Friday, 7th May 2021
German Industrial Production (MoM) (Mar)
German Trade Balance (Mar)
ECB President Lagarde Speech
It was a mixed day for the European majors on Thursday following Wednesday’s rebound. The CAC40 and the DAX30 ended the day with gains of 0.28% and 0.17% respectively. The EuroStoxx600 bucked the trend, however, with a 0.22% loss.
Economic data from the Eurozone and the U.S provided the European majors with support on Thursday.
Ahead of today’s nonfarm payrolls, the weekly jobless claims and factory orders from Germany impressed. Corporate earnings results added further support on the day.
Both France’s Soc Gen and Italy’s UniCredit delivered better than expected earnings results, supporting bank stocks.
Tech stocks were a drag once more, as were pharma stocks that struggled following U.S President Biden’s call for pharmas to waive COVID-19 patents. From the EU, a push back by German Chancellor Merkel and EU drug companies limited the damage, however.
It was a busy day on the Eurozone economic calendar on Thursday. Key stats included German factory orders and Eurozone retail sales figures.
In March, factory orders rose by 3.0%, month-on-month, following a 1.2% increase in February. Economists had forecast a 1.7% rise.
According to Destatis,
- Domestic orders increased by 4.9% and foreign orders by 1.6% month-on-month.
- New orders from the euro area increased 0.7% and by 2.2% from other countries.
- Manufacturers of intermediate goods saw new orders increase by 2.8%.
- Consumer goods manufacturers saw new orders jump by 8.5%, with orders for capital goods up 2.5%.
- When compared with February 2020, which was the month before restrictions were imposed, turnover was 3.4% lower.
- Compared on the same month a year earlier, new orders were up 27.8%.
In March, retail sales rose by 2.7% month-on-month following a 4.2% increase in February. Economists had forecast a 1.5% rise.
According to Eurostat,
- Retail sales for non-food products increased by 4.6% and by 1.0% for food, drinks, & tobacco.
- Automotive fuel sales fell by 2.9% in the month.
- By member state, The Netherlands (+8.4%) and Germany and Lithuania (both 7.7%) registered the largest monthly increases.
- Austria (-1.9%) registered the largest monthly decline, however.
- Compared with March 2020, retail sales was up by 12.0%.
- The volume of retail trade increased by 25.0% for non-food products and by 17.1% for automotive fuels.
- Sales of food, drinks, & tobacco fell by 1.1%, however.
The ECB Economic Bulletin
From the ECB, the Economic Bulletin was also in focus early in the European session.
Salient points from the summary section included:
- The near-term economic outlook remains clouded by uncertainty about the resurgence of the pandemic and the roll-out of vaccine campaigns.
- Persistently high rates of infection and the resultant extension and tightening of containment measures continue to constrain economic activity in the short-term.
- Looking ahead, progress on the vaccination front and the envisaged gradual relaxation of containment measures reinforce the expected firm economic rebound in 2021.
- While inflation has picked up, underlying price pressures remained subdued in the context of significant economic slack and still weak demand.
- Global economic activity remained on a solid recovery path at the turn of the year, despite the resurgence of the pandemic.
- While incoming economic data, surveys, and high-frequency indicators suggest a contraction in Q1, these point to a resumption of growth in the 2nd
- Restrictions on mobility and social interaction still limit activity in the services sector. There are signs, however, of a bottoming-out.
- Consumers remain cautious in view of the pandemic and its impact on employment and earnings.
- Over the medium term, the recovery of the euro area economy is expected to be driven by a recovery in domestic and global demand, supported by favorable financing conditions and fiscal stimulus.
From the U.S
Weekly jobless claims were in focus later in the European session. In the week ending 30th April, initial jobless claims fell from a revised 590k to 498k. Economists had forecast a decline to 540k.
Other stats included prelim unit labor costs and nonfarm productivity figures for the 1st quarter. The stats had a muted impact on the European majors.
The Market Movers
For the DAX: It was a mixed day for the auto sector on Thursday. BMW and Daimler rose by 0.77% and by 0.79% respectively, with Continental gaining 0.68%. Volkswagen slid by 1.71%, however, to buck the trend.
It was also a mixed day for the banks. Deutsche Bank rose by 1.13%, while Commerzbank ended the day down by 0.56%.
From the CAC, it was a relatively bullish day for the banks. Soc Gen jumped by 5.46% following its better than expected earnings results. BNP Paribas and Credit Agricole saw modest gains of 0.02% and 0.69% respectively, however.
It was a mixed day for the French auto sector. Stellantis NV rose by 0.45%, while Renault ended the day down by 0.25%.
Air France-KLM fell by 2.61%, while Airbus SE rose by 0.19%.
On the VIX Index
It was a second consecutive day in the red for the VIX on Thursday, marking a 3rd day in the red from 6 sessions.
Following on from a 1.69% fall on Wednesday, the VIX declined by 3.97% to end the day at 18.39.
The Dow and the S&P500 rose by 0.93% and by 0.82% respectively, with the NASDAQ ending the day up by 0.37%.
The Day Ahead
It’s a relatively busy day ahead on the Euro area economic calendar. Key stats include German industrial production and trade data for March. On the monetary policy front, ECB President Lagarde is also scheduled to speak later today. Any comments on the economy or monetary policy will influence.
Ahead of the European open, trade data and private sector PMI figures from China will set the tone.
From the U.S, nonfarm payrolls and unemployment figures will also provide direction late in the European session.
Away from the economic calendar, expect further discussion on Biden’s COVID-19 patent waiver plans to also draw interest.
In the futures markets, at the time of writing, the Dow Mini was down by 16 points.
For a look at all of today’s economic events, check out our economic calendar.