EU flags waving over blue sky. Brussels, Belgium

European Equities: German Business Sentiment and U.S Core Durable Goods in Focus

Economic Calendar:

Monday, 26th April 2021

German Ifo Business Climate Index (Apr)

Wednesday, 28th April 2021

GfK German Consumer Climate (May)

Thursday, 29th April 2021

Spanish HICP (YoY) (Apr) Prelim

German Unemployment Change and Rate (Apr)

German CPI (MoM) (Apr) Prelim

Friday, 30th April 2021

French GDP (QoQ) (Q1)

German GDP (QoQ) (Q1)

German GDP (YoY) (Q1)

Spanish GDP (QoQ) (Q1)

Italian CPI (MoM) (Apr) Prelim

Eurozone CPI (YoY) (Apr) Prelim

Eurozone Unemployment Rate (Mar)

Eurozone GDP (QoQ) (Q1)

Eurozone GDP (YoY) (Q1)

The Majors

The European majors ended the week on the back foot to mark a first weekly fall for the EuroStoxx600 in 8-weeks.

On Friday, the DAX30 slipped by 0.27%, with the CAC40 and the EuroStoxx600 declining by 0.15% and by 0.13% respectively.

Economic data from the Eurozone and the U.S failed to support the majors, with market concerns over President Biden’s capital tax gains plans weighing.

Adding to the downside at the end of the week was continued concern over the continued rise in new COVID-19 cases globally.

On Thursday, ECB President Lagarde had talked of a 1st quarter economic contraction. Failure to slow spread of the virus globally could raise concerns over demand and delay the reopening of economies.

The Stats

It was a busy day on the economic calendar on Friday, with private sector PMIs in focus.

France and Germany

According to prelim figures, the French manufacturing PMI slipped from 59.3 to 59.2 in April, while the services PMI rose from 48.2 to 50.4.

Economists had forecast PMIs of 59.0 and 46.5.

From Germany, the manufacturing PMI slipped from 66.6 to 66.4 with the services PMI falling from 51.5 to 50.1.

Economists had forecast PMIs of 65.8 and 50.8 respectively.

The Eurozone

For the Eurozone, the manufacturing PMI rose from 62.5 to a record high 63.3, with the services PMI rising from 49.6 to an 8-month high 50.3.

Economists had forecast PMIs of 62.0 and 49.1 respectively.

According to the prelim April Survey,

  • The composite PMI increased from 53.2 to a 9-month high 53.7.
  • At the turn of the quarter, the services sector returned to growth for the 1st time since Aug-2020.
  • Following 4-months of decline, output rose for the 2nd consecutive month, with the rate of increase the 2nd largest since Sep-2018.
  • New orders across the Eurozone hit the highest since Sep-2018, led by a 2nd successive record increase in new orders for manufactured goods.
  • New orders for services fell for a 9th consecutive month, though came close to stabilizing.
  • Employment levels across the private sector rose at the fastest pace since Nov-2018. Manufacturers reported the steepest job creation since Feb-2018, with service sector firms reporting a modest increase in staffing levels.

From the U.S

Private sector PMIs were in focus late in the session.

In April, the manufacturing PMI increased from 59.1 to 60.6, with the services PMI rising from 60.4 to 63.1.

Economists had forecast PMIs of 60.5 and 61.9 respectively.

The Market Movers

For the DAX: It was a bullish end to the week for the auto sector on Friday. Continental rallied by 3.12%, with BMW and Daimler rising by 0.67% and by 0.65% respectively. Volkswagen ended the day up by a more modest 0.17%.

It was a bullish day for the banks, however. Deutsche Bank rose by 1.10%, with Commerzbank gaining 1.90%.

From the CAC, it was a mixed day for the banks. BNP Paribas fell by 0.34%, while Credit Agricole and Soc Gen both rose by 0.23%.

It was also a mixed day for the French auto sector. Stellantis NV rose by 0.07%, while Renault ended the day down by 1.03%.

Air France-KLM returned to the red, sliding by 3.39%, with Airbus SE falling by 1.25%.

On the VIX Index

It was back into the red for the VIX on Friday.

Reversing a 6.91% rise from Thursday, the VIX slid by 7.38% to end the day at 17.33.

The Dow rose by 0.67%, with the NASDAQ and the S&P500 gaining 1.44% and 1.09% respectively.

VIX 260421 Daily Chart

The Day Ahead

It’s a relatively busy day ahead on the European economic calendar. Key stats include Germany’s IFO business sentiment figures for April.

We can expect plenty of sensitivity to the numbers, with business investment key to a sustainable economic recovery.

From the U.S, core durable and durable goods orders for March will also influence later in the session.

Away from the economic calendar, COVID-19 news updates and corporate earnings will also need continued monitoring.

The Futures

In the futures markets, at the time of writing, the Dow Mini was up by 6 points.

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