European Equities: Economic Data and the U.S Stimulus Bill in Focus

Economic Calendar:

Monday, 3rd August

Spanish Manufacturing PMI (Jul)

Italian Manufacturing PMI (Jul)

French Manufacturing PMI (Jul) Final

German Manufacturing PMI (Jul) Final

Eurozone Manufacturing PMI (Jul) Final

Wednesday, 5th August

Spanish Services PMI (Jul)

Italian Services PMI (Jul)

French Services PMI (Jul) Final

German Services PMI (Jul) Final

Eurozone Markit Composite PMI (Jul) Final

Eurozone Services PMI (Jul) Final

Eurozone Retail Sales (MoM) (Jun)

Thursday, 6th August

German Factory Orders (MoM) (Jun)

IHS Markit Construction PMI (Jul)

Friday, 7th August

German Industrial Production (MoM) (Jun)

German Trade Balance (Jun)

French Non-Farm Payrolls (QoQ) (Q2)

The Majors

It was another bearish day for the European majors on Friday, with the CAC40 sliding by 1.43% to lead the way. The DAX30 and EuroStoxx600 weren’t far behind, with losses of 0.54% and 0.89% respectively.

Negative sentiment towards the economic outlook weighed as the markets responded further to dire 2nd quarter GDP numbers.

The disappointing figures together with the upward trend in new COVID-19 cases continued to raise doubts over a speedy economic recovery.

In the week, Spain and the UK were amongst countries having to reintroduce containment measures.

The negative sentiment ultimately overshadowed upbeat tech earnings results on the day.

The Stats

It was another busy day on the Eurozone economic calendar. Key stats included 2nd quarter GDP from France and the Eurozone. June retail sales figures from France and Germany and Eurozone and member state prelim inflation figures were also in focus.

It was the GDP numbers that weighed, however. In the 2nd quarter, the French economy contracted by 13.8%, with the Eurozone economy contracting by 12.1%.

German retail sales rose by 5.9% in June, following a 12.7% jump in May, with French consumer spending up by 9.0%. In May, French consumer spending had surged by 37.4%.

While both sets of numbers came in ahead of forecasts there were not good enough to shift the mood.

From the U.S

Economic data included June’s personal spending and inflation figures. While inflationary pressures eased, personal spending was on the rise at the end of the quarter.

The increase was not enough to ease concerns over the U.S economic outlook, however.

Personal spending rose by 5.6%, while the annual rate of inflation softened from 1.0% to 0.90% In May, personal spending had jumped by 8.5%.

Late in the European session, finalized consumer sentiment figures were revised down, adding to the market angst.

The Market Movers

For the DAX: It was another particularly bearish day for the auto sector on Friday. Continental and Volkswagen slid by 5.00% and by 4.39% to lead the way down. BMW and Daimler saw more modest losses of 3.85% and 3.67% respectively.

Volkswagen continued to struggle after having reported an operating loss for the 1st half and a dividend cut on Thursday.

It was a mixed day for the banks, however. While Deutsche Bank fell by 0.38%, Commerzbank rose by 1.02%.

From the CAC, it was another bearish day for the banks. Soc Gen and Credit Agricole both fell by 1.43%, with BNP Paribas falling by 0.77%.

It was a more bearish day for the French auto sector. While Peugeot slid by 3.19%, Renault tumbled by a further 7.86% following a 9.26% slide on Thursday.

Air France-KLM joined the broader pack, falling by 2.35%, with Airbus SE ending the day down by 2.10%

On the VIX Index

It was a back into the red for the VIX on Friday. Partially reversing a 2.74% gain from Thursday, the VIX fell by 1.21% to end the day at 24.46.

The downside came as the U.S equity markets brushed off dire economic data in response to positive tech earnings results.

The S&P500 and NASDAQ rose by 0.77% and by 1.49% respectively, with the Dow gaining 0.44%.

VIX 03/08/20 Daily Chart

 

The Day Ahead

It’s a relatively busy day ahead on the Eurozone economic calendar. Key stats July manufacturing PMIs from Italy and Spain.

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

While the markets will focus on Germany’s numbers, expect Italy and the Eurozone’s PMIs to also influence.

From the U.S

The markets preferred ISM Manufacturing PMI and finalized Market Manufacturing PMI figures are due out.

Expect the ISM survey figures to have the greatest impact on the markets.

Away from the economic calendar, corporate earnings, and updates from Capitol Hill on the passage of the COVID-19 stimulus package will also influence.

From the weekend, COVID-19 updates were negative, however, which will test the markets early on.

The Latest Coronavirus Figures

According to figures at the time of writing, the number of new coronavirus cases rose by 249,532 to 18,231,469 on Sunday. On Saturday, the number of new cases had risen by 250,087. The daily increase was lower than Saturday’s rise while up from 213,347 new cases from the previous Sunday.

Germany, Italy, and Spain reported 623 new cases on Sunday, which was down from 707 new cases on Saturday. On the previous Saturday, 663 new cases had been reported.

From the U.S, the total number of cases rose by 50,702 to 4,813,647 on Sunday. On Saturday, the total number of cases had increased by 60,171. On Sunday, 26th July, a total of 56,130 new cases had been reported.

The Futures

In the futures markets, at the time of writing, the DAX was up by 7.5 points, while the Dow was down by 45 points. A pickup in manufacturing sector activity in China provided the DAX with support ahead of the open.

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

European Equities: A Month in Review – July 2020

The Majors

It was a mixed month for the European majors, with a final week sell-off reversing gains from earlier in the month.

The DAX30 ended the month up by just 0.02%, while the CAC40 and EuroStoxx600 fell by 3.49% and by 2.98% respectively.

Disappointing economic data from the Eurozone and the U.S, together with a mixed bag on the earnings front weighed late in the month.

Away from the economic calendar, U.S – China tensions and a 2nd wave of the COVID-19 pandemic added to the market angst.

For the European majors, EU member state agreement on the structure of the COVID-19 Recovery Fund had provided some support.

Coupled with news of progress towards a COVID-19 vaccine and positive economic data, the DAX30 had been up by as much as 7% before falling back to sub-13,000 levels.

The Stats

It was a busy month on the Eurozone economic calendar. July’s prelim private sector PMIs and 2nd quarter GDP number were the headline stats of the month.

While June had delivered a less gloomy picture, July delivered a mixed set of stats for the markets to consider.

In the early part of the month, economic data from Germany continued to deliver positive numbers, with factory orders and industrial production seeing further upside.

Mid-month prelim July private sector PMIs from France, Germany, and the Eurozone had also given the majors a boost.

The Eurozone’s Composite PMI rose from 48.5 to 54.8, according to prelim figures.

Late in the month, however, 2nd quarter GDP numbers for France, Germany, and the Eurozone weighed on the majors.

Germany’s economy contracted by 10.10%, France’s by 13.80%, and the Eurozone’s by 12.10% in the quarter.

From the U.S

While nonfarm payrolls, the weekly jobless claims, and private sector PMI numbers had provided support early in the month, it was the weekly jobless claims, consumer confidence, and 2nd quarter GDP numbers that weighed late in the month.

2 consecutive weekly jobless claims increases and a 32.9% contraction in the U.S economy weighed on risk appetite at the month-end.

Consumer confidence also weakened in July as the U.S struggled with a 2nd wave of the COVID-19 pandemic.

Geopolitics and a failure by the U.S government to pass through the 2nd COVID-19 stimulus package was also market negative.

Monetary Policy

On the monetary policy front, there were no surprises as the ECB left monetary policy unchanged. There had been reports of discord amongst members ahead of the meeting.

The FED also left monetary policy unchanged, while assuring the markets of continued and unwavering support.

The Market Movers

For the DAX: It was a bearish month for the auto sector. Continental and Volkswagen slid by 6.49% and by 7.78% respectively to lead the way down. BMW and Daimler saw more modest losses of 4.14% and 2.64% respectively.

It was a mixed month for the banks, however. Deutsche Bank slid by 10.51%, while Commerzbank ended the month up by 9.63%.

From the CAC, it was a bearish month for the banking sector. BNP Paribas and Credit Agricole fell by 3.53% and by 3.56% respectively, while Soc Gen slid by 12.30%.

It was also a bearish month for the auto sector. Peugeot fell by 5.80%, with Renault tumbling by 11.16%

Air France-KLM and Airbus SE also saw red, with the pair seeing losses of 13.49% and 2.38% respectively.

Corporate earnings contributed to the moves.

On the VIX Index

The VIX slid by 19.62% in July, delivering a 3rd month in the red out of 4. Reversing a 10.61% rise in June, the VIX ended the month at 24.46.

The VIX had seen 4 consecutive months in the green before the downward trend began in April.

Across the U.S equity markets, the S&P500 rose by 5.51%, with the Dow and NASDAQ gaining 2.38% and 6.82% respectively.

The FED and bank and tech stock earnings provided support amidst a rising number of new COVID-19 cases in the month.

The Month Ahead

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

An upward trend in the private sector PMIs through to August would need to continue to ease concerns of a further slowdown in the recovery.

The markets would need to continue to see a further pickup in both business and consumer confidence to support consumption.

Consumers would need to see improved labor market conditions, however, to fuel consumption and a service sector-driven economic recovery.

On the monetary policy front, expect the ECB to continue to assure the markets of further support.

From elsewhere, we continue to expect stats from the U.S and China to also garner plenty of attention and have plenty of influence.

Geopolitics and COVID-19 will also remain in focus. In July, Trump had looked to distract U.S voters, which led to a diplomatic spat with China. More of the same could be on the cards in the coming month.

On the Presidential Election front, Trump remains behind in the polls, which suggests more spin and distraction. In the final week of July, Trump had even tweeted a desire to delay the Presidential Election…

European Equities: A Week in Review – 01/08/20

The Majors

It was another bearish week for the European majors in the week ending 31st July. The DAX30 slid by 4.09% to lead the way down. It wasn’t much better for the CAC40 and EuroStoxx600, which saw losses of 3.49% and 2.98% respectively.

4 days in the red, including a heavy sell-off on Thursday, did the damage as economic data from Germany and the U.S weighed.

A continued rise in COVID-19 cases and a mixed bag on the corporate earnings front added to the market angst in the week.

The Stats

It was a busy week on the Eurozone economic calendar.

In a quiet first half of the week, however, stats were limited to Germany’s IFO Business Climate figures for July. Continued improvement in business sentiment delivered the only positive day for the DAX30 on Monday.

The markets then had to wait until Thursday for 2nd quarter GDP and July unemployment figures from Germany.

Germany’s economy contracted by 10.1% in the 2nd quarter, following a 2% contraction in the 1st quarter. Economists had forecast a 9% contraction. This was the largest decline since calculations began 50 years ago.

Year-on-year, the economy contracted by 11.7%, following a 1.8% contraction in the 1st quarter.

German Unemployment figures for July failed to provide support on the day, in spite of better than expected numbers. The unemployment rate held steady at 6.4%, with the number of unemployed falling by 18k.

On Friday, the French economy contracted by 13.8% in the 2nd quarter, with the Eurozone’s economy contracting by 12.1%.

June retail sales figures failed to provide support amidst the dire numbers, in spite of a further jump in sales. In France, consumer spending increased by 9%, following a 37.4% surge in May. German retail sales rose by 5.9%, following a 12.7% bounce in May.

Prelim inflation figures for July had a muted impact as the markets considered the economic woes. With a 2nd wave hitting the U.S and parts of the EU and Asia, the v-shaped recovery looks even less likely.

From the U.S

Stats were also skewed to the negative. Consumer confidence waned in July, with the CB Consumer Confidence Index hitting reverse.

Later in the week, initial jobless claims saw a 2nd consecutive weekly increase, with the U.S economy contracting by a whopping 32.9% in the 2nd quarter.

Things were not much better at the end of the week, with consumer sentiment revised down for July and inflationary pressures easing.

There were some pockets of positive, however. Durable goods and core durable goods orders continued to rise in June. Personal spending was also in recovery mode in June, though the 2nd wave pandemic could weigh on spending in July.

The Market Movers

From the DAX, it was a particularly bearish week for the auto sector. Volkswagen and Continental slid by 12.02% and 9.77% respectively to lead the way down. Things were not much better for BMW and Daimler, which saw losses of 8.88% and 6.33% respectively.

It was another bearish week for the banking sector. Commerzbank slid by 5.15%, with Deutsche Bank tumbling by 8.12%.

From the CAC, it was also a bearish week for the banks. Soc Gen tumbled by 11.64% to lead the way down. BNP Paribas and Credit Agricole weren’t far behind with losses of 8.13% and 8.75% respectively.

It was a particularly bearish week for the French auto sector, which reversed gains from the previous week. While Peugeot slid by 8.09%, the markets punished Renault, which slumped by 20.52% in the week.

Air France-KLM slid by 12.40%, while Airbus saw a more modest 3% loss in the week.

Earnings contributed to the moves in the week.

Renault reported a record net loss for the 1st half of the year. Volkswagen slashed its dividend off the back of an operating profit loss.

BNP Paribas fared better, with higher trading volumes providing support. The bank reported a net income loss for the 2nd quarter, however.

On the VIX Index

It was back into the red for the VIX, which saw its 6th week in the red out of 7. Reversing a 0.62% gain from the previous week, the VIX fell by 5.34% to 24.46 in the week ending 31st July.

The S&P500 and the NASDAQ ended the week up by 1.73% and by 3.69% respectively, while the Dow fell by 0.16%.

While economic data from the U.S was particularly dire, tech stocks delivered impressive quarterly earnings in the week. Mid-week, the FED had also delivered much-needed support, assuring the markets of continued support.

The Week Ahead

It’s another busy week on the Eurozone economic calendar.

The lion’s share of the stats is due out in the 1st half of the week. July private sector PMIs for Italy and Spain and finalized PMIs for France, Germany, and the Eurozone are in focus.

With Spain getting hit by a 2nd wave of the pandemic, there will be plenty of interest in the numbers. Ultimately, however, expect the Eurozone’s Service and Composite to garner the greatest attention.

In the 2nd half of the week, Germany is back in focus. June factory orders, industrial production, and trade data are due out.

Following last week’s GDP numbers, the stats will need to be impressive to ease the pain…

From the U.S

It is also a particularly busy week ahead.

Key stats include ISM private sector PMIs for July, the weekly jobless claims, and nonfarm payrolls.

From Elsewhere

Private sector PMIs and trade data from China will also influence in the week.

Away from the economic calendar, however, COVID-19 news and progress towards the U.S stimulus package will also influence. As always, there is also the simmering tension between the U.S and China to monitor.

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

Economic Calendar:

Friday, 31st July

French GDP (QoQ) (Q2)

German Retail Sales (MoM) (Jun)

French Consumer Spending (MoM) (Jun)

French CPI m/m (Jul) Prelim

French HICP m/m (Jul) Prelim

Spanish GDP (QoQ) (Q2)

Italian CPI (MoM) (Jul) Prelim

Eurozone CPI (YoY) (Jul) Prelim

Eurozone Core CPI y/y (Jul) Prelim

Eurozone GDP q/q (Q2) 1st Estimate

Eurozone GDP y/y (Q2) 1st Estimate

The Majors

It was a particularly bearish day for the European majors, with the DAX falling a to 1-month lows on Thursday.

The DAX30 slid by 3.45% to lead the way down, with the CAC40 and EuroStoxx600 falling by 2.13% and 2.16% respectively.

Particularly dire economic data from Germany and the U.S, corporate earnings weighed on the European majors. Trump’s tweet of considering a delay to the U.S Presidential Election added the market angst on the day.

The Stats

It was a busy day on the Eurozone economic calendar. Key stats included 2nd quarter GDP and July unemployment figures from Germany.

The Eurozone’s unemployment figures for June and prelim July inflation figures from Germany had a muted impact on the day.

Germany’s economy contracted by 10.1% in the 2nd quarter, following a 2% contraction in the 1st quarter. Economists had forecast a 9% contraction. This was the largest decline since calculations began 50 years ago.

According to Destatis,

  • An unprecedented slump in exports and imports of goods and services, household final consumption expenditures, and capital formation in machinery and equipment contributed.
  • General government raised its final consumption expenditure, however.

Year-on-year, the economy contracted by 11.7%, following a 1.8% contraction in the 1st quarter. Economists had forecast a 10.9% contraction.

On the positive, however, were better than expected German unemployment figures for July. The unemployment rate held steady at 6.4%, with the number of unemployed falling by 18k, following a 68k rise in June. Economists had forecast a 43k rise in the unemployed and for the unemployment rate to increase to 6.5%.

From the U.S

Late in the European session, 2nd quarter GDP and the weekly jobless claims were in focus.

In the 2nd quarter, the U.S economy contracted by a whopping 32.9%, following a 5% contraction in the 1st quarter. Economists had forecast a 34.1% contraction. Though this was of little consolation.

The weekly jobless claims were also on the rise once more. In the week ending 24th July, initial jobless claims rose by 1.434m, following a 1.422m jump from the previous week. Economists had forecast a 1.450m increase.

The Market Movers

For the DAX: It was a particularly bearish day for the auto sector on Thursday. Volkswagen slumped by 5.96% to lead the way down, with Continental sliding by 3.71%. BMW and Daimler saw more modest losses of 2.56% and 2.95% respectively.

Volkswagen reported an operating loss for the 1st half, while also slashing its dividend, which weighed heavily on the day.

It was another bearish day for the banks. Deutsche Bank fell by 2.65%, with Commerzbank sliding by 4.52%.

From the CAC, it was a particularly bearish day for the banks. Soc Gen and Credit Agricole slid by 5.07% and 4.69% respectively, with BNP Paribas falling by 3.97%.

It was even worse for the French auto sector. While Peugeot slid by 4.80%, Renault tumbled by 9.26%, off the back of a record net loss for the 1st half of the year.

Air France-KLM joined the broader pack, sliding by 4.59%, while Airbus SE bucked the trend, rising by 1.87%.

The upside for Airbus came in spite of second-quarter revenue sliding by 55%. Better than expected FCF and plans not to erode FCF in the 2nd half of the year supported the upside.

On the VIX Index

It was a back into the green for the VIX on Thursday. Partially reversing a 5.72% loss from Wednesday, the VIX rose by 2.74% to end the day at 24.76.

Particularly dire 2nd quarter GDP numbers and a 2nd consecutive rise in U.S initial jobless claims weighed on the S&P500 and the Dow.

U.S President Trump’s tweet of considering a delay to the November Presidential Election didn’t help…

The S&P500 and Dow fell by 0.38% and by 0.85% respectively, while the NASDAQ rose by 0.43%. The upside for the NASDAQ came in anticipation of earnings from Alphabet, Amazon.inc, Apple, and Facebook after the market close.

VIX 31/07/20 Daily Chart

The Day Ahead

It’s another busy day ahead on the Eurozone economic calendar. Key stats include 2nd quarter GDP numbers from France, Spain, and the Eurozone. June’s consumer spending and retail sales figures for France and Germany will also draw attention.

Prelim June inflation figures for France, Italy, and the Eurozone are also due out but will likely have a muted impact.

On the earnings front, BNP Paribas and Air France KLM are also in focus on the day.

From the U.S

June’s personal spending and inflation figures, together with finalized July consumer sentiment figures are due out.

Earlier in the day, China’s private sector PMIs for July could influence the mood.

Away from the numbers, tech stocks will likely get a boost following better than expected earnings results after the U.S close.

There is also the expiration of the U.S enhanced federal unemployment insurance policy to consider. With another jump in jobless claims, disagreement on Capitol Hill risks a further delay to the stalled COVID-19 stimulus package.

When considering the state of the U.S economy and the continued spread of COVID-19, even the passing of the stimulus package may not be enough…

The Latest Coronavirus Figures

According to figures at the time of writing, the number of new coronavirus cases rose by 268,725 to 17,440,017 on Thursday. On Wednesday, the number of new cases had risen by 287,638. The daily increase was lower than Wednesday’s rise and down from 270,301 new cases from the previous Thursday.

Germany, Italy, and Spain reported 4,022 new cases on Thursday, which was up from 3,179 new cases on Wednesday. On the previous Thursday, 3,593 new cases had been reported.

From the U.S, the total number of cases rose by 58,655 to 4,626,692 on Thursday. On Wednesday, the total number of cases had increased by 69,828. On Thursday, 23rd July, a total of 69,116 new cases had been reported.

The Futures

In the futures markets, at the time of writing, the Dow was up by 169 points.

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

How Far Is Another S&P 500 Upleg?

The good-bye kiss of the line connecting the early June highs indeed meant no farewell at all. Stocks rose in the runup to the Fed, and extended gains in its aftermath. Are the signs that made me merely cautiously optimistic about the bullish resolution, gone now?

The technical picture certainly cleared up with the credit markets moving higher and technology not having a really bad day either. Will its consolidation make it through the earnings report batch later today? Semiconductors hint at a rather constructive outcome, and my yesterday’s sectoral observations remain true also today:

(…) Technology is holding up, semiconductors aren’t weakening relatively to the sector, and the rotation into healthcare, materials, and industrials is very much on. The defensives (utilities and consumer staples) are also improving their posture. Consumer discretionaries are firm, and financials are getting better relative to the index.

Let’s check the other building blocks in the outlook assessment.

S&P 500 in the Short-Run

I’ll start with the daily chart perspective (charts courtesy of http://stockcharts.com ):

Yesterday’s close above the early June highs on rising volume is a bullish turn of events as stocks continue their chop around the horizontal blue line. The Fed didn’t really surprise yesterday, and stocks liked the message of continued support – in line with the yesterday-mentioned dynamic:

(…) Regardless of the real action in precious metals (canary in the coal mine), the Fed would err on the side of not fighting inflation too soon. And thus far fighting the deflationary corona effects, the stimulus is winning and being embraced with open arms by stocks.

So, I think that the bears would be getting ahead of themselves expecting a lasting downturn right now – I treat the consolidation as one with a higher likelihood of a bullish resolution than a bearish one.

Today’s frightening advance Q2 GDP and poor unemployment data are likely to be brushed aside during the regular session’s trading – I see the focus as being rather on the upcoming stimulus details and tech earnings.

Let’s check the credit market performance.

The Credit Markets’ Point of View

High yield corporate bonds (HYG ETF) regained ground yesterday, and on promising volume (please see this and many more charts at my home site). The Fed didn’t disappoint, and the sideways consolidation has indeed been resolved with an upswing. The move higher is confirmed by rising investment grade corporate bonds (LQD ETF). The pre-Fed gyrations appear to be over, and with the settling dust, I look for a renewed uptrend.

Both the leading credit market ratios – high yield corporate bonds to short-term Treasuries (HYG:SHY) and investment grade corporate bonds to longer-dated Treasuries (LQD:IEI) – are moving in lockstep again. The short-term weakness is about to give way to another advance in my opinion.

The overlaid S&P 500 closing prices (black line) reveal the extent of stocks taking the cue from the HYG:SHY ratio. The 500-strong index is recovering from its recent soft patch, and is ready to extend gains in case HYG:SHY moves up again. And the ratio’s upcoming rise isn’t a far-fetched idea. The similarity to its early July chop is again being resolved with an upswing.

Smallcaps, Emerging Markets and S&P 500 Market Breadth

The Russell 2000 (IWM ETF) is trading with solidly bullish undertones. Yesterday’s rising volume brought its closing prices farther away from the 200-day moving average, and smallcaps continue trading closer to their early July highs than the S&P 500. Such a very short-term outperformance can turn into more than a few days’ affair, benefitting the stock bulls broadly.

Mirroring the technology consolidation in a way, the emerging markets (EEM ETF) aren’t going pretty much anywhere. The fact that they aren’t selling off though, points to a floor below stock prices these days.

Volatility ($VIX) has moved to the lower border of its falling wedge, and doesn’t scream that an upside breakout is knocking on the door. As a result, it won’t likely influence the prevailing direction in stocks much. And that points to the S&P 500 upswing continuation.

Summary

Summing up, yesterday’s S&P 500 rebound rekindled the bullish spirits, and the credit market posture coupled with market breadth improvements (both the advance-decline line and advance-decline volume are encouraging) reflect that precisely. Expecting the stimulus details, stocks are likely to shake off yesterday-mentioned fundamental risks and leave the effects of stalling job market and horrific GDP decline in the rear view mirror. With the Fed perceived as having the markets’ back, the path of least resistance still remains chiefly higher. Today’s tech heavyweights’ earnings will be THE bellwether speaking with a decisive tone, and I keep being cautiously optimistic.

Thank you for reading today’s free analysis. I encourage you to sign up for our daily newsletter – it’s absolutely free and if you don’t like it, you can unsubscribe with just 2 clicks. If you sign up today, you’ll also get 7 days of free access to the premium daily Stock Trading Alerts as well as our other Alerts. Sign up for the free newsletter today!

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

Thank you.

Monica Kingsley
Stock Trading Strategist
Sunshine Profits: Analysis. Care. Profits.

* * * * *

All essays, research and information found above represent analyses and opinions of Monica Kingsley and Sunshine Profits’ associates only. As such, it may prove wrong and be subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Monica Kingsley and her associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Ms. Kingsley is not a Registered Securities Advisor. By reading Monica Kingsley’s reports you fully agree that she will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Monica Kingsley, Sunshine Profits’ employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.

 

European Equities: Earnings, Economic Data, and the U.S Stimulus Package in Focus

Economic Calendar:

Thursday, 30th July

German GDP (QoQ) (Q2)

German GDP (YoY) (Q2)

German Unemployment Change (Jul)

German Unemployment Rate (Jul)

Eurozone Unemployment Rate (Jun)

German CPI (MoM) (Jul) Prelim

Friday, 31st July

French GDP (QoQ) (Q2)

German Retail Sales (MoM) (Jun)

French Consumer Spending (MoM) (Jun)

French CPI m/m (Jul) Prelim

French HICP m/m (Jul) Prelim

Spanish GDP (QoQ) (Q2)

Italian CPI (MoM) (Jul) Prelim

Eurozone CPI (YoY) (Jul) Prelim

Eurozone Core CPI y/y (Jul) Prelim

Eurozone GDP q/q (Q2) 1st Estimate

Eurozone GDP y/y (Q2) 1st Estimate

The Majors

It was a mixed day for the European majors on Wednesday. The CAC30 rose by 0.60%, while the DAX30 and EuroStoxx600 ended the day with losses of 0.10% and 0.06% respectively.

The majors were largely in a holding pattern ahead of the FED’s monetary policy decision and the all-important press conference. Hopes of the FED assuring unwavering support propped up the European majors mid-week.

Earnings were also in focus on the day, however. While the CAC40 found support, the DAX30 struggled off the back of sentiment towards the latest batch of results.

The Stats

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

From the U.S

Late in the European session, June trade data and pending home sales had a muted impact on the European majors.

The markets were holding out for the FED and the FOMC press conference scheduled for after the European close.

The Market Movers

For the DAX: It was a mixed day for the auto sector on Wednesday. BMW and Volkswagen fell by 2.17% and by 1.38% respectively to lead the way. Continental fell by a more modest 0.82%, while Daimler bucked the trend, rising by 0.90%.

It was a bearish day for the banks. Deutsche Bank and Commerzbank ended the day down by 3.11% and by 1.44% respectively. For Deutsche Bank, while the bank beat earnings forecasts, concerns over what lies ahead weighed, as provisions for bad loans were ramped up.

From the CAC, it was a bearish day for the banks. Soc Gen slid by 2.67%, with BNP Paribas and Credit Agricole falling by 1.02% and by 1.10% respectively.

It was also a bearish day for the French auto sector. Peugeot and Renault slid by 3.05% and by 3.31% respectively.

Air France-KLM and Airbus SE also struggled, with the pair ending the day with losses of 0.29% and 2.62% respectively.

On the VIX Index

It was a 3rd day in the red from 4 for the VIX on Wednesday. Reversing a 2.83% gain from Tuesday, the VIX fell by 5.27% to end the day at 24.10.

Late in the U.S session, the FED Chair Powell’s promise of continued support and no intention to move rates northwards delivered support.

Hopes were for a dovish FED and, with the continued rise in new COVID-19 cases, the markets got the FED’s commitment.

The S&P500 and NASDAQ rose by 1.24% and by 1.35% respectively, with the Dow gaining a more modest 0.61%.

VIX 30/07/20 Daily Chart

The Day Ahead

It’s a busy day ahead on the Eurozone economic calendar. Key stats include 2nd quarter GDP and July unemployment numbers for Germany.

German inflation prelim inflation figures for July and Eurozone unemployment numbers are also due out.

We expect Germany’s GDP and unemployment figures to have the greatest impact on the day.

On the earnings front, Total, Airbus Grp, and Renault are also in focus on the day.

From the U.S

2nd quarter GDP numbers and the weekly jobless claims figures are due out. While we can expect the GDP numbers to influence, disappointing claims figures would weigh heavily on risk appetite.

Outside of the numbers, expect COVID-19 numbers, geopolitics, and updates on the U.S stimulus package to also influence.

Going into the European open, the FED’s assurances of unwavering commitment should deliver some early support, however.

The Latest Coronavirus Figures

According to figures at the time of writing, the number of new coronavirus cases rose by 263,777 to 17,147,431 on Wednesday. On Tuesday, the number of new cases had risen by 241,391. The daily increase was higher than Tuesday’s rise while down from 288,688 new cases from the previous Wednesday.

Germany, Italy, and Spain reported 3,179 new cases on Wednesday, which was up from 2,602 new cases on Tuesday. On the previous Wednesday, 2,217 new cases had been reported.

From the U.S, the total number of cases rose by 56,571 to 4,554,780 on Wednesday. On Tuesday, the total number of cases had increased by 64,799. On Wednesday, 22nd July, a total of 72,306 new cases had been reported.

The Futures

In the futures markets, at the time of writing, the Dow was up by 13 points.

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

Technical Patterns, Future Expectations and More – Part II

Continuing this multi-part research article, today we are going to explore some more immediate (shorter-term) technical setups.  If you missed the first part of this research article, please take a minute to review it before continuing because there is quite a bit of information and related article links that are very important for you to understand this next article. You can view it here.

In the first part of this article, we discussed how our team evaluates a proper market perspective and how we build a consolidated narrative for our subscribers.  Some times, it is not easy for us to build a suitable narrative or decide on risk factors as our team may not completely agree with one another.  At times like this, we’ll often decide that no action is better than taking any action at all.  Generally, though, our team is able to adopt a consensus narrative related to portfolio allocation levels, general market trends and specific target trade setups for the next 5 to 10+ trading days.

The Technical Traders services’ primary objective is to protect assets while attempting to deliver success with trading signals that generate consistent profits.  We care, very deeply, about our members and their success.  Our team has a combined experience in the markets of over 55+ years, and have lived through various market and economic scenarios going back over 35+ years. We have also had the opportunity to learn from some of the best technicians and analysts on the planet.  We publish our public research for two primary reasons: a) to assist our friends and followers, and b) to publically document our future calls and predictions – putting our necks on the line every time we publish anything to the general public.

When we develop a narrative for our members, we internally discuss longer-term and shorter-term expectations as well as to identify concerns or risks that we see as evident in the markets or setups that are present today.  As we suggested in Part I of this article, we don’t try to over trade and are very selective in our trades. We also have processes in place to ensure we have found the right risk /reward ratio prior to initiating new trades.  If we miss a move – we won’t chase it – there will always be other trades setting up for us to capture new profits for our members. We see some interesting events unfolding that will undoubtedly lead to some fantastic trades.

PUT/CALL RATIO SHOWS SELLERS LINING UP

A screen shot of a computer Description automatically generated

The chart above highlighting the PUT/CALL ratio suggests sellers are lining up near recent highs, expecting the markets to roll over as the Q2 earnings and data are released.  It makes sense that the data could be somewhat bearish in nature given the potential destruction of earnings and revenues in Q2.  It also makes sense that near recent highs, as the S&P 500 and Dow Jones have recently rolled into a sideways consolidation, that skilled traders would pull profits near these levels and initiate new Put Options trades to hedge any downside risks in the future.

Gold and Silver recently fired a very large warning shot for anyone paying attention.  The US Dollar has continued to weaken and Crude Oil may begin a new downside price trend if the economic data suggests a broader contraction in the US economy.  What all this means is that skilled traders and others are losing their bullish bias in the markets and are starting to become protective – expecting some type of new trend to setup.

Our researchers believe a downside price move targeting the $252 level on the SPY is not out of the question. Recall the $252 level is a price level that corresponds with economic expectations as of late 2017.  These levels represent a fairly nominal price correction that would still be considered moderate bullish overall.  Any deeper price move would indicate the markets are completely disconnected with future expectations for the rest of the year and possibly further out into the future.

VIX BACK AT FEBRUARY FEAR LEVELS

The VIX is trading at levels that indicate the level of fear in the markets has recovered to historically moderately high levels (near 25.00) – see the chart below.  Volatility is still a major factor in the markets and any change in trend could be aggressive and violent – sending VIX above 40.00 again.  We believe this new low level in the VIX is indicative of complacency in the markets and with the current bullish price trend.  Complacency in the markets tends to lead to very aggressive price corrections.  We believe skilled technical traders should adopt a very cautious stance going forward and protect open long positions exposed to risk.

A screen shot of a computer Description automatically generated

If the markets begin to breakdown on the Q2 GDP and Consumer data that will be released on Thursday, July 30, 2020, then the VIX will begin to move dramatically higher. In this situation, stop levels just below the current market price levels will begin to become targets.  We can also expect to experience a similar event as that of February 2020, a type of flash-crash where a -12 to -18% downside price move could happen over a matter of days – not weeks.

Pay attention to what happens in the Transportation Index and with Crude Oil and Gold and Silver.  Our researchers follow these as early warning triggers for what may come.  Additionally, our cycle research suggests a bottom in the markets will likely form in 2022 to 2023 – thus we may have quite a bit of sideways or downside price action ahead of us before a true market bottom completes.  At this point, in order for our cycle research to become valid, we would need to see a downside price move that substantiates the cycle predictions.

Right now, the advice we continue to provide to our members is to be patient, protect your profits and assets, and prepare for more volatility and risks.  This is not the time to play games with your capital and we strongly believe this is not the time to “buy the dips”.  A bigger price pattern is setting up in the markets and many traders simply ignore these broader technical patterns.  You can read more about these types of patterns in one of our recent research posts that explains the selloff structure. You can also see why we think gold will break out and silver will go ballistic once the stock market bottoms.

We hope you’ve found this multi-part research article helpful and informative.  Remember, read our research and determine if you like and agree with our conclusions.  Even if you don’t agree, pay attention to what we are suggesting.  You never know, it might lead you to make a decision that could help you protect your assets, find a new opportunity or, at the very least, help to keep you better informed – and that is our ultimate goal.  We put this effort into publishing these public research articles every day to help you stay ahead of the biggest moves in the markets.

See the articles listed above and read them to learn more about how we see the future unfolding. We believe you won’t find any better research or analysis anywhere on the web than what we offer and we urge you to take advantage of our member/subscriber services when you are ready.  The next 24 months are going to be really crazy – get ready for some really great opportunities.

Get our Active ETF Swing Trade Signals or if you have any type of retirement account and are looking for signals when to own equities, bonds, or cash, be sure to become a member of my Passive Long-Term ETF Investing Signals which we are about to issue a new signal for subscribers.

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

Chris Vermeulen
Chief Market Strategist
Founder of Technical Traders Ltd.

NOTICE: Our free research does not constitute a trade recommendation or solicitation for our readers to take any action regarding this research.  It is provided for educational purposes only.  Our research team produces these research articles to share information with our followers/readers in an effort to try to keep you well informed.  Visit our web site (www.thetechnicaltraders.com) to learn how to take advantage of our members-only research and trading signals.

European Equities: Futures see Red with U.S Monetary and Fiscal Policy in the Spotlight

Economic Calendar:

Thursday, 30th July

German GDP (QoQ) (Q2)

German GDP (YoY) (Q2)

German Unemployment Change (Jul)

German Unemployment Rate (Jul)

Eurozone Unemployment Rate (Jun)

German CPI (MoM) (Jul) Prelim

Friday, 31st July

French GDP (QoQ) (Q2)

German Retail Sales (MoM) (Jun)

French Consumer Spending (MoM) (Jun)

French CPI m/m (Jul) Prelim

French HICP m/m (Jul) Prelim

Spanish GDP (QoQ) (Q2)

Italian CPI (MoM) (Jul) Prelim

Eurozone CPI (YoY) (Jul) Prelim

Eurozone Core CPI y/y (Jul) Prelim

Eurozone GDP q/q (Q2) 1st Estimate

Eurozone GDP y/y (Q2) 1st Estimate

The Majors

It was another mixed day for the European majors on Tuesday. The EuroStoxx600 ended the day up by 0.42%, while the CAC40 and DAX30 fell by 0.22% and by 0.03% respectively.

As the markets continued to grapple with COVID-19 and geopolitics, the progress of the COVID-19 stimulus package also tested support.

Earnings delivered mixed results. While Peugeot reported profit, LVMH slumped in response to some quite dire results.

The Stats

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

From the U.S

Late in the European session, July’s CB Consumer Confidence figures were in focus.

The CB Consumer Confidence Index fell from 98.3 to 92.6. Economists had forecast a decline to 94.5.

May house price figures had a muted impact on the majors later in the day.

The Market Movers

For the DAX: It was a bearish day for the auto sector on Tuesday. BMW, Continental, and Volkswagen saw losses of 0.60%, 0.22%, and 0.24% respectively. Daimler slid by 1.38%, however, reversing a trend-bucking 0.62% gain from Monday.

It was a mixed day for the banks. While Deutsche Bank fell by 0.44%, Commerzbank ended the day with a 0.51% gain.

From the CAC, it was a mixed day for the banks. Soc Gen and Credit Agricole rose by 0.25% and by 0.86% respectively. BNP Paribas bucked the trend with a 0.40% loss.

It was another mixed day for the French auto sector. Peugeot rose by 2.42% following better than expected earnings, while Renault fell by 1.55%.

Air France-KLM continued to struggle, falling by 0.77% following a 4.97% slide on Monday. Airbus SE found support, however, rallying by 3.12%.

LVMH was amongst the worst performers, falling by 4.07% in response to dire earnings results and a negative near-term outlook.

On the VIX Index

It was back into the green for the VIX on Tuesday, following 2 consecutive days in the red. Partially reversing 4.26% decline from Monday, the VIX rose by 2.83% to end the day at 25.44.

Market apprehension hit the U.S equity markets on Tuesday as the markets monitored the progress of the COVID-19 stimulus package.

A proposed cut to unemployment benefits amidst unprecedented unemployment levels soured the mood.

The S&P500 and Dow fell by 0.65% and by 0.77% respectively, with the NASDAQ sliding by 1.27%.

VIX 29/07/20 Daily Chart

The Day Ahead

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

A lack of stats will leave the majors in the hands of corporate earnings, geopolitics, and sentiment towards U.S monetary and fiscal policy.

On the corporate earnings front, Deutsche Bank is scheduled to release its earnings.

From the U.S

June’s goods trade data and pending home sales figures are due out. We would expect the numbers to have a muted impact on the European majors, however.

The FED is in action after the European close and will need to assure the markets that there is more left in the war chest. Some apprehension is to be expected.

Any chatter from the U.S and China, the U.S COVID-19 stimulus package, and the latest COVID-19 figures will influence.

The Latest Coronavirus Figures

According to figures at the time of writing, the number of new coronavirus cases rose by 241,391 to 16,883,654 on Tuesday. On Monday, the number of new cases had risen by 229,469. The daily increase was higher than Monday’s rise and up from 240,565 new cases from the previous Tuesday.

Germany, Italy, and Spain reported 2,602 new cases on Tuesday, which was down from 7,167 new cases on Monday. On the previous Tuesday, 1,889 new cases had been reported.

From the U.S, the total number of cases rose by 64,799 to 4,498,209 on Tuesday. On Monday, the total number of cases had increased by 61,571. On Monday, 21st July, a total of 67,140 new cases had been reported.

The Futures

In the futures markets, at the time of writing, the DAX was down by 45.5 points, while the Dow was up by 20 points.

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

European Equities: U.S Stats, Stimulus, and COVID-19 in Focus

Economic Calendar:

Thursday, 30th July

German GDP (QoQ) (Q2)

German GDP (YoY) (Q2)

German Unemployment Change (Jul)

German Unemployment Rate (Jul)

Eurozone Unemployment Rate (Jun)

German CPI (MoM) (Jul) Prelim

Friday, 31st July

French GDP (QoQ) (Q2)

German Retail Sales (MoM) (Jun)

French Consumer Spending (MoM) (Jun)

French CPI m/m (Jul) Prelim

French HICP m/m (Jul) Prelim

Spanish GDP (QoQ) (Q2)

Italian CPI (MoM) (Jul) Prelim

Eurozone CPI (YoY) (Jul) Prelim

Eurozone Core CPI y/y (Jul) Prelim

Eurozone GDP q/q (Q2) 1st Estimate

Eurozone GDP y/y (Q2) 1st Estimate

The Majors

It was a mixed start the week for the European majors on Monday. While the DAX30 ended the day up by 60 points, the CAC40 and EuroStoxx600 fell by 0.34% and by 0.31% respectively.

U.S – China tensions continued to pin back the European majors on the day. The upward trend in new COVID-19 cases also weighed as the UK announced quarantine measures for travelers returning from Spain.

The news weighed on the travel sector. It also highlighted the realities of the 2nd wave that has hit a rising number of countries.

With economic data on the lighter side, there was little to distract attention on the day.

The Stats

It was a relatively quiet day on the Eurozone economic calendar. Key stats included Germany’s Ifo Business climate index numbers for July.

In July, the Business Climate Index rose from 86.3 to 90.5, marking a 3rd consecutive monthly increase. Economists had forecast a rise to 89.3.

According to the July report,

  • By sector, the improvement in the business climate was broad-based.
  • Sentiment towards the economy improved, with the Current Assessment sub-Index rising from 81.3 to 84.5. Economists had forecast a rise to 85.0, however.
  • For the markets, there was also a marked improvement in business expectations. The sub-index jumped from 91.4 to 97.0, coming in well above a forecasted 93.7.

From the U.S

June’s durable goods and core durable goods orders delivered mixed results.

Month-on-month, core durable goods orders rose by 3.30% in June, falling short of a forecasted 3.5% rise. In May, core orders had risen by 3.6%.

Durable goods orders were more aligned with expectations, however. In June durable goods orders rose by 7.3%, following a 15.1% jump in May. Economists had forecast a 7.2% rise.

The Market Movers

For the DAX: It was another mixed day for the auto sector on Monday. BMW, Continental, and Volkswagen fell by 0.27%, 0.66%, and by 0.62% respectively. Daimler bucked the trend, with a 0.62% gain.

It was a bearish day for the banks. Deutsche Bank slid by 1.84%, with Commerzbank ending the day with a 0.72% loss.

From the CAC, it was another bearish day for the banks. Soc Gen slid by 3.78% to lead the way down. BNP Paribas and Credit Agricole ended the day down by 2.22% and by 2.07% respectively.

It was a mixed day for the French auto sector. Peugeot rose by 0.47%, while Renault slipped by 0.18%.

Air France-KLM and Airbus SE slid by 4.97% and by 3.14% respectively.

On the VIX Index

It was a 2nd consecutive day in the red for the VIX on Monday. Following a 0.92% decline on Friday, the VIX fell by 4.26% to end the day at 24.74.

The downside came as the markets continued to consider the rising tensions between the U.S and China and COVID-19.

Supporting the U.S equity markets was the hope of further fiscal stimulus support amidst the latest spike in new COVID-19 cases.

There was talk of some progress towards an agreement between Republicans on the next COVID-19 stimulus package.

The S&P500 and Dow rose by 0.74% and 0.43% respectively, with the NASDAQ rallying by 1.67%.

The Day Ahead

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

Some concern over the spike in new COVID-19 cases in Spain and what it could mean for the EU will likely influence.

The lack of stats will also leave the majors in the hands of geopolitics and sentiment towards U.S monetary and fiscal policy.

From the U.S

July consumer confidence figures are due out later in the day. We can expect the numbers to influence, as the markets hope for a friendly FED on Wednesday.

There will also need to be further progress towards the next COVID-19 stimulus package on Capitol Hill…

The Latest Coronavirus Figures

According to figures at the time of writing, the number of new coronavirus cases rose by 202,298 to 16,615,092 on Monday. On Sunday, the number of new cases had risen by 213,347. The daily increase was lower than Sunday’s rise, while up from 182,589 new cases from the previous Monday.

Germany, Italy, and Spain reported 7,167 new cases on Monday, which was up from 663 new cases on Sunday. On the previous Monday, 5,413 new cases had been reported. The spike came from Spain that had not reported any new cases for 2 consecutive days before a 6,361 jump on Monday.

From the U.S, the total number of cases rose by 54,564 to 4,426,403 on Monday. On Sunday, the total number of cases had increased by 56,130. On Monday, 20th July, a total of 62,790 new cases had been reported.

The Futures

In the futures markets, at the time of writing, the Dow was up by 24 points.

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

Technology is Holding the Key to the Next S&P 500 Move

Going into Friday, I was still sticking to the bullish S&P 500 outlook. As the index declined, are the prospects of higher prices gone? Not at all, and today’s analysis will examine the signs that still lean bullish despite the precarious technology position.

Despite the S&P 500 closing below the line connecting the early June highs, continued unemployment claims rising on the state level (don’t forget about those rising ones under the federal pandemic programs either), the fate of the $600 weekly addition to unemployment benefits expiring at the end of July, or the U.S. – China confrontations.

On Thursday, I’ve laid out the market’s sensitivities this way:

(…) as strange as it might sound, the stock market isn’t about the real economy struggles these weeks. All eyes are on the stimulus and vaccine hopes (whatever one imagines under the latter term), not on the corona case panic and hyped death charts.

Stimulus is coming, and regardless of its final shape and size, markets are going to cheer it. The Fed is no longer in a wait-and-see weekly mode. Stocks expect a policy move, and are still positioned to benefit before inflation or economic realities (thornier road ahead than many an alphabet soup recovery projection implies) strike.

Talking economic realities, what about the societal and interpersonal ones? Sobering snippets of overnight U.S. corona fear transformations courtesy of Big League Politics:

  • 75 percent believe that things will never return to normal
  • 59 percent are too afraid to go back to their workplace with others
  • 75 percent feel that handshakes will no longer be customary
  • 38 percent want physical offices permanently removed and replaced with remote work
  • 53 percent are nostalgic for the good old days when people weren’t forcibly masked while the rest have seemingly become accustomed to the “new normal”.

Such shifts underscore why some sectors have it way tougher than others.

S&P 500 in the Medium- and Short-Run

I’ll start today’s flagship Stock Trading Alert with the higher timeframe perspective (charts courtesy of http://stockcharts.com ).

The weekly candlestick (please see this and many more charts at my home site) bears shape of a reversal, but is it a credible one? Weekly volume didn’t pick up, weakening the case for a trend change. The preceding week brought us a hanging man, and that didn’t bring the bears out of their caves either.

The weekly chart is thus rather neutral in its implications, but given the non-refusal (by and large) of the move above the early June highs, I still interpret the chart as bullish rather than bearish.

One close below the line connecting the early June highs, doesn’t make a breakout invalidation yet. It lack rising volume, and the noticeable lower knot also makes it suspicious.

As the bulls nibble at the late-Feb bearish gap, I expect them to overcome it eventually. Especially since all eyes are on the stimulus to counter the harsh economic realities of many real economy sectors.

Such were my Friday’s words regarding the days finishing in the red:

(…) Earlier in July, we have also experienced an odd bearish day that brought out the bears from their caves, without really changing the situation on the ground materially.

I expect the same dynamics to play out this time as well, regardless of the headlines touting more stimulus details only next week, or Trump discussing the China phase one trade deal value.

Meanwhile, the credit market signals are still pointing largely one way.

The Credit Markets’ Point of View

High yield corporate bonds (HYG ETF) reversed their opening weakness, and closed near the upper border of its recent range. Encouraging in itself, the move though lacked convincing volume, which makes the implications less bullish than when viewed with only price action in mind.

The ratios finetune the picture. Both the leading credit market ratios – high yield corporate bonds to short-term Treasuries (HYG:SHY) and investment grade corporate bonds to longer-dated Treasuries (LQD:IEI) paused – with the latter declining. This one-day hesitation has the potential to spill over into upcoming sessions’ trading.

The overlaid S&P 500 closing prices (black line) against the HYG:SHY chart shows just that the pace of stocks’ fall, has moderated. With more air out of their relative outperformance seen since late June, the judgmental scope for further declines becomes more limited. Unless the ratio plunges, that is – which is what I don’t expect it to do right now.

The recovering ratio of high yield corporate bonds to all corporate bonds (PHB:$DJCB) supports the notion of the stock bull having further to run. The sectoral rotation theme stands to benefit from such a dynamic.

Smallcaps, Emerging Markets and the S&P 500 Internals

The Russell 2000 (IWM ETF) also fell on Friday, but the daily volume left quite something to be desired. For the bears, that is. As a result, Friday’s candle appears to be merely a daily setback.

Emerging markets (EEM ETF) proved stronger on Friday, and erased their opening losses almost in full. That’s positive for stocks back in the States too – it’s a starting point, and obviously more has to follow.

Volatility ($VIX) made an intraday reversal on Friday, though a retest of its opening highs wouldn’t be out of the unexpected. This upside bump appears to have a little more to run on the upside, but judging by this chart alone, the stock bull run isn’t in danger yet.

Zooming out, the weekly market breadth provides us with a broader perspective. Please note both the advance-decline line and advance-decline volume having descended into solidly negative values – but the bullish percent index solidly in bull market territory makes a case for an upcoming stock price rebound (perhaps preceded by a bit more base-building).

S&P 500 Sectors in Focus

Technology (XLK ETF) holds the key, and not merely in the short-term. On a positive note, it has reversed intraday, closing slightly above its opening values. The rising volume indicates accumulation to me, lending more credibility to the bullish interpretation.

The defining moment though can’t be understated. This sector’s consolidation with an upside flavor would be very constructive for the S&P 500, as the ongoing rotation into former laggards can’t win the day due to weighting.

But the rotational stock bull signs of health are undoubtedly in. I would highlight materials (XLB ETF), healthcare (XLV ETF) and industrials (XLI ETF) as the best of the crowd, followed by the defensive utilities and consumer staples (XLU ETF, XLP ETF respectively). Consumer discretionaries (XLY ETF) are also fighting tooth and nail to keep among the leadership sectors, which is where the heavyweight financials (XLF) are slowly but surely moving too.

Once technology joins in again (or stops standing in the way as a minimum), the stock bull run can go on and leave this soft patch with bullish undertones behind.

Summary

Summing up, Friday’s S&P 500 setback hasn’t materially changed the optimistic stock outlook, and the balance of signals from related markets still keeps more than slightly favoring the bulls. Technology is the joker, the wild card that would decide the S&P 500 direction in the short run, and either prolong this two-day decline, or let stocks slowly but surely regain their footing, which they seem bound to do still.

Thank you for reading today’s free analysis. I encourage you to sign up for our daily newsletter – it’s absolutely free and if you don’t like it, you can unsubscribe with just 2 clicks. If you sign up today, you’ll also get 7 days of free access to the premium daily Stock Trading Alerts as well as our other Alerts. Sign up for the free newsletter today!

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

Thank you.

Monica Kingsley
Stock Trading Strategist
Sunshine Profits: Analysis. Care. Profits.

* * * * *

All essays, research and information found above represent analyses and opinions of Monica Kingsley and Sunshine Profits’ associates only. As such, it may prove wrong and be subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Monica Kingsley and her associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Ms. Kingsley is not a Registered Securities Advisor. By reading Monica Kingsley’s reports you fully agree that she will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Monica Kingsley, Sunshine Profits’ employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.

 

European Equities: Economic Data, Geopolitics, and COVID-19 News in Focus

Economic Calendar:

 Monday, 27th July

German Business Expectations (Jul)

German Current Assessment (Jul)

German Ifo Business Climate Index (Jul)

Thursday, 30th July

German GDP (QoQ) (Q2)

German GDP (YoY) (Q2)

German Unemployment Change (Jul)

German Unemployment Rate (Jul)

Eurozone Unemployment Rate (Jun)

German CPI (MoM) (Jul) Prelim

Friday, 31st July

French GDP (QoQ) (Q2)

German Retail Sales (MoM) (Jun)

French Consumer Spending (MoM) (Jun)

French CPI m/m (Jul) Prelim

French HICP m/m (Jul) Prelim

Spanish GDP (QoQ) (Q2)

Italian CPI (MoM) (Jul) Prelim

Eurozone CPI (YoY) (Jul) Prelim

Eurozone Core CPI y/y (Jul) Prelim

Eurozone GDP q/q (Q2) 1st Estimate

Eurozone GDP y/y (Q2) 1st Estimate

The Majors

It was a bearish end to the week for the European majors on Friday. The DAX30 slid by 2.02%, with the CAC40 and EuroStoxx600 falling by 1.54% and by 1.70% respectively.

Economic data took a back seat on Friday, with market jitters over the rise in tensions between the U.S and China weighing.

Following Wednesday’s order for China to shut down its Houston consulate, China retaliated on Friday. China revoked the U.S consulate’s license for Cheng Du.

The latest spat comes in the wake of the U.S accusing China of hacking U.S companies.

Adding to the market angst at the end of the week was a continued rise in new COVID-19 cases. There was also a lack of progress on Brexit in the week to test the majors further.

The Stats

It was a busy day on the Eurozone economic calendar. Key stats included prelim July private sector PMIs for France, Germany, and the Eurozone.

The Eurozone’s manufacturing PMI rose from 47.4 to 51.1, with the services PMI jumping from 48.3 to 55.1.

From France, the manufacturing PMI slipped from 52.3 to 52.0, while the services PMI rose from 50.7 to 57.8.

Out of Germany, the manufacturing PMI rose from 45.2 to 50.0, with the services PMI increasing from 47.3 to 56.7.

Supported by a marked improvement in service sector activity, the Eurozone’s Composite PMI jumped from 48.5 to 54.8.

From the U.S

Service sector activity continued to contract in July, with the PMI rising from 47.9 to 49.6. Economists had forecast a rise to 51.0. The Manufacturing PMI also disappointed, with a rise from 49.8 to 51.3 falling short of a forecasted 51.5.

It was another set of disappointing numbers that came in the wake of Thursday’s 1.416m initial jobless claims.

The Market Movers

For the DAX: It was a mixed day for the auto sector on Friday. Continental rose by 0.55% to buck the trend on the day. It was a bearish day for the rest. BMW and Volkswagen slid by 1.19% and by 1.11% respectively, while Daimler saw a more modest 0.54% loss.

It was also a mixed day for the banks. Deutsche Bank fell by 0.35%, while Commerzbank ended the day with a 1.33% gain.

From the CAC, it was another bearish day for the banks. Soc Gen slid by 2.21% to lead the way down. BNP Paribas and Credit Agricole ended the day down by 1.13% and by 0.87% respectively.

The French auto sector struggled. Peugeot and Renault ended the day with losses of 1.75% and 1.52% respectively.

Air France-KLM and Airbus SE fell by 0.82% and by 2.07% respectively.

On the VIX Index

It was back into the red for the VIX on Friday. Following a 7.24% gain on Thursday, the VIX fell by 0.92% to end the day at 25.84.

Geopolitics and disappointing economic data weighed on the U.S equity markets at the end of the week. Intel also weighed on the Dow, with a 16.24% slide as the markets responded to negative guidance for the 3rd quarter.

The S&P500 and Dow fell by 0.62% and 0.68% respectively, with the NASDAQ seeing a loss of 0.94%.

The Day Ahead

It’s a relatively busy day ahead on the Eurozone economic calendar. Key stats include Germany’s Ifo Business Climate Index figures.

Expect any weak numbers to test the European majors in the early part of the day.

On the geopolitical front, the progress of the EU Recovery Fund will also garner interest.

From the U.S

June’s core durable goods orders will provide direction later in the day.

Away from the economic calendar, the progress of the U.S stimulus package in the U.S and COVID-19 will also influence.

The Latest Coronavirus Figures

According to figures at the time of writing, the number of new coronavirus cases rose by 197,402 to 16,396,849 on Sunday. On Saturday, the number of new cases had risen by 268,668. The daily increase was lower than Saturday’s rise and 246,207 new cases from the previous Sunday.

Germany, Italy, and Spain reported 663 new cases on Sunday, which was up from 646 new cases on Saturday. On the previous Sunday, 491 new cases had been reported.

From the U.S, the total number of cases rose by 50,664 to 4,366,373 on Sunday. On Saturday, the total number of cases had increased by 67,398. On Sunday, 26th July, a total of 65,368 new cases had been reported.

The Futures

In the futures markets, at the time of writing, the DAX was up by 11 points, with the Dow up by 69 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:

Friday, 24th July

French Manufacturing PMI (Jul) Prelim

French Services PMI (Jul) Prelim

German Manufacturing PMI (Jul) Prelim

German Services PMI (Jul) Prelim

Eurozone Manufacturing PMI (Jul) Prelim

Eurozone Markit Composite PMI (Jul) Prelim

Eurozone Services PMI (Jul) Prelim

The Majors

It was a mixed day for the European majors on Thursday. The EuroStoxx600 eked out a 0.06% gain, while the DAX30 and CAC40 slipped by 0.01% and by 0.07% respectively.

Economic data, earnings, and geopolitics left the European majors flat on the day.

Mid-week, tensions between the U.S and China picked up once more, weighing on market risk appetite. This time around the U.S accused China of hacking U.S companies, leading to an order to shut down China’s consulate in Houston.

The Stats

It was a quiet day on the Eurozone economic calendar. Key stats included Germany’s GfK Consumer Climate figures for August.

According to the GfK Survey,

  • The GfK Consumer Climate Index increased by 9.3 points to -0.3 for August.
  • While economic expectations rose marginally, income expectations and the propensity to buy saw large jumps.
  • Income expectations rose by 12 points to 18.6, leaving the indicator down by around 32 points from the same time last year.
  • The propensity to buy indicator jumped by 23.1 points to 42.5, leaving it down by just 4 points from last year.
  • A reduction in value-added tax contributed to the sharp rebound.

From the U.S

The weekly jobless claims figures were in focus later in the European session.

In the week ending 17th July, initial jobless claims rose by 1.416m, which was worse than a forecasted 1.3m increase.

The figures yet again showed that the U.S economy was struggling to continue to recover as new COVID-19 cases hit the U.S.

The Market Movers

For the DAX: It was a mixed day for the auto sector on Thursday. Daimler rallied by 2.26% to lead the way, with BMW and Continental rising by 0.92% and by 0.69% respectively. Volkswagen bucked the trend, falling by 0.68%.

The upside for Daimler off the back of its quarterly earnings. A projected rise in profit for the Mercedes-Benz and Van divisions delivered support.

It was a bearish day for the banks. Deutsche Bank and Commerzbank ended the day with losses of 2.72% and 1.84% respectively.

From the CAC, it was another bearish day for the banks. Soc Gen slid by 1.47% to lead the way down. BNP Paribas and Credit Agricole ended the day down by 0.62% and by 0.16% respectively.

The French auto sector found support after Wednesday’s pullback. Peugeot and Renault ended the day with gains of 2.69% and by 7.19% respectively.

Air France-KLM and Airbus SE struggled, however, with the pair falling by 1.54% and by 2.73% respectively.

On the VIX Index

It was back into the green for the VIX on Thursday. Reversing a 2.09% fall on Wednesday, the VIX rose by 7.24% to end the day at 26.09.

Disappointing employment figures from the U.S and rising tensions between the U.S and China weighed on the U.S equity markets.

The S&P500 and Dow fell by 1.23% and 1.31% respectively, with the NASDAQ sliding by 2.29%.

VIX 24/07/20 Daily Chart

The Day Ahead

It’s a particularly busy day ahead on the Eurozone economic calendar. Key stats include prelim July private sector PMIs for France, Germany, and the Eurozone.

Expect plenty of interest in the numbers. The markets will be looking for a continued pickup in private sector activity.

We would expect the service sector PMis and the Eurozone’s Composite to garner the greatest interest.

From the U.S

July’s prelim private sector PMIs are also in focus later in the session. From the U.S, we would expect the services PMI to garner the greatest interest.

Away from the economic calendar, updates on the next U.S fiscal stimulus package, COVID-19 news, and U.S – China tensions will also need monitoring.

The Latest Coronavirus Figures

According to figures at the time of writing, the number of new coronavirus cases rose by 270,301 to 15,650,441 on Thursday. On Wednesday, the number of new cases had risen by 288,688. The daily increase was lower than Wednesday’s rise while up from 238,925 new cases from the previous Thursday.

Germany, Italy, and Spain reported 3,593 new cases on Thursday, which was up from 2,217 new cases on Wednesday. On the previous Thursday, 2,175 new cases had been reported.

From the U.S, the total number of cases rose by 69,116 to 4,169,991 on Thursday. On Wednesday, the total number of cases had increased by 72,306. On Thursday, 23rd July, a total of 76,953 new cases had been reported.

The Futures

In the futures markets, at the time of writing, the DAX was down by 92.5 points, while the Dow was up by 37 points.

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

Upswing Challenge Is Likely, But Won’t Derail the Stock Bull Run

The S&P 500 closed farther from the early June highs than the day before. The bull is telling us it wants to run, now that it’s becoming apparent that the bears are out of breath since their mid-July tech ambush.

The month’s end is approaching, and so is the window of opportunity to extend the $600 weekly addition to unemployment benefits, and pass the new stimulus into law before the August recess. While continuing unemployment claims under regular state programs are declining, couple that with special pandemic ones, and they’re still clinging to their highs.

But as strange as it might sound, the stock market isn’t about the real economy struggles these weeks. All eyes are on the stimulus and vaccine hopes (whatever one imagines under the latter term), not on the corona case panic and hyped death charts.

Time for another quick reality check.

Have you seen this comparison between New York and no-lockdown Sweden (courtesy of Lew Rockwell and David Stockman)? The markets see through that, and keep their focus on the countermeasures instead. Money printing is in our future, and won’t really end until inflation rears its ugly head.

S&P 500 in the Short-Run

I’ll start with the daily chart perspective (charts courtesy of http://stockcharts.com ):

The upper blue line marking the early June highs is getting more distant day-by-day. Volume is picking up, and the price action doesn’t exactly show the bulls as relenting. Prices keep cutting into the late-Feb bearish gap without real opposition from the sellers.

Let’s check the credit market clues next.

The Credit Markets’ Point of View

High yield corporate bonds (HYG ETF) again rose yesterday, but not without attempting to decline (please see this and many more charts at my home site). The volume though shows the bears weren’t really serious about it. Still, the bond ETF paused at its early June highs, and while I wouldn’t focus on those highs as a meaningful resistance strong enough to make S&P 500 crash and burn, it can exert a limited and temporary influence.

Better to look for more comprehensive clues such as the leading credit market ratios – and both the high yield corporate bonds to short-term Treasuries (HYG:SHY) and investment grade corporate bonds to longer-dated Treasuries (LQD:IEI), are rising together.

On a daily basis, the HYG:SHY ratio wavered a little, but stocks marched higher as vigorously as in previous days. A short-term noise that needn’t have repercussions – the key point is that both are broadly continuing higher.

That’s the message of the stocks to Treasuries ($SPX:$UST) chart too. The relative valuation of both asset classes continues favoring stocks. Yes, Treasuries remain in a secular bull market and calls for its end earlier this decade have proven premature, but it’s stocks (that is companies) that are rising faster here – as they always do when we’re in “everyone benefits, no one pays” stage of inflation.

By the way, did you know that inflation used to be about tracking the monetary base increases, and not the symptom of rising real-world prices? Talk of putting the cart before the horse – the latter is a secondary effect of a greater money pool chasing the same amount of goods and services.

Smallcaps, Emerging Markets and the S&P 500 Internals

The Russell 2000 (IWM ETF) took to yesterday’s S&P 500 cue. Rising, but the drawn-out underperformance goes on. Little wonder given that smallcaps are more connected to the real economy than the 500-strong index.

While I expect the S&P 500 to challenge and overcome its February highs this year, the Russell 2000 has a tougher ride ahead in doing so. The emerging markets chart shows these markets having started to outperform already – which the smallcaps clearly haven’t.

While emerging markets (EEM ETF) have declined yesterday, that isn’t a sign of a trend change. It calls for short-term caution as the U.S. index is a little exposed here.

The market breadth view confirms that. To see advance-decline line retreating on a stock advance, is never a short-term sign of strength. The rising bullish percent index though points in the direction of dips being better bought as we’re firmly in a stock bull market territory.

Volatility is also in favor of caution. As it challenges the early June lows, the upper knots are telltale signs of it striving to move higher next. And little wonder as the real world outlook didn’t get brighter or calmer over the recent weeks. The coming stimulus will buy us some time, and encouragingly, the Fed is no longer in a week-to-week tightening mode. Obviously though, stocks are banking on more.

Summary

Summing up, the health of the S&P 500 upswing yesterday leaves quite a bit to be desired, and highlights a solid likelihood of upcoming weakness in stocks. Nothing extraordinary in its outlook-changing power though – the stock bull is alive and well, thriving on sensible rotation. What I look for, is a temporary setback that would bring down the rising greed so as to capitalize on short-term mispricing opportunities (or disappearing cautionary signs) within the stock bull run.

Thank you for reading today’s free analysis. I encourage you to sign up for our daily newsletter – it’s absolutely free and if you don’t like it, you can unsubscribe with just 2 clicks. If you sign up today, you’ll also get 7 days of free access to the premium daily Stock Trading Alerts as well as our other Alerts. Sign up for the free newsletter today!

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

Thank you.

Monica Kingsley
Stock Trading Strategist
Sunshine Profits: Analysis. Care. Profits.

* * * * *

All essays, research and information found above represent analyses and opinions of Monica Kingsley and Sunshine Profits’ associates only. As such, it may prove wrong and be subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Monica Kingsley and her associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Ms. Kingsley is not a Registered Securities Advisor. By reading Monica Kingsley’s reports you fully agree that she will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Monica Kingsley, Sunshine Profits’ employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.

 

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

Economic Calendar:

Thursday, 23rd July

GfK German Consumer Climate (Aug)

Eurozone Consumer Confidence Flash

Friday, 24th July

French Manufacturing PMI (Jul) Prelim

French Services PMI (Jul) Prelim

German Manufacturing PMI (Jul) Prelim

German Services PMI (Jul) Prelim

Eurozone Manufacturing PMI (Jul) Prelim

Eurozone Markit Composite PMI (Jul) Prelim

Eurozone Services PMI (Jul) Prelim

The Majors

It was a bearish day for the European majors on Wednesday, with the CAC40 falling by 1.32% to lead the way down. The DAX30 and EuroStoxx600 ended the day with losses of 0.51% and 0.87% respectively.

There were no major stats out of the Eurozone or the U.S to distract the majors on the day.

Following the Tuesday upswing in response to the progress on the EU Recovery Fund, the focus shifted to U.S – China relations.

News of China being ordered to shut down their Houston consulate by Friday weighed on market risk appetite. China’s response was of little comfort for the markets.

The Stats

It was another quiet day on the Eurozone economic calendar. There were no material stats for the markets to consider.

From the U.S

Economic data was limited to June’s existing-home sales figures that also had a muted impact on the European majors.

The Market Movers

For the DAX: It was a bearish day for the auto sector on Wednesday. BMW and Continental declined by 0.55% and 0.69% to lead the way down.

Daimler and Volkswagen saw more modest losses of 0.38% and 0.15% respectively.

It was another mixed day for the banks. While Deutsche Bank rose by 0.78%, Commerzbank ended the day with a 1.31% loss.

From the CAC, it was a bearish day for the banks. Credit Agricole and Soc Gen fell by 2.30% and by 2.69% respectively to lead the way. BNP Paribas fell by a marginally more modest 1.92%.

The French auto sector also struggled, with Peugeot and Renault falling by 0.88% and by 2.35% respectively.

Air France-KLM eked out a 0.17% gain, while Airbus SE fell by 1.38%.

On the VIX Index

It was back into the red for the VIX on Wednesday. Marking a 3rd day in the red out of 4, the VIX fell by 2.09% to end the day at 24.32. On Tuesday, the VIX had risen by 1.55%.

After a choppy session, the U.S majors recovered from the red, with fiscal stimulus and COVID-19 vaccine news providing support.

Rising tensions between the U.S and China had tested investor sentiment early in the session.

The S&P500 and Dow rose by 0.57% and 0.62% respectively, with the NASDAQ gaining 0.24%.

VIX 23/07/20 Daily Chart

The Day Ahead

It’s a busier day ahead on the Eurozone economic calendar. Key stats include GfK Consumer Climate figures out of Germany and Eurozone consumer confidence figures.

While we expect the numbers to influence, earnings, COVID-19 news, and geopolitics will also be in focus.

From the U.S

The weekly jobless claims figures are in focus later in the day. Another worse than expected set of numbers and expect the markets to react…

With tensions between the U.S and China on the rise once more, the markets could be in for another rollercoaster ride. The markets will need to decide whether a COVID-19 vaccine will arrive in time to prevent another economic meltdown.

Following the late rally in the U.S markets on Wednesday, any further chatter on fiscal stimulus will also need consideration.

And, there are also corporate earnings to consider. From Germany, Daimler will release its quarterly earnings.

On the U.S earnings calendar, Amazon.com (Thurs), Intel (Thurs), Twitter (Thurs) are amongst the big names.

The Latest Coronavirus Figures

According to figures at the time of writing, the number of new coronavirus cases rose by 221,985 to 15,313,437 on Wednesday. On Tuesday, the number of new cases had risen by 240,565. The daily increase was lower than Tuesday’s rise and 242,529 new cases from the previous Wednesday.

Germany, Italy, and Spain reported 2,214 new cases on Wednesday, which was up from 1,889 new cases on Tuesday. On the previous Wednesday, 1,523 new cases had been reported. Spain was the main contributor to the uptick in new cases for a 3rd consecutive day.

From the U.S, the total number of cases rose by 48,152 to 4,076,721 on Wednesday. On Tuesday, the total number of cases had increased by 67,140. On Wednesday, 22nd July, a total of 71,670 new cases had been reported.

The Futures

In the futures markets, at the time of writing, the Dow was down by 8 points.

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

European Equities: Futures Point to the Red as the Asian Markets Struggle

Economic Calendar:

 Thursday, 23rd July

GfK German Consumer Climate (Aug)

Eurozone Consumer Confidence Flash

Friday, 24th July

French Manufacturing PMI (Jul) Prelim

French Services PMI (Jul) Prelim

German Manufacturing PMI (Jul) Prelim

German Services PMI (Jul) Prelim

Eurozone Manufacturing PMI (Jul) Prelim

Eurozone Markit Composite PMI (Jul) Prelim

Eurozone Services PMI (Jul) Prelim

The Majors

It was another bullish start to the week for the European majors on Tuesday, with the DAX30 rising by 0.96% to lead the way. The CAC40 and EuroStoxx600 ended the day with gains of 0.22% and 0.32% respectively.

There were no major stats out of the Eurozone or the U.S to distract the majors from EU Recovery Fund talks.

After extended talks that went through from last Friday to Monday, EU member states finally reached an agreement on the structure of the EU Recovery Fund.

News of progress towards a COVID-19 vaccine was also a market positive through the 1st half of the week.

The Stats

It was a quiet day on the Eurozone economic calendar. There were no material stats for the markets to consider.

From the U.S

There were also no material stats to influence the majors on the day.

The Market Movers

For the DAX: It was a bullish day for the auto sector on Tuesday. BMW and Continental rallied by 2.13% and 1.85% to lead the way.

Daimler and Volkswagen saw more modest gains of 1.28% and 0.18% respectively.

It was a mixed day for the banks. While Deutsche Bank slid by 4.94%, Commerzbank ended the day up by 0.86%.

From the CAC, it was also a mixed day for the banks. BNP Paribas and Credit Agricole rose by 1.39% and by 0.90% respectively. Soc Gen reversed gains from early in the day to end the day down by 0.19%.

The French auto sector found support, however, with Peugeot and Renault rising by 1.54% and by 0.89% respectively.

Air France-KLM struggled, falling by 1.48%, while Airbus SE rallied by 3.56% on the day.

On the VIX Index

It was back into the green for the VIX on Tuesday. Following two consecutive days in the red, the VIX rose by 1.55% to end the day at 24.84. On Monday, the VIX had fallen by 4.75.

The market focus shifted away from progress towards a COVID-19 pandemic to U.S fiscal stimulus. Talks in the U.S resume this week ahead of the expiration of the current stimulus programs at the end of the month.

Failure to secure additional stimulus would be considered a particularly dire outcome for the U.S economy that remains dependent upon consumption.

The S&P500 and Dow rose by 0.17% and 0.60% respectively, while the NASDAQ slipped by 0.81%.

VIX 22/07/20 Daily Chart

The Day Ahead

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

A lack of stats will leave the majors in the hands of updates on the EU Recovery Fund and COVID-19. The numbers for Tuesday were on the rise once more.

U.S domestic issues are also likely of concern for the markets as the administration sends in officers to quash protests.

From the U.S

It’s a relatively quiet day ahead. June’s existing-home sales figures are due out later today. We don’t expect the numbers to have an impact on the majors, however.

Chatter from Capitol Hill on fiscal stimulus and more from the U.S President will continue to drive the majors.

The Latest Coronavirus Figures

On Tuesday, the number of new coronavirus cases rose by 240,565 to 15,091,452. On Monday, the number of new cases had risen by 182,589. The daily increase was higher than Monday’s rise and 218,739 new cases from the previous Tuesday.

Germany, Italy, and Spain reported 1,889 new cases on Tuesday, which was down from 5,413 new cases on Monday. On the previous Tuesday, 1,110 new cases had been reported.

From the U.S, the total number of cases rose by 67,140 to 4,028,569 on Tuesday. On Monday, the total number of cases had increased by 62,790. On Tuesday, 21st July, a total of 65,594 new cases had been reported.

The Futures

In the futures markets, at the time of writing, the DAX was down by 44.5 points, while the Dow was up by 69 points. A pullback across the Asian majors weighed on the DAX early on.

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

European Equities: A Lack of Stats Leaves the EU Recovery Fund and COVID-19 in Focus

Economic Calendar:

 Thursday, 23rd July

GfK German Consumer Climate (Aug)

Eurozone Consumer Confidence Flash

Friday, 24th July

French Manufacturing PMI (Jul) Prelim

French Services PMI (Jul) Prelim

German Manufacturing PMI (Jul) Prelim

German Services PMI (Jul) Prelim

Eurozone Manufacturing PMI (Jul) Prelim

Eurozone Markit Composite PMI (Jul) Prelim

Eurozone Services PMI (Jul) Prelim

The Majors

It was a bullish start to the week for the European majors on Monday, with the DAX30 rising by 0.99% to lead the way. The CAC40 and EuroStoxx600 saw gains of 0.47% and 0.75% respectively.

There were no major stats out of the Eurozone or the U.S to distract the majors from EU Recovery Fund talks.

Talks extended from Friday and the weekend as member states failed to come to an agreement. There was a sense of optimism, however, that EU leaders would eventually find common ground that prevented a sell-off.

COVID-19 vaccine news delivered upside for the European majors on the day. News of further progress towards a vaccine hit the wires to support the majors.

The markets had struggled in the earlier part of the day as a result of the deadlock in Brussels.

The Stats

It was a quiet day on the Eurozone economic calendar. Key stats included Germany’s wholesale inflation figures for June.

Wholesale prices stalled in June, following a 0.4% fall in May. Economists had forecast a 0.2% rise.

The stats had a muted impact on the majors, however, as the markets remained focused elsewhere.

From the U.S

There were also no material stats to influence the majors on the day.

The Market Movers

For the DAX: It was a mixed day for the auto sector on Monday. Continental rallied by 1.33% to lead the way, as support continued to kick in on expectations of better than expected earnings.

Daimler struggled on the day, falling by 1.45%. BMW and Volkswagen saw relatively modest losses of 0.49%, and 0.19% respectively.

It was also a mixed day for the banks. While Deutsche Bank rallied by 1.73%, Commerzbank ending the day down by 0.09%.

From the CAC, it was a mixed day for the banks. BNP Paribas and Credit Agricole rose by 0.09% and by 0.18% respectively. Soc Gen bucked the trend with a 0.04% loss.

The French auto sector had another mixed day. Peugeot fell by 0.41%, while Renault ended the day up by 1.70%.

Air France-KLM ended the day flat, while Airbus SE fell by 0.29% to mark a 3rd consecutive day in the red.

On the VIX Index

It was a second consecutive day in the red for the VIX, which fell by 4.75% on Monday. Following on from an 8.29% slide on Friday, the VIX ended the day at 24.46.

News updates on progress towards a COVID-19 vaccine delivered support on the day.

The S&P500 and Dow rose by 0.84% and 0.03% respectively, while the NASDAQ rallied by 2.51%.

VIX 21/07/20 Daily Chart

The Day Ahead

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

A lack of stats will leave the majors in the hands of updates from the EU Recovery Fund talks and COVID-19 news and updates.

From the U.S

It’s another particularly quiet day ahead, with no material stats due out of the U.S.

We can expect chatter from Capitol Hill and Beijing and COVID-19 news and updates to remain key drivers.

There are also corporate earnings to consider, though the markets seem to remain hellbent on optimism thanks to the FED.

The Latest Coronavirus Figures

On Monday, the number of new coronavirus cases rose by 182,589 to 14,850,887. On Sunday, the number of new cases had risen by 246,207. The daily increase was lower than Saturday’s rise and 199,164 new cases from the previous Monday.

Germany, Italy, and Spain reported 5,413 new cases on Monday, which was up from 491 new cases on Sunday. On the previous Monday, just 2,700 new cases had been reported.  Spain reported 4,581 new cases.

From the U.S, the total number of cases rose by 62,790 to 3,961,429 on Monday. On Sunday, the total number of cases had increased by 65,368. On Monday, 20th July, a total of 65,488 new cases had been reported.

The Futures

In the futures markets, at the time of writing, the DAX was up by 59.5 points, with the Dow up by 13 points.

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

European Equities: Futures Point to the Red as EU Recovery Fund Talks Stall

Economic Calendar: 

Monday, 20th July

German PPI (MoM) (Jun)

Thursday, 23rd July

GfK German Consumer Climate (Aug)

Eurozone Consumer Confidence Flash

Friday, 24th July

French Manufacturing PMI (Jul) Prelim

French Services PMI (Jul) Prelim

German Manufacturing PMI (Jul) Prelim

German Services PMI (Jul) Prelim

Eurozone Manufacturing PMI (Jul) Prelim

Eurozone Markit Composite PMI (Jul) Prelim

Eurozone Services PMI (Jul) Prelim

The Majors

It was mixed end to the week for the European majors on Friday, with the CAC40 falling by 0.31% to buck the trend. The DAX30 and EuroStoxx600 saw gains of 0.35% and 0.16% respectively.

Economic data from the Eurozone and the U.S failed to deliver support for a 2nd consecutive day. Geopolitics took center stage on Friday as EU member states met to hash out the mechanics of the EU Recovery Fund.

The EU has had a number of pivotal moments in recent history and the COVID-19 pandemic has presented Brussels with another. Failure to deliver more sizeable funds to the most adversely impacted will bring into question the project once more.

A continued rise in new COVID-19 cases across the U.S didn’t help the mood. At the end of the week, the U.S reported a record-high number of new cases for Thursday.

If that wasn’t enough to test the majors, there had also been reports that Trump was planning to rile China again. This time a possible travel ban on members of the Chinese Communist Party and their families.

The Stats

It was a quiet day on the Eurozone economic calendar. Key stats included June’s finalized inflation figures for the Eurozone.

According to Eurostat,

  • The annual rate of inflation picked up from 0.1% to 0.3% in June, while down from 1.3% from earlier in the year.
  • Cyprus (-2.2%), Greece (-1.9%), and Estonia (-1.6%) registered the lowest annual rates.
  • The highest contribution came from food, alcohol, & tobacco (+0.60 percentage points, pp).
  • Services also provided support, with a 0.55 percentage point contribution.

From the U.S

It was a relatively busy day on the U.S calendar. July consumer sentiment and expectation figures were in focus.

June housing sector data had a muted impact on the day.

According to prelim figures, the Michigan Consumer Expectations Index fell from 72.3 to 66.2 in July. The Consumer Sentiment Index slipped from 78.1 to 73.2.

Concerns over the spike in new COVID-19 cases across the most populous U.S states weighed in July.

The Market Movers

For the DAX: It was a bullish day for the auto sector on Friday. Daimler rallied by 3.37% to lead the way. The upside on the day came from an announcement that operating losses for the 2nd quarter would be less than expected. BMW, Continental, and Volkswagen saw more modest gains of 0.64%, 1.53%, and 2.03% respectively.

It was a bearish day for the banks, however. Deutsche Bank fell by 0.80%, with Commerzbank ending the day down by 1.76%.

From the CAC, it was a bearish day for the banks. BNP Paribas and Soc Gen fell by 1.52% and by 1.58% respectively to lead the way down. Credit Agricole saw a more modest 1.11% loss.

The French auto sector had another mixed day. Peugeot rose by 1.00%, while Renault slipped by 0.27%.

Air France-KLM and Airbus SE saw red for a 2nd consecutive day. The pair ended the day with losses of 3.19% and by 1.64% respectively.

On the VIX Index

It was back into the red for the VIX, which fell by 8.29% on Friday. Reversing a 0.86% gain from Thursday, the VIX ended the day at 25.68.

Disappointing consumer sentiment figures for July and a new record high number of new COVID-19 cases for Thursday tested the majors.

In spite of the downside risks, there was enough support for riskier assets to sink the VIX on the day…

The S&P500 and the NASDAQ both rose by 0.28%, while the Dow slipped by 0.23%.

VIX 20/07/20 Daily Chart

The Day Ahead

It’s a quiet start to the week on the Eurozone economic calendar. Key stats are limited to Germany’s wholesale inflation figures for June.

We don’t expect the numbers to have an impact on the majors, however.

From the U.S

It’s a particularly quiet start to the week, with no material stats due out of the U.S.

With economic data on the lighter side, the market focus will be on the EU Recovery Fund. EU member states failed to agree through the weekend.

Fresh spikes in new COVID-19 cases will also be a test, though expect geopolitics to be the key driver on the day. Any further moves by the U.S President to antagonize Beijing will also need consideration.

The Latest Coronavirus Figures

On Sunday, the number of new coronavirus cases rose by 219,728 to 14,641,819, according to figures at the time of writing. On Saturday, the number of new cases had risen by 232,868. The daily increase was lower than Saturday’s rise while up from 194,475 new cases from the previous Sunday.

Germany, Italy, and Spain reported 491 new cases on Sunday, which was up from 476 new cases on Saturday. On the previous Sunday, just 372 new cases had been reported.

From the U.S, the total number of cases rose by 65,279 to 3,898,550 on Sunday. On Saturday, the total number of cases had increased by 63,259. On Sunday, 19th July, a total of 58,349 new cases had been reported.

The Futures

In the futures markets, at the time of writing, the DAX was down by 24.5 points with the Dow down by 103 points.

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

European Equities: A Week in Review – 11/07/20

The Majors

It was a bullish week for the European majors in the week ending 17th July. The DAX30 rose by 2.26% to lead the way, with the CAC40 and EuroStoxx600 gaining 1.99% and 1.60% respectively.

While economic data was in focus in the week, COVID-19 numbers and news updates remained a key driver.

A continued rise in the U.S and reintroduction of containment measures in California was market negative. Progress towards a COVID-19 vaccine, however, eased the pain in spite of the U.S continuing to hit new daily highs.

At the end of the week, EU leaders met to agree on the mechanics of the €750bn EU Recovery Fund. The markets were expecting some push back from the likes of Austria and the Netherlands amongst others…

Failure to agree would raise concerns over the durability of the economic recovery.

The Stats

It was a busier week on the Eurozone economic calendar.

Key stats included July’s ZEW economic sentiment figures for Germany and the Eurozone. May trade data and industrial production figures for the Eurozone were also in focus.

It was a mixed set of numbers, however.

Economic sentiment waned in Germany while seeing a marginal pickup in the Eurozone. Industrial production bounced back in May but came up short of forecasts.

The Eurozone’s trade surplus widened, though imports and exports were down significantly from May 2019.

According to Eurostat,

  • Exports of goods to the rest of the world tumbled by 29.5% to €143.3bn when compared with May 2019.
  • Imports from the rest of the world slumped by 26.7% to €133.9bn.
  • In May 2019, the trade surplus had stood at €20.7bn.
  • Intra-euro area trade tumbled by 27.9% to €125.3bn.

On the monetary policy front, the ECB stood pat on monetary policy, which was in line with expectations.

From the U.S

The stats were skewed to the positive once more. Manufacturing sector figures delivered mixed results for July. The NY Empire State Manufacturing Index saw a sizeable increase. The Philly FED Manufacturing Index fell back marginally, however.

Retail sales also continued to rise amidst the spike in new COVID-19 cases, with industrial production jumping by 5.4% in June.

The weekly jobless claims figures disappointed, however, with claims rising by 1.3m in the week ending 10th July.

From Elsewhere

A data deluge from China on Thursday weighed on the majors. While China’s economy rebounded sharply in the 2nd quarter, retail sales disappointed, raising some red flags at the end of the quarter.

The Market Movers

From the DAX, it was a bullish week for the auto sector. Daimler rallied by 7.13% to lead the way, with Volkswagen rising by 3.41%. BMW and Continental saw relatively modest gains of 1.28% and 1.98% respectively.

The upside for Daimler came from an announcement that it would have a smaller than anticipated operating loss in the quarter.

It was a mixed week for the banking sector, however. Commerzbank rose by 1.78% following a 10.35% jump from the previous week, while Deutsche Bank fell by 2.13%.

From the CAC, it was a bullish week for the banks. BNP Paribas and Soc Gen rose by 3.52% and by 3.77% to lead the way. Credit Agricole wasn’t far behind with a 2.94% gain.

It was also a bullish week for the French auto sector, with Peugeot and Renault rallying by 4.49% and by 6.42% respectively.

Air France-KLM and Airbus ended the week up by 2.66% and by 0.69% respectively.

On the VIX Index

It was a 5th consecutive week in the red for the VIX. In the week ending 17th July, the VIX fell by 5.90%. Following on from a 1.41% decline from the previous week, the VIX ended the week at 25.68.

The S&P500 and the Dow ended the week up by 1.25% and by 2.29%, while the NASDAQ fell by 1.08%.

It was a 3rd consecutive weekly gain for the S&P500, while the NASDAQ saw red for the 1st time in three weeks.

Over the week, economic data from China tested market risk sentiment late in the week. Economic indicators from the U.S also pointed to a possible stalling of the economic recovery amidst the spike in new COVID-19 cases.

Support did come from news of progress towards a COVID-19 vaccine, however.

While economic data was on the positive side in the week, a pullback in consumer sentiment in July was of concern.

The Week Ahead

It’s a relatively busy week on the Eurozone economic calendar. Key stats include July’s prelim private sector PMIs for France, Germany, and the Eurozone that are due out on Friday.

The Eurozone’s and Germany’s consumer confidence figures on Thursday will also garner plenty of attention.

With little for the markets to consider in the 1st half of the week, COVID-19 updates will remain a key area of focus. Expect any chatter on Brexit and from Beijing or Washington to also dictate market risk appetite.

Updates from Friday’s EU talks on the EU Recovery Fund will also need consideration.

From elsewhere

The U.S weekly jobless claims figures on Thursday and the private sector PMIs on Friday will also influence.

Corporate Earnings

With earnings season underway, earnings will also provide direction.

From the U.S, IBM (Mon), Coca-Cola (Tues), United Airlines (Tues), Microsoft (Wed), Tesla (Wed), Amazon.com (Thurs), Intel (Thurs), Twitter (Thurs), Chevron (Fri), and American Express (Fri) are amongst the big names.

Out of Germany, Daimler (Thurs) is the marquee name delivering earnings results.

European Equities: COVID-19 and the EU Recovery Fund in Focus

Economic Calendar:

Friday, 17th July

Eurozone Core CPI (YoY) (Jun) Final

Eurozone CPI (MoM) (Jun) Final

Eurozone CPI (YoY) (Jun) Final

The Majors

It was back into the red for the European majors on Thursday, which partially reversed a Wednesday recovery.

The EuroStoxx600 fell by 0.47%, with the CAC40 and the DAX30 seeing losses of 0.46% and 0.43% respectively.

Economic data from the Eurozone and the U.S and the ECB failed to deliver a 2nd consecutive daily gain for the majors. Earlier in the day, a mixed set of stats from China had weighed on risk sentiment ahead of the European session.

Apprehension ahead of today’s meeting of EU leaders to agree on the mechanism of the EU Recovery Fund left the majors on the back foot. There’s been disagreement within the ECB and amongst leaders of EU member states. It may take some time for EU leaders to agree on how to slice and dice the pie…

The Stats

It was a quiet day on the Eurozone economic calendar. Key stats included finalized inflation figures out of France and the Eurozone’s trade figures for May.

While the stats were positive, there was no impact on the majors.

From France, consumer prices rose by 0.1% in June, with harmonized consumer prices also rising by 0.1%. Both were revised up from -0.1% prelim figures.

For the Eurozone, the trade surplus widened from €2.9bn to €9.4bn in May.

According to Eurostat,

  • Exports of goods to the rest of the world tumbled by 29.5% to €143.3bn when compared with May 2019.
  • Imports from the rest of the world slumped by 26.7% to €133.9bn.
  • In May 2019, the trade surplus had stood at €20.7bn.
  • Intra-euro area trade tumbled by 27.9% to €125.3bn.

The ECB was also in action on Thursday. There were no surprises, however, with the ECB standing pat on monetary policy.

From the U.S

It was a busier day on the U.S calendar. The Philly FED Manufacturing Index fell from 27.5 to 24.1, with initial jobless claims rising by 1.3m in the week ending 10th July.

A recovery in retails sales continued in June, however. Month-on-month, retail sales rose by 7.5%, with core retail sales rising by 7.3%.

The Market Movers

For the DAX: It was another mixed day for the auto sector on Thursday. BMW, Daimler, and Volkswagen saw gains of 1.29%, 1.47%, and 0.62% respectively. Continental fell by 0.21% to buck the trend on the day.

It was also a mixed day for the banks. Deutsche Bank fell by 1.48%, while Commerzbank rose by 0.21%.

From the CAC, it was another bullish day for the banks. Credit Agricole and Soc Gen rose by 0.94% and by 1.46% respectively to lead the way. BNP Paribas eked out a 0.08% gain.

The French auto sector also had a mixed day. Peugeot slipped by 0.51%, while Renault rose by 2.00%.

Air France-KLM and Airbus SE gave up some of Wednesday’s gains. The pair ended the day down by 2.18% and by 3.21% respectively.

On the VIX Index

A run of 2 consecutive days in the red came to an end on Thursday. Partially reversing a 5.96% fall from Wednesday, the VIX rose by 0.86% to end the day at 28.00.

Concerns over the economic outlook and disappointing economic data from China weighed on the U.S majors.

On Thursday, reports of a stalling of the U.S economic recovery stemming from the spike in new COVID-19 cases also weighed.

The S&P500 slipped by 0.34%, with the Dow and NASDAQ seeing losses of 0.50% and 0.73% respectively.

VIX 17/07/20 Daily Chart

The Day Ahead

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

The numbers are unlikely to have too much impact. We expect the market focus to be on the meeting of EU leaders to discuss the details of the EU Recovery Fund.

From the U.S

It’s a relatively busy day on the economic calendar. June housing starts and prelim July consumer sentiment figures are due out.

We can expect consumer sentiment figures to have greater influence. With the continued spread of COVID-19, any impact on consumer confidence will be negative for riskier assets.

While the gathering of EU leaders is the main event, COVID-19 news and any chatter from the U.S administration will also need monitoring.

The Latest Coronavirus Figures

On Thursday, the number of new coronavirus cases rose by 227,202 to 13,924,221, according to figures at the time of writing. On Wednesday, the number of new cases had risen by 242,529. The daily increase was lower than Wednesday’s rise while up from 223,514 new cases from the previous Thursday.

Germany, Italy, and Spain reported 2,175 new cases on Thursday, which was up from 1,523 new cases on Wednesday. On the previous Thursday, 1,190 new cases had been reported. Notably, Spain reported 1,361 new cases on Thursday.

From the U.S, the total number of cases rose by 66,562 to 3,683,309 on Thursday. On Wednesday, the total number of cases had increased by 71,670. On Thursday, 9th July, a total of 61,067 new cases had been reported.

The Futures

In the futures markets, at the time of writing, the Dow up by 64 points.

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

European Equities: COVID-19 News, Economic Data and the ECB in Focus

Economic Calendar:

Thursday, 16th July

French CPI (MoM) (Jun) Final

French HICP (MoM) (Jun) Final

Eurozone Trade Balance (May)

Deposit Facility Rate (Jul)

ECB Interest Rate Decision (Jul)

ECB Press Conference

Friday, 17th July

Eurozone Core CPI (YoY) (Jun) Final

Eurozone CPI (MoM) (Jun) Final

Eurozone CPI (YoY) (Jun) Final

The Majors

It was back into the green for the European majors on Wednesday, which managed to reverse Tuesday’s pullback.

The CAC40 rallied by 2.03%, with the DAX30 and EuroStoxx600 gaining 1.84% and 1.76% respectively.

Following the market jitters over moves across California to contain a new spread of the virus, it was vaccine hopes that delivered the upside.

The race to find an effective vaccine is on, with a number of contenders delivering positive news to the markets this week. An introduction of an effective vaccine and treatment would support a more rapid global economic recovery.

The Stats

It was a quiet day on the Eurozone economic calendar. Key stats included finalized inflation figures out of Italy that had a muted impact on the majors.

In June, consumer prices rose by 0.1%, partially reversing a 0.2% decline from May. Economists had forecast a 0.1% rise.

From the U.S

It was a busier day on the U.S calendar. The NY Empire State Manufacturing Index jumped from -0.20 to 17.20, with industrial production rising by 5.4% following a 1.4% increase in May.

Both sets of numbers supported the optimism over a speedier economic recovery amidst the COVID-19 spikes across parts of the U.S.

The Market Movers

For the DAX: It was a mixed day for the auto sector on Wednesday. Daimler and Volkswagen led the way, with gains of 1.20% and by 2.53% respectively. BMW rose by a more modest 0.19%, while Continental fell by 0.65%.

It was another bullish day for the banks. Deutsche Bank rose by 1.74%, with Commerzbank ending the day up by 1.49%.

From the CAC, it was a bullish day for the banks. BNP Paribas and Soc Gen rallied by 2.73% and by 2.74% respectively to lead the way. Credit Agricole saw a more modest gain of 1.33%.

The French auto sector also found support, with Peugeot and Renault rising by 1.46% and by 3.76% respectively.

Air France-KLM jumped by 6.7%, A COVID-19 vaccine would material shift the outlook for the sector. Airbus SE wasn’t far behind, rallying by 4.63%.

On the VIX Index

It was a 2nd consecutive day in the red for the VIX on Wednesday. Following on from an 8.29% slide on Tuesday, the VIX fell by 5.96% to end the day at 27.76.

News of solid progress towards an effective COVID-19 vaccine and better than expected earnings delivered the upside.

The S&P500 rose by 0.91%, with the Dow and NASDAQ seeing gains of 0.85% and 0.59% respectively.

VIX 16/07/20 Daily Chart

The Day Ahead

It’s another relatively quiet day ahead on the Eurozone economic calendar. Key stats are limited to finalized June inflation figures from France and trade data from the Eurozone.

The numbers are unlikely to have too much impact, with the ECB in action later this afternoon.

Expect the ECB press conference to be the main event of the day, with the markets still in need of assurances from central banks.

From the U.S

It’s a busy day on the economic calendar. Philly FED Manufacturing and U.S retail sales figures are due out along with the U.S weekly jobless claims.

We can expect the stats to influence, with retail sales and the jobless claims needing to impress.

Ultimately, however, any further chatter on progress towards a COVID-19 vaccine could be enough for the bulls.

From earlier in the day, 2nd quarter GDP numbers from China will likely set the tone going into the European session.

The Latest Coronavirus Figures

On Wednesday, the number of new coronavirus cases rose by 215,144 to 13,669,634 based on figures at the time of writing. On Tuesday, the number of new cases had risen by 218,739. The daily increase was lower than Tuesday’s rise and 222,368 new cases from the previous Wednesday.

Germany, Italy, and Spain reported 1,523 new cases on Wednesday, which was up from 1,110 new cases on Tuesday. On the previous Wednesday, 986 new cases had been reported.

From the U.S, the total number of cases rose by 66,528 to 3,611,605 on Wednesday. On Tuesday, the total number of cases had increased by 65,594. On Wednesday, 8th July, a total of 62,416 new cases had been reported.

The Futures

In the futures markets, at the time of writing, the Dow up by a modest 18 points.

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