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European Equities: Prelim Private Sector PMIs for May in Focus

Economic Calendar:

Friday, 21st May

French Manufacturing PMI (May) Prelim

French Services PMI (May) Prelim

German Manufacturing PMI (May) Prelim

German Services PMI (May) Prelim

Eurozone Manufacturing PMI (May) Prelim

Eurozone Markit Composite PMI (May) Prelim

Eurozone Services PMI (May) Prelim

The Majors

It was a bullish day for the European majors on Thursday.

The CAC40 and EuroStoxx600 rose by 1.29% and by 1.27% respectively, with the DAX30 ending the day up by 1.70%.

Following Wednesday’s losses, the FOMC meeting minutes released after the European close on Wednesday pegged the majors back early on Thursday.

With economic data from the Eurozone on the lighter side, stats from the U.S provided support later in the European session, however.

The Stats

Wholesale inflation figures for Germany were in focus this morning.

In April, the producer price index rose by 0.8% month-on-month, following a 0.9% increase in February.

According to Destatis,

  • Month-on-month, energy prices increased by 0.6%, with prices for intermediate goods rising by 1.8%.
  • Prices for non-durable goods increased by 0.6%, month-on-month, with prices for durable consumer goods up 0.4%.
  • Compared with April 2020, the index of producer prices for industrial products increased by 5.2%. This was the highest year-on-year increase since August 2011.
  • Prices of intermediate goods increased by 8.2%, compared with April 2020.
  • Compared with April 2020, energy prices jumped by 10.6%.
  • Price for durable consumer goods increased by 1.6%, with prices for capital goods up by 1.0%.
  • Non-durable consumer goods prices declined by 0.6%, however.

From the U.S

It was a relatively busy day on the economic calendar on Thursday. Philly FED Manufacturing numbers for May were in focus along with weekly jobless claim figures.

In May, the Philly FED Manufacturing Index fell from 50.2 to 31.5. Economists had forecast a decline to 43.0.

More significantly, however, initial jobless claims for the week ending 14th May fell from 478k to 444k. Economists had forecast a decline to 450k.

The downward trend in claims continues to support the optimistic outlook towards the U.S economy. Improving labor market conditions combined with the upward trend in personal savings rates point to a sharp pickup in consumption to fuel economic growth.

Impressive labor market figures will add further pressure on the FED to reconsider its policy stance in the coming months.

The Market Movers

For the DAX: It was a bullish day for the auto sector on Thursday. Daimler rallied by 2.33%, with BMW and Volkswagen seeing gains of 1.58% and 1.49% respectively. Continental rose by a more modest 0.64% on the day.

It was also a bullish day for the banks. Deutsche Bank and Commerzbank ended the day up by 0.27% and by 0.93% respectively.

From the CAC, it was a bullish day for the banks. Credit Agricole rose by 0.63%, with BNP Paribas and Soc Gen both seeing gains of 0.48% respectively.

It was also a bullish day for the French auto sector. Stellantis NV rose by 1.87%, with Renault gaining 0.14%.

Air France-KLM saw more red, falling by 2.34%, while Airbus SE ended the day up by 1.53%.

On the VIX Index

It was back into the red for the VIX on Thursday, ending a run of 3 consecutive days in the green.

Reversing a 3.66% gain from Wednesday, the VIX fell by 6.81% to end the day at 20.67.

The NASDAQ rallied by 1.77%, with the Dow and the S&P500 ending the day up by 0.55% and by 1.06% respectively.

VIX 210521 Daily Chart

The Day Ahead

It’s a busy day ahead on the European economic calendar. Prelim private sector PMI numbers for France, Germany, and the Eurozone are due out.

Expect plenty of influence from the numbers, with the markets looking for a pickup in service sector activity to support the economic recovery.

From the U.S, prelim private sector PMIs are also due out, with the services PMI likely to have the greatest impact on the majors.

The Futures

In the futures markets, at the time of writing, the Dow Mini was up by 18 points.

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