more stringent containment measures to curb the latest spike weighed.

Negative sentiment towards Brexit and the chances of both sides reaching an agreement added further pressure in the month.

The Stats

It was a busy month on the Eurozone economic calendar. Looking at the private sector PMIs, it was a mixed bag for the month once more.

Following disappointing August PMIs, September’s prelim PMIs delivered mixed results.

While manufacturing sector activity picked up, service sector activity contracted at the end of the quarter. With the ECB looking for a consumer-driven economic recovery, the service sector PMIs were a concern…

The Eurozone’s Service PMI fell from 50.5 to 47.6, with the composite PMI falling from 51.9 to 50.1.

Other stats were also mixed in the month.

Consumer and business sentiment saw marginal improvements in September. By contrast, deflationary pressures raised concerns, pressuring the European majors in the month.

At the end of the month, unemployment and consumer spending figures impressed, though provided little support. The pickup in new COVID-19 cases and further evidence of deflationary pressures countered the upbeat numbers.

Prelim inflation figures for September pointed to a pickup in deflationary pressures at the end of the quarter.

While economic data from the Eurozone failed to impress, stats from China continued to support the optimistic economic outlook.

From the U.S

Weekly jobless claims failed to continue to slide, raising concerns that the U.S economic recovery had hit a speed bump.

Non-manufacturing PMI numbers for August and prelim service sector PMIs for September also pointed to slower growth in the sector.

In spite of this, nonfarm payrolls continued to add, with the U.S unemployment rate falling to 8.4% in August.

Other positives in the month included a jump in consumer confidence and solid ADP nonfarm figures ahead of September NFP numbers tomorrow.

While the stats were somewhat mixed, Trump’s targeting of Chinese companies and chip suppliers continued to test market risk appetite.

There was some reprieve late in the month, with the court’s ruling to temporarily block Trump’s attempted ban on TikTok.

On the final day of the month, the 1st presidential debate also drew plenty of market attention… Ultimately, a disruptive debate weighed heavily on riskier assets at the end of the month.

Monetary Policy

On the monetary policy front, the FED was in action. Lower for longer was the message, with Powell highlighting economic uncertainty stemming from COVID-19.

Projections showed that interest rates would sit at close to zero until 2023, which caught the markets off-guard, weighing on riskier assets. There was also a revised framework, though much of the revisions had been telegraphed well in advance.

Later in the month, there was much the same from the FED Chair, who delivered testimony on Capitol Hill.

For the ECB, there were no major surprises, with the ECB also talking of economic uncertainty.

A hot topic in the September ECB press conference was EUR appreciation. The ECB President was quick to point out that the ECB does not target exchange rates. Lagarde did note, however, that price stability would continue to be monitored. The comments followed on from concerns raised over a pickup in deflationary pressures.

The Market Movers

For the DAX: It was a mixed month for the auto sector in September. Daimler led the way once more, rallying by 7.54%. BMW and Continental also found support, with gains of 2.08% and 1.19% respectively, while Volkswagen fell by 1.04%.

It was also a bearish month for the banks, however. Deutsche Bank slid by 11.08%, with Commerzbank ended the month down by 13.78%.

Another bank scandal contributed to the demise of the banks in the month.

From the CAC, it was a particularly bearish month for the banking sector. Soc Gen slumped by 16.64% to lead the way down. BNP Paribas and Credit Agricole weren’t far behind, with losses of 15.26% and 13.04% respectively.

It was a mixed month for the auto sector, however. Peugeot rose by 7.86%, while Renault slid by 6.92%.

Air France-KLM stumbled by 21.56%, as a result of the spike in new COVID-19 cases, with Airbus SE falling by 9.83%.

On the VIX Index

The VIX slipped by just 0.15% in September to market a 4th monthly decline in 6-months. Partially reversing a 7.97% gain from August, the VIX ended the month at 26.37.

The VIX had seen 4 consecutive months in the green that had led to its recent high 85.47 in March before the downward trend began in April.

Across the U.S equity markets, it was a bearish month in spite of a visit to fresh record highs at the start of the month. The Dow and the S&P500 fell by 2.28% and by 3.92% in September, with NASDAQ sliding by 5.16%.

VIX 01/10/20 Monthly Chart

The Month Ahead

It’s another busy month ahead on the Eurozone economic calendar.

After yet more mixed private-sector numbers for September, the markets will be looking for private sector activity to pick up.

The key to any pickup will be a continued improvement in consumer and business confidence. While employment conditions have improved, the latest spikes in new COVID-19 cases ahead of the winter months is a concern. The COVID-19 numbers will influence as winter dawns on Europe.

A failure for economic data to reflect improving economic conditions will test market risk appetite at the turn of the quarter.

On the geopolitical front, there’s never a dull moment. Both Brexit and the U.S Presidential Election will be front and center.

Expect Trump to continue to target China over trade and the COVID-19 pandemic throughout the month that could test already frayed relations.

For the Pound, the EUR, and the European majors, the EU and the UK government will be looking for a last-minute agreement. Failure to reach an agreement in the month may well leave Britain without a deal, which would be market negative.

European Equities: A Busy Economic Calendar and Geopolitics to Drive the Majors

Economic Calendar:

Wednesday, 30th September

German Retail Sales (MoM) (Aug)

French Consumer Spending (MoM) (Aug)

French CPI (MoM) September Prelim

French HICP (MoM) September Prelim

German Unemployment Change (Sep)

German Unemployment Rate (Sep)

Italian CPI (MoM) September Prelim

Eurozone Core CPI (YoY) September Prelim

Eurozone CPI (YoY) September Prelim

Thursday, 1st October

Spanish Manufacturing PMI (Sep)

Italian Manufacturing PMI (Sep)

French Manufacturing PMI (Sep) Final

German Manufacturing PMI (Sep) Final

Eurozone Manufacturing PMI (Sep) Final

Eurozone Unemployment Rate (Aug)

EU Leaders Summit

The Majors

It was a relatively bearish day for the European majors on Tuesday. Following Monday’s breakout, investors locked in profits ahead of a hectic Wednesday.

Uncertainty ahead of the 1st presidential debate had the majors on the defensive. The debate is scheduled to take place in the early hours of Wednesday morning, European time. Adding to the market angst on the day was the resumption of Brexit negotiations. Ahead of talks, both sides remained some way off from an agreement.

Economic data from the Eurozone had a muted impact, with inflation figures from Germany and Spain sending mixed signals.

While caution was the name of the game, news of progress towards the stalled COVID-19 relief Bill had limited the downside.

On Tuesday, the EuroStoxx600 fell by 0.52% to lead the way down. The CAC40 and DAX30 weren’t far behind, with losses of 0.23% and 0.35% respectively.

The Stats

It was a relatively quiet day on the Eurozone economic calendar. Key stats included September’s prelim inflation figures for Germany and Spain.

Spain

According to prelim figures, Spain saw deflationary pressures ease marginally in September. Consumer prices fell by 0.4%, year-on-year, following a 0.5% decline in August. Economists had forecast a decline of 0.5%.

By contrast, the harmonized consumer price index fell by 0.6%, following a 0.6% decline in August. Economists had forecast a 0.5% fall.

Germany

German consumer prices fell by 0.2% in September, month-on-month, following a 0.1% decline in August. Economists had forecast a 0.1% decline.

According to Destatis,

  • Year-on-year, consumer prices fell by 0.2% after having stalled in August. Economists had forecasted a 0.1% decline.

The Eurozone

From the Eurozone, the consumer confidence indicator came in at -13.9 according to finalized figures. This was in line with prelim and forecasts. In August, the indicator had stood at -14.7.

From the U.S

It was a busier day on the economic calendar, with the stats preceding the first of the 2020 presidential debates.

Economic data included July house price figures, August trade data, and consumer confidence figures for September.

In August, the U.S goods trade deficit widened from $80.11bn to $82.94bn. The widening came in spite of Trump continuing to put pressure on China to ramp up imports.

In spite of the widening, the data had a muted impact on the majors, however. House price figures for July also had a muted impact on the day.

Later in the session, however, consumer confidence was in focus. The CB Consumer Confidence Index jumped from 86.3 to 101.8. Economists had forecast a rise to 89.2. While the rebound didn’t return the index to March levels, it was a solid rebound in spite of plenty of economic uncertainties.

The Market Movers

For the DAX: It was a mixed day for the auto sector on Tuesday. BMW and Continental rose by 0.64% and by 0.04% respectively. Daimler and Volkswagen saw red, however, falling by 0.49% and by 0.32% respectively.

It was a bearish day for the bank. Deutsche Bank and Commerzbank fell by 2.67% and by 2.82% respectively.

From the CAC, bank stocks were back in the red. Soc Gen slid by 3.7%, with BNP Paribas and Credit Agricole ending the day down by 2.59% and by 2.32% respectively.

It was also a bearish day for the French auto sector. Peugeot and Renault slid by 3.19% and by 3.72% respectively.

Air France-KLM resumed its downward trend, falling by 2.79%, while Airbus SE rose by 0.45%.

On the VIX Index

A run of 3 consecutive days in the red came to an end for the VIX on Tuesday. Partially reversing a 0.72% decline from Monday, the VIX rose by 0.31% to end the day at 26.27.

Progress towards a relief Bill on Capitol Hill limited the downside as investors looked ahead to the 1st presidential debate.

The Dow and S&P500 both fell by 0.48%, with the NASDAQ ending the day down by 0.29%.

VIX 30/09/20 Daily Chart

The Day Ahead

It’s a particularly busy day ahead on the Eurozone economic calendar.

On the economic data front, stats from China will set the tone ahead of the European session.

The focus will then shift to French and German retail sales figures and unemployment figures for Germany.

Ahead of economic data from the U.S, inflation figures for France, Italy, and the Eurozone will also influence.

In a busy European session, retail sales and unemployment figures will likely garner the greatest interest, however.

From the U.S, it’s also a busy day ahead. Key stats include finalized 2nd quarter GDP numbers and Chicago’s PMI for September.

Of greater influence, however, will be September’s ADP non-farm employment change figures.

Away from the economic calendar, there is also plenty for the markets to consider.

Market reaction to the first presidential debate may well overshadow any stats ahead of the U.S open.

Later in the day, Brexit updates, progress towards a COVID-19 relief Bill, and further market reaction to the debate will influence.

The Futures

In the futures markets, at the time of writing, the Dow was up by 14 points, with the DAX up by 21 points.

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

European Equities: September Inflation and U.S Consumer Confidence in Focus

Economic Calendar:

Tuesday, 29th September

Spanish HICP (YoY) September Prelim

Spanish HICP (YoY) September Prelim

Eurozone Economic Sentiment

German CPI (MoM) September Prelim

Wednesday, 30th September

German Retail Sales (MoM) (Aug)

French Consumer Spending (MoM) (Aug)

French CPI (MoM) September Prelim

French HICP (MoM) September Prelim

ECB President Lagarde Speaks

German Unemployment Change (Sep)

German Unemployment Rate (Sep)

Italian CPI (MoM) September Prelim

Eurozone Core CPI (YoY) September Prelim

Eurozone CPI (YoY) September Prelim

Thursday, 1st October

Spanish Manufacturing PMI (Sep)

Italian Manufacturing PMI (Sep)

French Manufacturing PMI (Sep) Final

German Manufacturing PMI (Sep) Final

Eurozone Manufacturing PMI (Sep) Final

Eurozone Unemployment Rate (Aug)

The Majors

It was a particularly bullish day for the European majors on Monday. Bank shares led the way at the start of the week as investors looked for value following last week’s reversal.

News of Ping-An insurance announcing plans to increase its stake in HSBC drove HSBC and the broader sector northwards.

There were no material stats to spook the markets on the day.

The Stats

It was a quiet day on the Eurozone economic calendar. There were no material stats from the Eurozone to provide direction on Monday.

From the U.S

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

While there were no stats, the Court’s ruling to block Trump’s ban of Tiktok was positive for the markets following last week’s sell-off.

The Market Movers

For the DAX: It was a bullish day for the auto sector on Monday. Continental and Daimler rallied by 3.02% and by 3.05% to lead the way. BMW and Volkswagen weren’t far behind, with gains of 2.65% and by 2.86% respectively.

It was a particularly bullish day for the bank. Deutsche Bank and Commerzbank rallied by 5.59% and by 5.60% respectively.

From the CAC, bank stocks found much-needed support. Credit Agricole rallied by 5.78%, with BNP Paribas and Soc Gen ending the day up by 5.19% and by 5.03% respectively.

It was also a bullish day for the French auto sector. Peugeot and Renault jumped by 4.28% and by 7.12% respectively.

Air France-KLM eked out a 0.64% gain after a string of heavy losses, while Airbus SE ended the day with a 2.86% gain.

On the VIX Index

It was a 3rd consecutive day in the red for the VIX on Monday. Following on from a 7.47% slide on Friday, the VIX fell by 0.72% to end the day at 26.19.

Progress towards a relief Bill on Capitol Hill provided support as investors looked to jump back in after last week’s declines.

The Dow and S&P500 rose by 1.51% and by 1.61% respectively, with the NASDAQ ending the day up by 1.87%

VIX 29/09/20 Daily Chart

The Day Ahead

It’s a busier day ahead on the Eurozone economic calendar. Key stats include prelim September inflation figures from Germany and Spain and economic sentiment figures for the Eurozone.

Following negative sentiment towards August inflation figures, expect some market sensitivity to today’s numbers.

From the U.S, September consumer confidence figures will also draw attention.

Away from the economic calendar, the markets will need to keep an eye on the latest COVID-19 numbers. With Brexit talks set to resume today, any chatter from Brussels will also influence.

From the U.S, the markets will be looking for further progress on the relief Bill.

The Futures

In the futures markets, at the time of writing, the Dow was up by 85 points, with the DAX up by 42.5 points.

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