European Equities: A Quiet Economic Calendar Leaves COVID-19 and Central Banks in Focus

The Majors

It was a particularly bearish day for the European majors on Thursday.

The CAC40 slid by 2.01%, with the DAX30 and the EuroStoxx600 ending the day with losses of 1.73% and 1.72% respectively.

Yet more disappointing economic data from Germany and a rise in jobless claims from the U.S added to the market angst.

A dovish set of ECB minutes and a shift in the ECB’s inflation target to 2% failed to support the majors.

The continued spread of the Delta variant will have added to concerns over the sustainability of the current economic recovery.

While recent manufacturing PMI numbers from the Eurozone and member states have impressed, non-survey-based data have been less impressive.

The Stats

It was another relatively quiet start to the European session. German trade data was in focus.

Trade Data

In May, Germany’s trade surplus narrowed from €15.2bn to €12.3bn. Economists had forecast a widening to €17.4bn.

According to Destatis,

  • Exports increased by 0.3% on the previous month and by 36.4% on the same month a year earlier.
  • Imports increased by 3.4% on the previous month and by 32.6% on the same month a year earlier.

Trade with EU countries,

  • Germany exported goods to the value of €60.7bn to EU member states, while importing goods to the value of €52.9bn.
  • Compared with May 2020, exports were up 43.3% and imports up 38.1%.
  • Goods exported to euro area countries increased by 40.2%, with imports up 36.9%.
  • In May 2021, goods exported to EU countries outside of the euro area rose by 50.8%, with imports up 40.8%, year-on-year.

Trade with non-EU countries,

  • Exports to non-EU countries increased by 28.7%, with imports rising by 26.5%.
  • Compared with May 2020, exports to the UK jumped by 46.3%, while imports from the UK rose by 26.2%.
  • Exports to China rose by 17.1%, while exports to the U.S surged by 40.7%.

From the U.S

It was also another quieter day on the U.S economic calendar. On the economic data front, the weekly jobless claim figures were in focus. In the week ending 2nd July, jobless claims rose from 371k to 373k. Economists had forecast claims to fall to 320k,

The Market Movers

For the DAX: It was a bearish day for the auto sector on Thursday. Volkswagen slid by 3.02%, with Continental and Daimler ending the day down by 2.79% and by 2.42% respectively. BMW also struggled, falling by 2.18%.

It was also a bearish day for the banks. Deutsche Bank and Commerzbank saw losses of 3.39% and 1.76% respectively.

From the CAC, it was a bearish day for the banks. BNP Paribas and Soc Gen slid by 2.86% and by 3.12% respectively, with Credit Agricole falling by 1.61%.

It was also a bearish day for the French auto sector. Stellantis NV and Renault ended the day down by 3.35% and 1.59% respectively.

Air France-KLM bucked the trend, rising by 0.29%, while Airbus SE fell by a relatively modest 0.73%.

On the VIX Index

It was back into the green for the VIX on Thursday, marking just the 2nd day in the green from 6-sessions.

Reversing a 1.46% decline from Wednesday, the VIX jumped by 17.28% to end the day at 19.00.

The NASDAQ fell by 0.72%, with the Dow and the S&P500 ending the day down 0.75% and by 0.86% respectively.

VIX 090721 Daily Chart

The Day Ahead

It’s a particularly quiet day ahead on the economic calendar. There are no material stats to provide the European majors with direction on the day.

From the U.S, there are also no material stats to consider later in the day.

The lack of stats will leave the markets to consider the latest set of minutes from the ECB and FED and updates on the Delta variant of the coronavirus.

On the monetary policy front, ECB President Lagarde is scheduled to speak later in the day. Following the latest sell-off, any chatter on the economic outlook would likely influence.

The Futures

In the futures markets, at the time of writing, the Dow Mini was down by 4 points.

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

Global Stocks Fall, Bonds, Euro Rise in Flight to Safety

Markets had come off of their more extreme early moves by mid-afternoon in U.S. trading, but remained lower.

Worries about knock-on effects of Beijing’s crackdown on foreign-listed Chinese firms also weighed on equities.

Bonds, meanwhile, rallied strongly as investors factored in a lower-for-longer interest rate scenario, easing expectations that reflating economies would force rates to rise through the second half of the year.

“The reflation trade is shocked but not dead,” said Jim Vogel, interest rate strategist at FHN Financial in Memphis, since rates will eventually have to rise.

“People have been persistently too optimistic because the first four months of year were just gang-busters good,” he said.

Investor optimism about the pace of recovery is being tempered after months spent overlooking some bearish economic signals. Unusual items that boosted core U.S. inflation data last month, for example, may have made inflation and growth appear more robust than it was.

Around 19:00 GMT, the Dow Jones Industrial Average was down 360.91 points, or 1.04%, to 34,320.88. The broad S&P 500 lost 41.57 points, or 0.95% to 4,316.56. The tech-focused Nasdaq Composite dropped 105.30 points, or 0.72%, to 14,559.76.

The yield on 10-year Treasury notes was down 3.5 basis points to 1.286%. It fell as low as 1.2496% earlier in the day.

Also raising concerns: political tensions in the Middle East, Russia and China that can distract the Biden administration from its domestic agenda, and lessen the focus on policies such as the infrastructure bill. Also, debate about raising the U.S. debt ceiling looms not far ahead.

Meanwhile, a reading on Thursday on the number of Americans filing new unemployment claims provided another indication that the job market recovery from the COVID-19 pandemic continues to be choppy.

The U.S. Federal Reserve on Wednesday dispelled fears of an imminent monetary policy tightening, but confirmed views that such talk could begin next month.

Shares in Europe fell about 1.8%.

The dollar index, which tracks the greenback versus a basket of six currencies, was down 0.22% at 92.436. The euro was last up 0.41%, at $1.1837.

Spot gold prices fell $4.375 or 0.24%, to $1,799.03 an ounce.

Brent crude was last up $0.82, or 1.12%, at $74.25 a barrel. U.S. crude was last up $0.87, or 1.2%, at $73.07 per barrel.

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

(Additional reporting by Simon Jessop, Tom Westbrook, Yoruk Bahceli and Brenna Hughes-Neghaiwi; editing by Kirsten Donovan, Angus MacSwan, Barbara Lewis, William Maclean and Sonya Hepinstall)

 

 

European Equities: German Trade Data, the ECB Minutes, and U.S Jobless Claims in Focus

Economic Calendar

Thursday, 8th July

German Trade Balance (May)

ECB Monetary Policy Meeting Minutes

The Majors

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

The DAX30 rallied by 1.17%, with the CAC40 and the EuroStoxx600 seeing gains of 0.31% and by 0.78% respectively.

Disappointing economic data from Germany and apprehension ahead of the FOMC meeting minutes failed to spook bargain hunters following Tuesday’s pullback.

Optimism and market expectation of continued central bank support remains key for the European markets near-term.

The Stats

It was relatively quiet start to the European session. German industrial production figures were in focus.

German Industrial Production

In May, industrial production fell by 0.3%, following a 0.3% decline in April. Economists had forecast a 0.7% rise.

According to Destatis,

  • Production in industry excluding energy and construction was down by 0.5%.
  • Within industry, the production of consumer goods rose by 4.1%, while the production of intermediate goods increased by 0.6%.
  • The production of capital goods fell by 3.4%.
  • Outside of industry, energy production fell by 2.1%, while production in construction rose by 1.3%.
  • Compared with May 2020, production was up 17.3%, while down by 5.0% when compared with February 2020.

From the U.S

It was also a quieter day on the U.S economic calendar. On the economic data front, JOLT’s job openings had little influence. In May, job openings increased from 9.193m to 9.209m, coming in ahead of a forcasted 9.100m rise.

After the European close, the FOMC meeting minutes were key, however, and may provide some support going into the European open. In response to the FOMC meeting minutes, the U.S majors wrapped up the day in positive territory.

The Market Movers

For the DAX: It was a mixed day for the auto sector on Wednesday. BMW and Volkswagen rose by 0.05% and by 0.68% respectively. Continental and Daimler ended the day down by 0.25% and by 0.83% respectively.

It was a bearish day for the banks, however. Deutsche Bank and Commerzbank saw losses of 1.56% and 2.37% respectively.

From the CAC, it was a bearish day for the banks. Credit Agricole and Soc Gen slipped by 0.14% and by 0.84% respectively, with BNP Paribas falling by 1.43%.

It was also a bearish day for the French auto sector. Stellantis NV and Renault ended the day with losses of 0.43% and 1.33% respectively.

Air France-KLM and Airbus SE fell by 1.54% and by 0.96% respectively.

On the VIX Index

It was back into the red for the VIX on Wednesday, marking a 4th day in the red from 5-sessions.

Partially reversing a 9.09% gain from Tuesday, the VIX fell by 1.46% to end the day at 16.20.

The NASDAQ eked out a 0.1% gain, with the Dow and the S&P500 ending the day up 0.30% and by 0.34% respectively.

VIX 080721 Daily Chart

The Day Ahead

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

German trade data will be in focus ahead of the European open. Later in the day, the ECB’s monetary policy meeting minutes will also draw interest.

From the U.S, the weekly jobless claims will provide direction, though the release coincides with the ECB minutes.

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

The Futures

In the futures markets, at the time of writing, the Dow Mini was up by 16 points.

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

European Equities: German Industrial Production in Focus

Economic Calendar

Wednesday, 7th July

German Industrial Production (MoM) (May)

Thursday, 8th July

German Trade Balance (May)

The Majors

It was a bearish day for the European majors on Tuesday, with the U.S markets reopening after Monday’s holiday.

The CAC40 and the DAX30 fell by 0.91% and by 0.96% respectively, with the EuroStoxx600 ending the day down by 0.52%.

Disappointing economic data from Germany and the Eurozone weighed on the majors as did lingering concerns over the Delta variant.

The Stats

It was another busy start to the European session. German and Eurozone economic sentiment and German factory orders and Eurozone retail sales figures were in focus.

German Factory Orders

In May, factory orders slid by 3.7%, reversing a 0.2% fall from April with interest. Economists had forecast a 1.0% increase.

According to Destatis,

  • Domestic orders increased by 0.9%, while foreign orders tumbled by 6.7%, month-on-month.
  • New orders from the euro area decreased by 2.3% and tumbled by 9.3% from other countries.
  • In May 2021, the manufacturers of intermediate goods saw new orders fall by 3.6%.
  • Orders for capital goods tumbled by 4.6%, while orders for consumer goods rose by 3.9%.
  • Excluding major orders, real new orders in manufacturing were 3.7% lower than in the previous month.

Economic Sentiment

ZEW economic sentiment figures for Germany and the Eurozone disappointed.

Germany’s Economic Sentiment Indicator fell from 79.8 to 63.3 versus a forecasted decline to 75.2.

For the Eurozone, the Economic Sentiment Indicator fell from 81.3 to 61.2, which was worse than a forecasted decline to 78.9.

Eurozone Retail Sales

In May, retail sales increased by 4.6%, reversing a 3.9% fall from April. Economists had forecast a 4.4% rise.

According to Eurostat,

  • Sales of non-food products increased by 8.8% and by 8.1% for automotive fuels.
  • By contrast, food, drinks, & tobacco sales slipped by 0.3%.
  • France and the Netherlands recorded retail sales of 9.9% and 9.3% respectively to lead the way.
  • Compared with May 2020, retail sales jumped 9.0% in the euro area.
  • The jump was driven by a 28.4% surge in automotive fuel sales and a 14.8% increase in non-food product sales.
  • Food, drinks, & tobacco sales rose by just 0.1%.

From the U.S

Service sector PMIs for June also provided direction later in the day, with the market’s favored ISM Non-Manufacturing PMI in focus.

In June, the ISM Non-Manufacturing PMI fell from 64.0 to 60.1. Economists had forecast a decline to 63.0.

The Market Movers

For the DAX: It was a bearish day for the auto sector on Tuesday. BMW and Daimler slid by 3.41% and by 3.49% respectively, with Continental ending the day down by 3.26%. Volkswagen fell by a more modest 2.79%.

It was a bearish day for the banks. Deutsche Bank and Commerzbank saw losses of 3.53% and 3.11% respectively.

From the CAC, it was a bearish day for the banks. BNP Paribas and Soc Gen led the way down, falling by 3.19% and by 3.08% respectively. Credit Agricole saw a more modest 2.80% loss on the day.

It was also a bearish day for the French auto sector. Stellantis NV fell by 1.19%, with Renault tumbling by 5.43%.

Air France-KLM and Airbus SE joined the broader market in the red, falling by 1.80% and by 1.95% respectively.

On the VIX Index

A run of 3 consecutive days in the red came to an end for the VIX on Tuesday.

Reversing a 2.21% fall from Friday, the VIX rose by 9.09% to end the day at 16.44.

The NASDAQ gained 0.17%, while the Dow and the S&P500 ended the day down 0.60% and by 0.20% respectively.

VIX 070721 Daily Chart

The Day Ahead

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

German industrial production figures for May will be in focus going into the European open. With little else for the markets to consider early in the day, expect plenty of influence. Following the unexpected slide in factory orders, a marked decline in production would bring further economic uncertainty.

From the U.S, JOLT’s job openings are due out. The numbers will likely have a muted impact on the European majors, however. There will likely be some apprehension ahead of the FOMC meeting minutes due out after the European close.

Away from the economic calendar, the markets will continue to monitor COVID-19 news updates.

The Futures

In the futures markets, at the time of writing, the Dow Mini was down by 55 points.

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

European Equities: Service Sector PMIs and COVID-19 News in Focus

Economic Calendar

Monday, 5th July

Spanish Services PMI (Jun)

Italian Services PMI (Jun)

French Services PMI (Jun) Final

German Services PMI (Jun) Final

Eurozone Markit Composite PMI (Jun) Final

Eurozone Services PMI (Jun) Final

Tuesday, 6th July

German Factory Orders (MoM) (May)

German IHS Markit Construction PMI (Jun)

German ZEW Economic Sentiment / Current Conditions(Jul)

Eurozone Retail Sales (MoM) (May)

Eurozone ZEW Economic Sentiment (Jul)

Wednesday, 7th July

German Industrial Production (MoM) (May)

Thursday, 8th July

German Trade Balance (May)

The Majors

It was a mixed end to the week for the European majors on Friday.

The CAC40 slipped by 0.01%, while the DAX30 and the EuroStoxx600 rose 0.30% and by 0.26% respectively.

There were no major stats from the Eurozone to provide direction in the early part of the session. The lack of stats left the majors in the hands of U.S nonfarm payroll figures and news updates on the COVID-19 Delta variant.

From the U.S

The all-important nonfarm payrolls were in focus late in the European session.

In June, the government reported a 662k increase in nonfarm payrolls following a 516k rise in May.

In spite of the rise, the unemployment rate edged up from 5.8% to 5.9%.

Economists had forecast nonfarm payrolls to rise by 570k and for the unemployment rate to fall to 5.7%. The participation rate held steady at 61.6% versus a forecasted increase to 61.7%…

The Market Movers

For the DAX: It was a mixed day for the auto sector on Friday. BMW and Continental fell by 0.10% and by 0.57% respectively. Daimler and Volkswagen ended the day up by 0.38% and by 0.09% respectively.

It was a bearish day for the banks, however. Deutsche Bank and Commerzbank ended the day with losses of 1.21% and by 1.48% respectively.

From the CAC, it was a bearish day for the banks. BNP Paribas and Credit Agricole fell by 1.89% and by 1.13% respectively. Soc Gen led the way down, however, sliding by 2.45%.

It was also a bearish day for the French auto sector. Stellantis NV and Renault ended the day with losses of 0.02% and 0.28% respectively.

Air France-KLM rose by 0.27%, with Airbus SE rallying by 2.11%.

On the VIX Index

It was a 3rd consecutive day in the red for the VIX on Friday.

Following a 2.21% loss on Thursday, the VIX fell by 2.65% to end the day at 15.07.

The Dow rose by 0.44%, with the NASDAQ and the S&P500 ending the day with gains of 0.81% and by 0.75% respectively.

VIX 050721 Daily Chart

The Day Ahead

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

Service sector PMIs for Italy and Spain are due out along with finalized PMIs for France, Germany, and the Eurozone.

With little else for the markets to consider, expect plenty of influence from the numbers. The ECB is looking towards consumption to fuel a speedier economic recovery in the 2nd half of the year…

Away from the economic calendar, COVID-19 news updates will also need monitoring on the day.

There are no stats from the U.S to consider, with the U.S markets closed at the start of the week.

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

The Week Ahead – Economic Data, Monetary Policy, and COVID-19 in Focus

On the Macro

It’s quieter week ahead on the economic calendar, with 43 stats in focus in the week ending 9th July. In the week prior, 58 stats had also been in focus.

For the Dollar:

ISM Non-Manufacturing PMI numbers for June will be in focus on Tuesday. Following Monday’s U.S holiday, expect plenty of interest in the numbers.

JOLT’s job openings on Wednesday will also draw interest ahead of weekly jobless claims on Thursday.

A fall in initial jobless claims to sub-300k levels would deliver a boost for the Greenback.

On the monetary policy front, the FOMC meeting minutes and FOMC member chatter will also influence. The minutes are due out on Wednesday.

In the week, the Dollar ended the week rose by 0.41% to 92.226.

For the EUR:

It’s a relatively busy week on the economic calendar.

Service PMIs for Italy and Spain are due out on Monday. Finalized PMIs for France, Germany, and the Eurozone are also due out.

Barring marked revisions, expect Italy and the Eurozone’s PMIs to have the greatest impact.

The focus will then shift to German factory orders, Eurozone retail sales, and economic sentiment figures on Tuesday.

Expect German factory orders and Germany’s ZEW Economic Sentiment index to have the greatest impact.

On Wednesday German industrial production figures will be in focus ahead of German trade data on Thursday.

From the ECB, ECB President Lagarde is scheduled to speak on Monday ahead of the ECB minutes on Thursday. ECB President Lagarde is also due to speak on Friday.

The EUR ended the week down by 0.59% to $1.1865.

For the Pound:

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

Finalized service and composite PMIs are due out on Monday. Expect any downward revisions to test support for the Pound.

The focus will then shift to industrial and manufacturing production and trade data due out on Friday.

Away from the calendar, COVID-19 news updates will remain a key area of interest.

The Pound ended the week down by 0.40% to $1.3824.

For the Loonie:

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

IVEY PMI numbers for June are due out on Wednesday ahead of employment change figures on Friday.

With little else for the markets to consider, both sets of numbers will influence.

Crude oil inventories and market risk sentiment will also provide direction. A wider spread of the Delta strain of the coronavirus could test support for the Loonie in the week.

The Loonie ended the week down 0.24% to C$1.2322 against the U.S Dollar.

Out of Asia

For the Aussie Dollar:

It’s also a relatively quiet week ahead.

Economic data is limited to retail sales figures on Monday. While the numbers are key, the RBA monetary policy decision will be the main event of the week.

With the markets expecting the RBA to stand pat on policy, the Rate Statement will be the key driver.

The Aussie Dollar ended the week down by 0.84% to $0.7526.

For the Kiwi Dollar:

It’s a particularly quiet week ahead.

NZIER Business confidence figures for the 2nd quarter will be in focus on Tuesday.

With little else for the markets to consider, expect plenty of influence from the numbers. A continued pickup in business investment remains key to support a sustainable economic recovery.

The Kiwi Dollar ended the week down by 0.66% to $0.7026.

For the Japanese Yen:

Finalized service PMI figures on Monday and household spending figures on Tuesday are the key stats of the week.

We don’t expect the numbers to have a material impact on the Japanese Yen, however. Monetary policy divergence from the FED remains a negative for the Yen near-term.

The Japanese Yen fell by 0.27% to ¥111.05 against the U.S Dollar.

Out of China

It’s a relatively busy week ahead, June’s Caixin Services PMI will draw interest on Monday.

With service sector activity now also a key component of the Chinese economy, weak numbers would weigh on riskier assets.

At the end of the week, inflation figures will also influence. Central banks are expecting the latest spike in inflation to be transitory. Another pickup in inflationary pressure could test the theory…

The Chinese Yuan ended the week down by 0.26% to CNY6.4730 against the U.S Dollar.

Geo-Politics

Russia and China continue to be the main areas of interest for the markets. On the Iran nuclear agreement, updates on talks with Iran will also need monitoring.

European Equities: A Week in Review – 02/07/21

The Majors

It was a mixed week for the majors in the week ending 2nd July.

The DAX30 rose by 0.27%, while the CAC40 and the EuroStoxx600 ended the week down by 1.06% and by 0.18% respectively.

Economic data from the Eurozone and the U.S delivered the majors with support in the week.

From the Eurozone, inflationary pressures softened in June, according to prelim figures, while the Manufacturing PMI hit a record high.

Economic data from the U.S was also positive, with labor market data supporting the FED’s more optimistic outlook.

While the stats were skewed to the positive for the majors, however, rising COVID-19 cases across the world pressured the majors in the week.

The Stats

Economic sentiment figures for the Eurozone in focus on Tuesday.

A pickup in economic sentiment in June provided some support early in the week.

Midweek, German unemployment and Eurozone inflation figures were in focus.

While unemployment numbers were market positive, inflationary pressures across the Eurozone softened in June.

According to prelim figures, the Eurozone’s annual rate of inflation softened from 2.0% to 1.9%.

On Thursday, manufacturing sector PMIs for June were positive, however.

Spain’s manufacturing PMI increased from 59.4 to 60.4, with Italy’s seeing a modest fall from 62.3 to 62.2.

Germany’s manufacturing PMI rose from 64.4 to 65.1, which was up from a prelim 64.9.

France’s manufacturing sector saw growth slow moderately, with the PMI falling from 59.4 to 59.0. This was up from a prelim 58.6.

As a result, the Eurozone’s manufacturing PMI rose from 63.1 to a record high 63.4, which was up from a prelim 63.1.

Eurozone unemployment figures for May were also upbeat, with the unemployment rate falling from 8.1% to 7.9%.

Retail sales figures from Germany were also market positive on Thursday. Retail sales rose by 4.2% partially reversing a 6.8% slide in April.

From the U.S

After a quiet start to the week, consumer confidence figures impressed on Tuesday. The CB Consumer Confidence Index jumped to a 16-month high in June.

Mid-week, ADP nonfarm employment change figures pointed to another sharp increase in hiring. In June, the ADP reported a 692k increase in nonfarm payrolls, following an 886k surge in May.

On Thursday, the focus shifted to the weekly jobless claims and manufacturing sector PMI numbers.

In the week ending 25th June, initial jobless claims fell from 415k to 365k.

Manufacturing sector activity saw slightly weaker growth in June, however, with the ISM Manufacturing PMI falling from 61.2 to 60.6.

While the stats delivered Dollar support, nonfarm payroll data at the end of the week was the key stat of the week.

In June, the government reported a 662k increase in nonfarm payrolls following a 516k rise in May.

In spite of the rise, the unemployment rate edged up from 5.8% to 5.9%.

Economists had forecast nonfarm payrolls to rise by 570k and for the unemployment rate to fall to 5.7%. The participation rate held steady at 61.6% versus a forecasted increase to 61.7%…

The Market Movers

From the DAX, it was a bearish week for the auto sector. Volkswagen fell by 1.90%, with BMW and Daimler declining by 2.18% and by 2.02% respectively. Continental led the way down, however, with a 2.58% loss.

It was also a bearish week for the banking sector. Deutsche Bank fell by 1.71%, with Commerzbank sliding by 5.59%.

From the CAC, it was a bearish week for the banks. BNP Paribas slid by 3.65%, with Credit Agricole and Soc Gen ending the week down by 0.84% and by 1.30% respectively.

It was a mixed week for the French auto sector, however. Stellantis NV fell by 2.13%, while Renault rose by 0.71%.

Air France-KLM ended the week down by 4.21%, while Airbus rose by 1.72%.

On the VIX Index

It was a 2nd consecutive week in the red for the VIX, marking a 5th weekly loss in 6-weeks. In the week ending 2nd July, the VIX fell by 3.52%. Following a 24.54% slide from the previous week, the VIX ended the week at 15.07.

3-days in the red from 5 sessions delivered the downside in the week.

For the week, the Dow rose by 1.02%, with the NASDAQ and the S&P500 ending the week up by 1.94% and by 1.67% respectively.

VIX 030721 Weekly Chart

The Week Ahead

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

At the start of the week, service sector PMIs for Italy and Spain will be in focus along with finalized PMIs for France, Germany, and the Eurozone.

With the markets expecting a pickup in service sector activity, expect the numbers from Italy and Spain to draw plenty of attention. According to prelim figures last month, the Eurozone’s services PMI hit a 41-month high in June.

On Tuesday, German factory orders and Eurozone retail sales figures will be in focus along with ZEW Economic Sentiment numbers.

Through the 2nd half of the week, the German economy will remain in the spotlight, with industrial production and trade data due out.

From the U.S, the market’s preferred ISM Non-Manufacturing PMI on Tuesday and weekly jobless claims on Thursday will also provide direction.

China’s Caixin services PMI and inflation data due out on Monday and Friday will also need considering.

Away from the economic calendar, central bank chatter and COVID-19 news will continue to influence.

The Weekly Wrap – Economic Data and the Delta Variant Deliver Mixed Results

The Stats

It was a busier week on the economic calendar, in the week ending 2nd July.

A total of 58 stats were monitored, which was up from 49 stats in the week prior.

Of the 58 stats, 26 came in ahead forecasts, with 26 economic indicators coming up short of forecasts. There were 6 stats that were in line with forecasts in the week.

Looking at the numbers, 26 of the stats reflected an upward trend from previous figures. Of the remaining 32 stats, 25 reflected a deterioration from previous.

For the Greenback, economic data had delivered strong Dollar support ahead of Friday’s NFP numbers. In the week ending 2nd July, the Dollar Spot Index rose by 0.41% to 92.226. In the previous week, the Dollar had fallen by 0.41% to 91.851.

Out of the U.S

After a quiet start to the week, consumer confidence figures impressed on Tuesday. The CB Consumer Confidence Index jumped to a 16-month high in June.

Mid-week, ADP nonfarm employment change figures pointed to another sharp increase in hiring. In June, the ADP reported a 692k increase in nonfarm payrolls, following an 886k surge in May.

On Thursday, the focus shifted to the weekly jobless claims and manufacturing sector PMI numbers.

In the week ending 25th June, initial jobless claims fell from 415k to 365k.

Manufacturing sector activity saw slightly weaker growth in June, however, with the ISM Manufacturing PMI falling from 61.2 to 60.6.

While the stats delivered Dollar support, nonfarm payroll data at the end of the week was the key stat of the week.

In June, the government reported a 662k increase in nonfarm payrolls following a 516k rise in May.

In spite of the rise, the unemployment rate edged up from 5.8% to 5.9%.

Economists had forecast nonfarm payrolls to rise by 570k and for the unemployment rate to fall to 5.7%. The participation rate held steady at 61.6% versus a forecasted increase to 61.7%…

In the equity markets, the Dow rose by 1.02%, with the NASDAQ and the S&P500 ending the week up by 1.94% and by 1.67% respectively.

Out of the UK

It was another relatively quiet week, with GDP and finalized manufacturing sector PMI figures in focus.

The stats were skewed to the negative, with the UK economy contracting more than had been expected in the 1st quarter.

Quarter-on-quarter, the economy contracted by 1.6%, revised down from a prelim 1.5%.

In June, the Manufacturing PMI fell from 65.6 to 63.9, which was revised down from a prelim 64.2.

Away from the economic calendar, concerns over the continued spread of the Delta variant added further downward pressure on the Pound.

In the week, the Pound fell by 0.40% to end the week at $1.3824. In the week prior, the Pound had risen by 0.50% to $1.3879.

The FTSE100 ended the week down by 0.18%, following a 1.69% gain from the previous week.

Out of the Eurozone

It was another busy week.

Economic sentiment figures for the Eurozone in focus on Tuesday.

A pickup in economic sentiment in June provided some EUR support early in the week.

Midweek, German unemployment and Eurozone inflation figures were in focus.

While unemployment numbers were EUR positive, inflationary pressures across the Eurozone softened in June.

According to prelim figures, the Eurozone’s annual rate of inflation softened from 2.0% to 1.9%.

On Thursday, manufacturing sector PMIs for June were positive, however.

Spain’s manufacturing PMI increased from 59.4 to 60.4, with Italy’s seeing a modest fall from 62.3 to 62.2.

Germany’s manufacturing PMI rose from 64.4 to 65.1, which was up from a prelim 64.9.

France’s manufacturing sector saw growth slow moderately, with the PMI falling from 59.4 to 59.0. This was up from a prelim 58.6, however.

As a result, the Eurozone’s manufacturing PMI rose from 63.1 to a record high 63.4, which was up from a prelim 63.1.

Eurozone unemployment figures for May were also upbeat, with the unemployment rate falling from 8.1% to 7.9%.

Retail sales figures from Germany were also market positive on Thursday. Retail sales rose by 4.2% partially reversing a 6.8% slide in April.

For the week, the EUR fell by 0.59% to $1.1865. In the week prior, the EUR had risen by 0.61% to $1.1935.

The DAX30 rose by 0.27%, while the CAC40 and the EuroStoxx600 ended the week down by 1.06% and by 0.18% respectively.

For the Loonie

GDP, RMPI, and trade data were in focus in the week.

The stats were skewed to the positive, with the Canadian economy contracting by less than forecasted. In April, the economy contracted by 0.3% versus a forecasted 0.8% contraction. The economy had expanded by 1.3% in March.

The RPMI jumped by 3.2% in May, following a 1.0% increase in April, the uptrend supporting the pickup in inflationary pressures globally.

At the end of the week, Canada’s trade balance fell from a C$0.59bn surplus to a C$1.39bn deficit, however. Economists had forecast a deficit of C$0.30bn.

In the week ending 2nd July, the Loonie fell by 0.24% to C$1.2322. In the week prior, the Loonie had risen by 1.39% to C$1.2292.

Elsewhere

It was a bearish week for the Aussie Dollar and the Kiwi Dollar.

In the week ending 2nd July, the Aussie Dollar fell by 0.84% to $0.7526, with the Kiwi Dollar declining by 0.66% to $0.7026.

For the Aussie Dollar

It was another quiet week. Private sector credit figures were in focus along with manufacturing sector and trade data.

The stats were skewed to the positive but were not strong enough to prevent a loss against the Greenback.

In May, private sector credit rose by 0.4%, following a 0.3% increase in April.

Manufacturing sector activity was also on the rise, with the AIG Manufacturing Index climbing from 61.8 to a new series high 63.2.

More significantly, however, was a widening in the trade balance from A$8.028bn to A$9.681bn in May. The widening was driven by a 6% jump in exports.

For the Kiwi Dollar

It was a relatively quiet week.

Business confidence was in focus mid-week.

In June, the ANZ Business Confidence Index fell by 3 points to -0.6%. Firm’s own activity index climbed by 5 points to +31.6%, however.

While building consents for May were also in focus, an unexpected 2.8% drop in consents having little impact on the Kiwi.

For the Japanese Yen

It was a busy week.

Retail sales figures for May came in ahead of forecasts early in the week. Year-on-year, retail sales was up by 8.2% versus a forecasted 7.9%. In April, retail sales had been up by 11.9%.

Mid-week, industrial production figures disappointed, however. Production slid by 5.9% according to prelim figures, reversing a 2.9% increase from April.

On Thursday, the focus then shifted to 2nd quarter Tankan survey numbers.

While on the rise in the 2nd quarter, only the All-Big Industry Capex beat forecasts, rising by 9.6% versus a forecasted 5.2%. In the 1st quarter, the index had risen by 3%.

The Tankan Big Manufacturing Outlook Index increased from 4 to 13, with the Large Manufacturers Index up from 5 to 14. From the services sector, the Large Non-Manufacturers Index climbed from -1 to 3 in the 2nd quarter.

The Japanese Yen fell by 0.27% to ¥111.05 against the U.S Dollar. In the week prior, the Yen had fallen by 0.49% to ¥110.750.

Out of China

Private sector PMI figures for June were in focus in the week.

The stats were skewed to the negative but were not weak enough to sound the alarm bells.

In June, the NBS manufacturing PMI slipped from 51.0 to 50.9, with the non-manufacturing PMI falling from 55.2 to 53.5.

The markets preferred Caixin Manufacturing PMI fell from 52.0 to 51.3.

In the week ending 2nd July, the Chinese Yuan fell by 0.26% to CNY6.4730. In the week prior, the Yuan had fallen by 0.05% to CNY6.4562.

The CSI300 and the Hang Seng ended the week down by 3.03% and by 3.34% respectively.

European Equities: U.S Nonfarm Payrolls in Focus

Economic Calendar

Friday, 2nd July

German Retail Sales (MoM) (May)

The Majors

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

The CAC49 led the way, rising by 0.71%, with the DAX30 and the EuroStoxx600 seeing gains of 0.47% and 0.62% respectively.

Market focus returned to economic data from the Eurozone and the U.S, supporting a partial recovery of Wednesday’s losses.

The upside was limited, however, in spite of a fresh record high Eurozone PMI and a weaker EUR.

Concerns over the rising number of new COVID-19 cases continued to limit the upside across the European majors.

The Stats

It was a busy economic calendar this morning. Following Tankan survey numbers from Japan and manufacturing PMI numbers from China, manufacturing PMI and unemployment figures from the Eurozone were in focus.

The Member States

Spain’s manufacturing PMI rose from 59.4 to 60.4, while Italy’s manufacturing PMI slipped from 62.3 to 62.2 in June.

Economists had forecast PMIs of 58.6 and 61.5 respectively.

For Germany, the manufacturing PMI increased from 64.4 to 65.1, which was down from a prelim 64.9.

The French manufacturing PMI fell from 59.4 to 59.0, which was up from June’s prelim 58.6.

The Eurozone

In June, the Eurozone’s manufacturing PMI increased from 63.1 to a record high 63.4, which was also up from a flash 63.1.

According to the June Survey,

  • Production increased sharply, with jobs growth hitting a survey peak in June.
  • Investment goods producers recorded the strongest growth, followed by intermediate goods producers.
  • While consumer goods producers continued to lag, growth was the most marked since Jun-2020.

By country, the Netherlands led the way in spite of a 2-month low PMI of 68.8. By contrast, Greece sat at the bottom of the table despite a 254-month high PMI of 58.6.

Germany ranked 3rd, with a 2-month high PMI of 65.1, with Italy’s 2-month low PMI of 62.2 leaving Italy in 5th spot.

Eurozone Unemployment

In May, the Eurozone’s unemployment rate fell from 8.1% to 7.9%, which was in line with forecasts.

From the U.S

Jobless claims and manufacturing sector PMIs were in focus.

In the week ending 25th June, initial jobless claims fell from 415k to 364k, which was better than a forecasted 370k.

The ISM Manufacturing PMI slipped from 61.2 to 60.6, however. Economists had forecast a more modest decline to 61.0.

The Market Movers

For the DAX: It was a relatively bullish day for the auto sector on Thursday. BMW rose by 0.74%, with Continental and Daimler ending the day up by 0.58% and by 0.52% respectively. Volkswagen saw a more modest 0.45% gain on the day.

It was also a bullish day for the banks. Deutsche Bank and Commerzbank ended the day up by 0.45% and by 0.33% respectively.

From the CAC, it was a bullish day for the banks. BNP Paribas and Credit Agricole rose by 1.15% and by 1.47% respectively. Soc Gen led the way, however, rallying by 3.38%.

It was also a bullish day for the French auto sector, however. Stellantis NV rose by 0.89%, with Renault rallying by 4.47%.

Air France-KLM and Airbus SE saw gains of 1.38% and 1.35% respectively.

On the VIX Index

It was a 2nd consecutive day in the red for the VIX on Thursday.

Following a 1.19% loss on Wednesday, the VIX fell by 2.21% to end the day at 15.48.

The NASDAQ rose by 0.13%, with the Dow and the S&P500 ending the day up by 0.38% and by 0.52% respectively.

VIX 020721 Daily Chart

The Day Ahead

It’s a quieter day ahead on the economic calendar. There are no material stats from the Eurozone to provide the majors with direction.

From the U.S, the stats will be more significant, however. June’s nonfarm payroll figures and unemployment rate will provide direction late in the session.

A number of FOMC members have begun talking of a shift in policy as early as next year. A marked increase in payrolls may force further pressure on the FED as inflationary pressures linger.

Away from the economic calendar, COVID-19 news will once more need monitoring. Any further lockdown measures will test support for the majors.

The Futures

In the futures markets, at the time of writing, the Dow Mini was up by 29 points, with the DAX up by 48 points.

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

European Equities: Manufacturing PMIs and U.S Jobless Claims in Focus

Economic Calendar

Thursday, 1st July

Spanish Manufacturing PMI (Jun)

Italian Manufacturing PMI (Jun)

French Manufacturing PMI (Jun) Final

German Manufacturing PMI (Jun) Final

Eurozone Manufacturing PMI (Jun) Final

Eurozone Unemployment Rate (May)

Friday, 2nd July

German Retail Sales (MoM) (May)

The Majors

It was a bearish day for the European majors on Wednesday, reversing Tuesday’s modest gains.

The DAX30 led the way down, falling by 1.02%, with the CAC40 and the EuroStoxx600 seeing losses of 0.91% and 0.77% respectively.

Economic data from China, the Eurozone, and the U.S were all in focus through the day.

From China, NBS private sector PMI figures for June disappointed. The NBS Manufacturing PMI slipped from 51.0 to 50.9, with the Non-Manufacturing PMI falling from 55.2 to 53.5.

The weaker figures had weighed on the DAX futures ahead of the European open

Through the early part of the week, the markets remained torn. Market optimism towards a speedier economic recovery continued to provide support.

Concerns over the rising number of new Delta variant COVID-19 cases weighed, however.

The Stats

In June, the annual rate of inflation ticked up from 1.4% to 1.5% based on prelim figures. This was in line with forecasts.

According to Insee.fr,

  • Prices for energy were up 10.9%, with prices for tobacco rising by 5.3% year-on-year.
  • Food prices were down by 0.3%, with prices for fresh food (-3.4%) weighing.
  • Month-on-month, consumer prices increased by 0.2% after having risen by 0.3% in May.

German Unemployment

In June, unemployment fell by 38k, following on from a 19k decline in May. Economists had forecast a more modest 20k fall. In spite of the larger than expected drop, the unemployment rate held steady at 5.9%.

The Eurozone

According to prelim figures for the Eurozone, the annual rate of inflation softened from 2.0% to 1.9% in June. Month-on-month, consumer prices rose by 0.3% following a 0.3% increase in May.

From the U.S

ADP nonfarm employment change numbers were in focus.

In June, the ADP reported a 692k increase in nonfarm payrolls, following an 886k surge in May. Economists had forecast a 450k rise.

Chicago PMI and pending home sales figures were also in focus but 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. Continental and Volkswagen slid by 2.49% and by 2.18% to lead the way down. BMW and Daimler ended the day down by 1.61% and by 0.97% respectively.

It was also a bearish day for the banks. Deutsche Bank fell by 0.22%, with Commerzbank declining by 1.45%.

From the CAC, it was a bearish day for the banks. BNP Paribas and Credit Agricole fell by 1.31% and by 1.24% respectively. Soc Gen saw a more modest 0.92% loss on the day.

It was also a bearish day for the French auto sector. Stellantis NV and Renault fell by 1.59% and by 2.85% respectively.

Air France-KLM fell by 1.33%, while Airbus SE bucked the trend, rising by 1.84%.

On the VIX Index

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

Partially reversing a 1.65% gain from Tuesday the VIX fell by 1.19% to end the day at 15.83.

The NASDAQ slipped by 0.17%, while the Dow and the S&P500 ended the day up by 0.61% and by 0.13% respectively.

VIX 010721 Daily Chart

The Day Ahead

It’s another busy day ahead on the economic calendar. Italian and Spanish manufacturing PMIs are due out along with finalized PMIs for France, Germany, and the Eurozone.

Barring any marked revisions to prelim figures, expect Italy and the Eurozone’s PMIs to draw the greatest interest.

Later in the day, Eurozone unemployment figures will also draw interest ahead of key stats from the U.S.

From the U.S, the weekly jobless claim figures and market’s favored ISM Manufacturing PMI numbers will also influence.

Ahead of the European open, the Caixin Manufacturing PMI for June will set the tone, however.

Away from the economic calendar, COVID-19 news updates and any central bank chatter will also provide direction.

The Futures

In the futures markets, at the time of writing, the Dow Mini was up by 67 points, with the DAX up by 53 points.

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

European Equities: A Month in Review – June 2021

The Majors

It was another bullish month for the European majors in May, logging a 5th consecutive monthly gain.

The EuroStoxx600 rose by 1.36% to lead the way, with the CAC40 and the DAX30 gaining 0.94% and 0.71% respectively.

After a bearish start to the year, with January having delivered heavy losses, the CAC40 was up 17.2% year-to-date. The DAX30 and EuroStoxx600 weren’t far behind, with year-to-date gains of 13.2% and 13.5% respectively.

The general market theme remained unchanged at the end of the 2nd quarter. Economic data and continued assurances from the ECB of unwavering support delivered the upside in June.

In June’s ECB press conference and in separate speeches, ECB President Lagarde talked of a speedier economic recovery in the 2nd half of the year. This was coupled with assurances that there would be no near-term shift in monetary policy.

From the U.S, a more hawkish than expected FED failed to derail the European market rally. This was in spite of a number of FOMC members talking of a possible rate hike as early as next year.

While monetary policy and economic data provided support, the spread of the Delta variant of the coronavirus limited the upside late in the month.

The Stats

It was a busy month on the Eurozone economic calendar. Inflation, private sector PMIs, and consumer confidence were key areas of focus.

The Private Sector

Private sector PMIs continued to impress in June, with service sector activity seeing a further pickup in activity.

Eurozone member states eased lockdown measures and reopened borders to tourism, supporting the sector.

For the Eurozone, the services PMI rose from 55.2 to 58.0, with the manufacturing PMI holding steady at 63.1, according to June prelim figures.

As a result, the Eurozone’s composite PMI rose from 57.1 to a 180-month high 59.2.

For Germany, a pickup in manufacturing sector activity was also market positive. Manufacturing sector growth had slowed marginally in the preceding months.

Consumer Confidence

With the ECB looking towards a consumer driven pickup in economic activity, consumer confidence and economic sentiment were also on the rise.

For the Eurozone, consumer sentiment increased from -5.1 to -3.3 in June, which was in line with prelim figures.

Sentiment towards the economy was also on the rise. The Eurozone’s economic sentiment indicator increased from 114.5 to 117.9. Economists had forecast an increase to 116.5.

Inflation

In the month, jitters over inflation had tested support for the majors before central bank assurances delivered comfort. The general view has been that the spike in inflation is transitory, with inflation likely to soften going into next year.

According to prelim figures for the Eurozone, the annual rate of inflation softened from 2.0% to 1.9% in June. Month-on-month, consumer prices rose by 0.3% following a 0.3% increase in May.

From the U.S

Economic data was also skewed to the positive in the month.

Inflationary pressures continued to raise the prospects of a sooner rather than later shift in FED monetary policy.

According to the FED’s preferred core PCE Price Index, the annual rate of inflation accelerated from 3.1% to 3.4% in May.

While the acceleration was aligned with market expectations, labor market data continued to ease pressure on the FED.

NFP numbers for May disappointed, with nonfarm payrolls rising by just 559k, which was well short of the ADP’s 886k rise.

Weekly jobless claim figures also pointed to continued slack in the economy. After having fallen to a June low 376k, initial jobless claims crept back up to 400k levels in the 2nd half of the month.

While labor market numbers failed to impress, private sector PMIs were skewed to the positive.

In May, the all-important ISM Non-Manufacturing PMI rose from 62.7 to 64.0, with the ISM Manufacturing PMI increasing from 60.7 to 61.2.

Consumer confidence was also on the rise, hitting a 16-month high in June. A marked improvement in labor market conditions would therefore support a sharper pickup in service sector activity and consumption. Such an eventuality would give the hawks a stronger footing in terms of monetary policy.

All-in-all, the numbers supported the FED’s optimistic outlook on the economy.

The Market Movers

For the DAX: It was a mixed month for the auto sector in June. Continental and BMW rallied by 3.64% and by 3.31% respectively. Daimler and Volkswagen bucked the trend, however, ending the month down by 0.66% and by 7.49% respectively.

It was a bearish month for the banks. Deutsche Bank and Commerzbank slid by 9.09% and by 9.39% respectively.

From the CAC, it was a bearish month for the banking sector. BNP Paribas and Soc Gen slid by 5.34% and by 5.11% respectively. Credit Agricole saw a more modest 3.20% loss in the month, however.

It was another bullish month for the auto sector. Renault and Stellantis NV ended the month up by 0.74% and by 1.82% respectively.

Air France-KLM tumbled by 12.02% as a result of the Delta variant, while Airbus SE rose by 1.67%.

On the VIX Index

It was a 5th consecutive month in the red for the VIX in June, delivering a 7th monthly decline in 10-months.

Following on from a 9.94% decline in May, the VIX fell by 5.55% to end the month at 15.83.

In June, the NASDAQ rallied by 5.49%, with the S&P500 ending the month up by 2.22%. The Dow bucked the trend, however, falling by 0.08%.

VIX 010721 Monthly Chart

The Month Ahead

Following a string of impressive numbers from the Eurozone, we can expect continued focus on key stats.

While private sector PMIs and inflation will remain key drivers, consumer consumption and confidence will have greater significance. The markets will be looking for stats to be aligned with the ECB’s more optimistic outlook towards the economic recovery.

A continued pickup in private sector activity would support a more hawkish stance by the ECB. Much will depend on whether inflationary pressures continue to build and on COVID-19 updates in the month, however.

From the U.S, the big question will be whether tapering talk gathers momentum.

The markets will likely continue to focus on labor market and inflation figures. Consumer confidence and spending will need to remain on an upward trend, however.

As such, we can expect greater market sensitivity to FOMC member chatter in the month ahead.

From China, private sector PMIs will also draw interest following some weaker numbers of late…

European Equities: Consumer Spending, Unemployment, and Inflation in Focus

Economic Calendar

Wednesday, 30th June

French Consumer Spending (MoM) (May)

French CPI y/y (Jun) Prelim

German Unemployment Change (Jun)

German Unemployment Rate (Jun)

Italian CPI (MoM) (Jun) Prelim

Eurozone CPI (YoY) (Jun) Prelim

Eurozone Core CPI (YoY) (Jun) Prelim

Eurozone CPI (MoM) (Jun) Prelim

Thursday, 1st July

Spanish Manufacturing PMI (Jun)

Italian Manufacturing PMI (Jun)

French Manufacturing PMI (Jun) Final

German Manufacturing PMI (Jun) Final

Eurozone Manufacturing PMI (Jun) Final

Eurozone Unemployment Rate (May)

Friday, 2nd July

German Retail Sales (MoM) (May)

The Majors

It was a relatively bullish day for the European majors on Tuesday.

The DAX30 led the way, rising by 0.88%, with the CAC40 and the EuroStoxx600 seeing gains of 0.14% and 0.31% respectively.

A pickup in consumer confidence and economic sentiment in the Eurozone delivered support, with softer inflation figures from Germany also market positive.

From the U.S, a marked pickup in consumer confidence added further support to the majors late in the day.

Concerns over the spread of the Delta variant of the coronavirus continued to limit the upside, however.

The Stats

Inflation and economic sentiment figures were in focus on the day.

According to prelim figures, German consumer prices increased by 0.4% in June, which was in line with forecasts. In May, consumer prices had risen by 0.5%.

As a result, Germany’s annual rate of inflation softened from 2.5% to 2.3%.

For the Eurozone, consumer sentiment increased from -5.1 to -3.3 in June, which was in line with prelim figures.

Sentiment towards the economy was also on the rise. The Eurozone’s economic sentiment indicator increased from 114.5 to 117.9. Economists had forecast an increase to 116.5

From the U.S

Consumer confidence was also in focus. In June, the CB Consumer Confidence Index rose from 120.0 to 127.3. Economists had forecast an increase to 119.0.

The Market Movers

For the DAX: It was a bullish day for the auto sector on Tuesday. Continental ended the day up by 1.02%, with Volkswagen and Daimler rising by 0.68% and by 0.30% respectively. BMW eked out a 0.01% gain on the day.

It was a mixed day for the banks, however. Deutsche Bank rose by 0.62%, while Commerzbank ended the day down by 0.44%.

From the CAC, it was a bullish day for the banks. BNP Paribas rose by 0.70%, with Credit Agricole and Soc Gen seeing gains of 1.53% and 1.27% respectively.

It was a mixed day for the French auto sector, however. Stellantis NV slipped by 0.01%, while Renault ended the day up by 1.12%.

Air France-KLM and Airbus SE saw losses of 0.43% and 0.58% respectively.

On the VIX Index

It was a 2nd consecutive day in the green for the VIX on Tuesday.

Following a 0.90% gain on Monday, the VIX rose by 1.65% to end the day at 16.02.

The NASDAQ rose by 0.19%, with the Dow and the S&P500 both ending the day up by 0.03% respectively.

VIX 300621 Daily Chart

The Day Ahead

It’s a busier day ahead on the economic calendar. French consumer spending and German unemployment figures are due out along with inflation figures for the Eurozone.

While consumer spending is key, expect German unemployment and Eurozone inflation figures to have a greater impact on the majors.

Another marked pickup in inflationary pressures could bring into question the willingness of the ECB to stand pat on policy.

Unemployment figures from Germany will also be key. A rise in unemployment would weigh on spending and test market optimism towards the economic outlook.

From the U.S, ADP nonfarm employment change figures will also provide direction late in the European session.

Ahead of the European open, private sector PMIs from China will set the tone.

The Futures

In the futures markets, at the time of writing, the Dow Mini was up by 33 points.

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

European Equities: Inflation and Consumer Confidence in Focus

Economic Calendar

Tuesday, 29th June

Spanish HICP (YoY) (Jun) Prelim

Eurozone Economic Sentiment

German CPI (MoM) (Jun) Prelim

Wednesday, 30th June

French Consumer Spending (MoM) (May)

French CPI y/y (Jun) Prelim

German Unemployment Change (Jun)

German Unemployment Rate (Jun)

Italian CPI (MoM) (Jun) Prelim

Eurozone CPI (YoY) (Jun) Prelim

Eurozone Core CPI (YoY) (Jun) Prelim

Eurozone CPI (MoM) (Jun) Prelim

Thursday, 1st July

Spanish Manufacturing PMI (Jun)

Italian Manufacturing PMI (Jun)

French Manufacturing PMI (Jun) Final

German Manufacturing PMI (Jun) Final

Eurozone Manufacturing PMI (Jun) Final

Eurozone Unemployment Rate (May)

Friday, 2nd July

German Retail Sales (MoM) (May)

The Majors

It was a bearish start to the week for the European majors on Monday.

The CAC40 fell by 0.98%, with the DAX30 and the EuroStoxx600 seeing losses of 0.34% and 0.58% respectively.

There were no major stats for the markets to consider, leaving market reaction to the latest spike in new COVID-19 cases to peg back the majors.

An introduction of a ban on UK travelers and Germany requiring quarantine for travelers returning from Portugal hit the news wires, weighing on airline stocks.

Adding to the market angst at the start of the week was news of the Delta strain of the virus spreading across Asia.

The Stats

There were no major stats from the Eurozone to provide the majors with direction.

From the U.S

It was also a quiet day on the economic calendar, with no major stats to influence later in the day.

The Market Movers

For the DAX: It was a bearish day for the auto sector on Monday. Daimler slid by 2.07% to lead the way down, with BMW and Continental falling by 1.22% and by 1.42% respectively. Volkswagen saw a more modest 0.74% loss on the day.

It was also a bearish day for the banks. Deutsche Bank and Commerzbank ended the day with losses of 1.24% and 2.53% respectively.

From the CAC, it was a bearish day for the banks. BNP Paribas and Soc Gen slid by 2.31% and by 2.46% respectively, with Credit Agricole falling by 1.41%.

The French auto sector also saw red, with Stellantis NV and Renault ended the day down by 1.29% and by 1.60% respectively.

Air France-KLM tumbled by 4.08% in reaction to the travel bans, with Airbus SE falling by 2.92%.

On the VIX Index

A run of 5 consecutive days in the red came to an end for the VIX on Monday.

Partially reversing a 2.19% fall from Friday, the VIX rose by 0.90% to end the day at 15.76.

The Dow fell by 0.44%, while the NASDAQ and the S&P500 ended the day up by 0.98% and by 0.23% respectively.

VIX 290621 Daily Chart

The Day Ahead

It’s a relatively busy day ahead on the economic calendar. From the Eurozone, German inflation and Eurozone consumer sentiment figures together with U.S consumer confidence figures will be in focus.

With central banks looking towards consumer spending to deliver a speedier economic recovery in the 2nd half of the year, today’s stats will influence.

On the inflation front, a further pickup in inflationary pressure would test support for the majors, however.

Away from the economic calendar, COVID-19 news and central bank chatter will also need monitoring.

The Futures

 

In the futures markets, at the time of writing, the Dow Mini was down by 4 points.

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

Will The Markets Lead Us To Temptation Or Back To Work?

Headed into the July 4th holiday weekend, we have 5 more trading days in Q2:2021. We are starting to see a continual grinding higher in the US major indexes and various market sectors.  The one thing my team and I believe is happening in the markets right now is “moderate complacency”.

After the FOMC statements just a few weeks ago and the continued support of the US Fed, the markets entered a period of moderate volatility.  Currently, the markets appear to be settling in for moderately strong earnings expectations as Q2:2021 comes to a close.  That means the markets will start to react to earnings and profit data as well as forward expectations presented by corporate statements along with the continued economic recovery attempt.

NASDAQ Grinds Higher – Breaks Upper Flag Channel Level

This NASDAQ Daily chart shows how the NQ has rallied above a Flag channel high and has begun to grind higher. Traders continue to expect upward price trending in expectation of stronger technology and other earnings data.  This broad Flag pattern, shown on this chart by the CYAN lines, should highlight the level of volatility currently active in the NQ right now. The range between the upper and lower boundaries is more than 6%.  Therefore, any surprise volatility may prompt a price rotation within this volatility range.

Retail Breaking Resistance And Attempting A Rally Above $100 – Get Ready

Retail will likely surge as earnings data is delivered showing a moderate increase in consumer spending.  Additionally, as we are well into the start of Summer, there are likely a large number of consumers that are making big-ticket purchases (boats, cars, RVs/Trailers, toys) in support of Summer vacation plans.  This surge of consumer spending after many months of lockdown and saving may prompt a wave of spending throughout the end of 2021 and into 2022.  The stimulus checks also continue to help drive additional savings and spending.

Retail may surge to levels above $105 if profits and earnings data comes in strong over the next few weeks for Q2:2021.

MIDCAPS Show Us Where Resistance Is Likely To Contain The Upward Grind

This Monthly chart of the SPDR S&P 400 Midcap Futures shows the resistance level that we believe will continue to act as a ceiling for the markets.  The trends that started in 2016 and continued through early 2018 created a Standard Deviation channel range that trends almost perfectly to the current price highs.  My researchers believe this upper Standard Deviation channel will continue to act as strong resistance as earnings data pushes the markets into a continued grind higher.

So, as we start to see the markets trend after the July 4th holiday weekend, stay keenly aware of where the current resistance/price ceiling is in the charts.  It is likely that prices may attempt to reach above this level briefly, then stall sideways, or correct lower, as this upward trending channel represents extreme bullish trending.

The strongest market sectors are likely to continue to try to grind higher and attempt a 4% to 7% rally (or possibly more) as the markets prepare for Q2:2021 earnings and continued US economic recovery data.  Traders are expecting solid earnings and further economic growth, and are thus putting their capital behind these expectations – grinding the markets higher right now.  There is a very strong potential the strongest sectors will rally 5% to 8%, or more, over the next 25+ days.  Are you ready?

Or, are you trying to make sense of where the opportunities are in these market trends?  Are you still trapped in the thinking that guessing when and where to enter the markets will help you identify good trades?

My team and I have been building and developing fully systematic algorithmic trading strategies for many years and can tell you that unless you have a solid foundation related to knowing when and where opportunities exist in market trends, you are likely churning your money in and out of failed trades. I will be presenting my two favorite strategies at the July Wealth365 Summit on July 13th at 4 pm and July 16th at 12 pm. The Summit is free to attend and offers unparalleled opportunities for learning…plus a potential prize or two!

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

Have a great day!

Chris Vermeulen
Chief Market Strategist
www.TheTechnicalTraders.com

 

European Equities: A Quiet Economic Calendar Leaves Central Bank Chatter and COVID in Focus

Economic Calendar

Tuesday, 29th June

Spanish HICP (YoY) (Jun) Prelim

Eurozone Economic Sentiment

German CPI (MoM) (Jun) Prelim

Wednesday, 30th June

French Consumer Spending (MoM) (May)

French CPI y/y (Jun) Prelim

German Unemployment Change (Jun)

German Unemployment Rate (Jun)

Italian CPI (MoM) (Jun) Prelim

Eurozone CPI (YoY) (Jun) Prelim

Eurozone Core CPI (YoY) (Jun) Prelim

Eurozone CPI (MoM) (Jun) Prelim

Thursday, 1st July

Spanish Manufacturing PMI (Jun)

Italian Manufacturing PMI (Jun)

French Manufacturing PMI (Jun) Final

German Manufacturing PMI (Jun) Final

Eurozone Manufacturing PMI (Jun) Final

Eurozone Unemployment Rate (May)

Friday, 2nd July

German Retail Sales (MoM) (May)

The Majors

It was a mixed end to the week for the European majors on Friday.

The CAC40 slipped by 0.12%, while the DAX30 and the EuroStoxx600 saw modest gains of 0.12% and 0.13% respectively.

Economic data from Germany provided support to the DAX30 and the EuroStoxx600, with consumer sentiment on the rise.

Following ECB President Lagarde’s outlook on the economy, a pickup in consumer sentiment was a must to be aligned. Early in the week, Lagarde had talked of a likely pickup in consumer spending to support a speedier economic recovery.

From the U.S, economic data was mixed, however, limiting the upside on the day.

The Stats

Economic data from the Eurozone was on the quieter side on Friday, with German consumer sentiment in focus.

The Gfk Consumer Climate increased from -6.9 to -0.3, which was the highest level since August 2020.

According to the June survey,

  • Both economic and income expectations saw marked increases.
  • Income expectations jumped by 14.6 points to 34.1, which was the highest level since a 41.2 in February 2020.
  • In June, the economic expectations indicator jumped by 17.3 points to 58.4 points, the highest level since 59 points in February 2011.
  • There was a modest rise in the propensity to buy indicator, however, which increased by 3.4 points to 13.4 points.

From the U.S

It was another busy day on the economic calendar.

Personal spending and the FED’s preferred inflation metrics were in focus later in the European session.

It was a mixed bag for the markets, however.

In May, personal spending stalled after a 0.9% rise in April.

On the inflation front, the numbers suggested that a further spike in prices may be avoided.

In May, the Core PCE Price Index rose by 0.5%, month-on-month, following a 0.7% increase in April. Economists had forecast a 0.6% rise.

Year-on-year, the Core PCE Price Index increased by 3.4%, which was in line with forecasts. In April, the Core PCE Price Index had risen by 3.1%.

Other stats included finalized consumer sentiment and expectation figures that had a muted impact on the majors.

The Market Movers

For the DAX: It was a bearish day for the auto sector on Friday. Volkswagen and Daimler fell by 1.37% and by 1.33% to lead the way down. BMW and Continental saw modest losses of 0.38% and 0.53% respectively.

It was a bullish day for the banks, however. Deutsche Bank and Commerzbank ended the day with gains of 0.38% and 0.72% respectively.

From the CAC, it was a mixed day for the banks. BNP Paribas and Credit Agricole rose by 0.67% and by 0.57% respectively. Soc Gen bucked the trend, however, falling by 0.14%.

It was also a mixed day for the French auto sector. Stellantis NV rose by 0.41%, while Renault ended the day down by 0.30%.

Air France-KLM and Airbus SE ended the day with losses of 0.83% and 1.43% respectively.

On the VIX Index

It was a 5th consecutive day in the red for the VIX on Friday.

Following a 2.14% fall on Thursday, the VIX declined by 2.19% to end the day at 15.62.

The NASDAQ slipped by 0.06%, while the Dow and the S&P500 ended the day up by 0.69% and by 0.33% respectively.

VIX 280621 Daily Chart

The Day Ahead

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

From the U.S, there are also no material stats to provide the majors with direction later in the day.

A lack of economic data will leave the majors in the hands of central bank chatter and COVID-19 news updates from the weekend.

With the UK government struggling to contain the spread of the Delta strain, a pickup in new cases across the EU would question the optimistic economic outlook.

The Futures

In the futures markets, at the time of writing, the Dow Mini was up by 22 points, while the DAX was down by 8 points.

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

Daimler Set to Spin Off Truck Unit by Year End – CFO

“We are right on schedule with the detailed preparations for this complex project and want to float Daimler Truck on the stock exchange as an independent company by the end of this year,” CFO Harald Wilhelm told the Automobilwoche weekly.

“We are convinced of the industrial logic and benefits of the planned realignment of Daimler and the spin-off of Daimler Truck.”

A Daimler spokesperson said on Sunday the company had no further comment on the report.

The plan – announced in February – is aimed at increasing Daimler’s investor appeal as a focused electric, luxury car business, as the Mercedes-Benz brand challenges Tesla Inc, Porsche, BMW and others.

LBBW analyst Frank Biller told the magazine Daimler Truck could join the German DAX index of blue chip companies next March.

In the truck market, Daimler faces traditional rivals such as Sweden’s AB Volvo, Volkswagen AG unit Traton and Paccar Inc

Under the planned spin-off, a significant majority stake in Daimler Truck would be distributed to Daimler shareholders.

(Reporting by Emma Thomasson; Editing by Jan Harvey)

The Week Ahead – A Busy Economic Calendar and Central Bank Chatter to Keep the Markets Busy

On the Macro

It’s busier week ahead on the economic calendar, with 61 stats in focus in the week ending 2nd July. In the week prior, 49 stats had been in focus.

For the Dollar:

Consumer confidence figures for June get things going on Tuesday.

The focus will then shift to ADP nonfarm employment change figures on Wednesday and jobless claims on Thursday.

At the end of the week, nonfarm payrolls and the U.S unemployment rate wrap things up.

Other stats include Chicago PMI, Manufacturing PMI, trade, and factory order numbers. Barring particularly dire numbers, however, these stats should have a muted impact on the Dollar.

In the week, the Dollar ended the week down by 0.41% to 91.851.

For the EUR:

It’s a busy week on the economic data front.

Economic sentiment figures for the Eurozone will be in focus on Tuesday.

The focus will then shift to French consumer spending and German unemployment figures on Wednesday.

On Thursday, manufacturing PMIs for Italy and Spain and finalized numbers for France, Germany, and the Eurozone will draw attention.

At the end of the week, German retail sales figures will also influence.

With market jitters over inflation lingering, prelim June inflation numbers for member states and the Eurozone will also influence in the week.

The EUR ended the week up by 0.61% to $1.1935.

For the Pound:

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

Finalized 1st quarter GDP numbers are due out on Wednesday ahead of June’s finalized Manufacturing PMI on Thursday.

Barring any marked GDP revisions, however, the numbers are unlikely to have a lasting impact on the Pound.

Updates on COVID-19 and the government’s plans to ease restrictions or to extend will remain the key driver.

The Pound ended the week up by 0.50% to $1.3879.

For the Loonie:

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

April GDP and May RMPI numbers on Wednesday will provide the Loonie with direction.

On Friday, trade data for May will also influence.

The Loonie ended the week up 1.39% to C$1.2292 against the U.S Dollar.

Out of Asia

For the Aussie Dollar:

It’s also a relatively quiet week ahead.

Private sector credit figures for May are due out on Wednesday ahead of trade data on Thursday.

AIG Manufacturing figures for June are also due out on Thursday but will likely have a muted impact on the Aussie.

The Aussie Dollar ended the week up by 1.48% to $0.7590.

For the Kiwi Dollar:

It’s a particularly quiet week ahead.

Business confidence figures for June will be in focus on Wednesday.

With little else for the markets to consider, expect plenty of influence from the numbers. A continued pickup in business investment remains key to support a sustainable economic recovery.

Building consents for May, due out on Thursday, should have a muted impact on the Kiwi, however.

The Kiwi Dollar ended the week up by 1.98% to $0.7073.

For the Japanese Yen:

Retail sales figures will draw interest on Tuesday ahead of prelim industrial production numbers on Wednesday.

On Thursday, Tankan survey figures for the 2nd quarter will also be in focus.

The Japanese Yen fell by 0.49% to ¥110.75 against the U.S Dollar.

Out of China

It’s a relatively busy week ahead, with the private sector PMI numbers due out.

On Wednesday, the NBS private sector PMIs will draw interest ahead of the all-important Caixin Manufacturing PMI on Thursday.

The Chinese Yuan ended the week down by 0.05% to CNY6.4562 against the U.S Dollar.

Geo-Politics

Russia and China remain main areas of interest for the markets. On the Iran nuclear agreement, Raisi’s victory in the Iranian presidential election also makes talks more interesting. Raisi is not expected to be as amenable in talks as his more moderate predecessors…

European Equities: A Week in Review – 25/06/21

The Majors

It was a bullish week for the majors in the week ending 25th June.

The DAX30 and the EuroStoxx600 ended the week up by 1.04% and by 1.23% respectively, with the CAC40 rising by 0.82%.

Economic data from the Eurozone coupled with assurances from ECB President Lagarde delivered the majors with support.

Some positive market chatter from FED Chair Powell during COVID-19 testimony early in the week added to the upside. Powell, delivering testimony to lawmakers, highlighted that inflation alone would not be enough to cause a shift in monetary policy. Slack in the labor market would also need to be removed to support a more hawkish stance. The FED Chair also continued to note that inflationary pressures were likely to be transitory.

From the ECB, June’s Economic Bulletin also delivered, with the ECB talking of a pickup in economic growth in the 2nd half of the year. While optimistic, the ECB also talked of the need for unwavering monetary policy support.

The combination was aligned with the markets optimistic outlook and hope of continued ECB monetary policy support.

From the U.S, news on Thursday of an infrastructure deal on Capitol Hill was another plus for the bulls late in the week.

The Stats

Consumer confidence figures on Tuesday improved marginally in June, providing support.

On Wednesday, private sector PMIs for June were positive, however.

Germany’s manufacturing PMI rose from 64.4 to 64.9, with the services PMI increasing from 52.8 to 58.1.

France’s services PMI was also on the rise, increasing from 56.6 to 57.4. Manufacturing sector growth slowed, however, with the PMI falling from 59.4 to 58.6.

As a result, the Eurozone’s manufacturing PMI held steady at 63.1, while the services PMI increased from 55.2 to 58.0.

The pickup in service sector activity drove the composite PMI to a 180-month high 59.2.

In the second half of the week, business and consumer sentiment figures for Germany were in focus.

In June, the Ifo Business Climate Index rose from 99.2 to 101.8 in June. Economists had forecast an increase to 100.6.

The Business Expectations sub-index increased from 102.9 to 104.0, with the Current Assessment sub-index climbing from 95.7 to 99.6. Economists had forecasted increases to 103.9 and to 97.8 respectively.

For July, the GfK consumer climate indicator increased from -6.9 to -0.3, coming in ahead of a forecasted -4.0. The pickup in consumer confidence supported the ECB’s outlook on consumer spending.

The ECB

On the monetary policy front, ECB President Lagarde delivered an optimistic outlook on the economy early in the week.

The ECB’s Economic Bulletin also drew attention on Thursday.

Salient points from the Bulletin included:

  • The latest data signal a bounce-back in services activity and ongoing dynamism in manufacturing production.
  • Economic activity is expected to accelerate in the 2nd half of this year, as further containment measures are lifted.
  • A pickup in consumer spending, strong global demand, and accommodative fiscal and monetary policies will lend crucial support to the recovery.
  • Uncertainties remain, however, as the near-term economic outlook continues to depend on the course of the pandemic and on how the economy responds after reopening.
  • Inflation has picked up as a result of transitory factor and an increase in energy prices. It is expected to rise further through the 2nd half of the year before declining as temporary factors fade out.
  • Headline inflation is expected to remain below the Governing Council’s aim over the projection horizon.

From the U.S

The markets had to wait until Wednesday for June’s prelim private sector PMI numbers.

It was a mixed bag for the markets. While manufacturing sector activity picked up, the pace of service sector growth slowed in June.

The services PMI fell from 70.4 to 64.8, while the manufacturing PMI rose from 62.1 to 62.6.

On Thursday, core durable goods and jobless claims figures disappointed. In the week ending 18th June, initial jobless claims saw a modest decline from 418k to 411k.

Core durable goods orders failed to impress, rising by just 0.3%. Economists had forecast a 0.8% rise off the back of a 1.7% jump in April.

At the end of the week, the focus then shifted to inflation and personal spending figures.

In May, personal spending stalled, falling short of a forecasted 0.4% rise. In April, spending had risen by 0.9%.

Inflationary pressures were on the rise, however, aligned with market expectations. The FED’s preferred Core PCE Price Index rose by 3.4% year-on-year, following a 3.1% increase in April. This was in line with forecasts.

Other stats included finalized consumer sentiment and expectation figures that had a muted impact on the markets.

The Market Movers

From the DAX, it was a mixed week for the auto sector. Volkswagen fell by 1.19% to buck the trend. BMW and Daimler ended the week up by 1.23% and by 0.74% respectively, with Continental gaining 2.68%.

It was a bullish week for the banking sector. Deutsche Bank and Commerzbank rose by 1.46% and by 1.79% respectively.

From the CAC, it was a bullish week for the banks. BNP Paribas and Credit Agricole rose by 1.34% and by 1.27% respectively, with Soc Gen gaining by 1.56%.

It was a mixed week for the French auto sector, however. Stellantis NV rallied by 3.63%, while Renault slipped by 0.06%.

Air France-KLM and Airbus ended the week down by 4.43% and by 2.13% respectively.

On the VIX Index

It was back into the red for the VIX, marking a 4th weekly loss in 5-weeks. In the week ending 25th June, the VIX slid by 24.54%. Partially reversing a 32.27% jump from the previous week, the VIX ended the week at 15.62.

5-days in the red from 5 sessions, which included an 13.57% slide on Monday delivered the downside in the week.

For the week, the Dow rallied by 3.44%, with the NASDAQ and the S&P500 ending the week up by 2.35% and by 2.74% respectively.

VIX 260621 Weekly Chart

The Week Ahead

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

Eurozone economic sentiment figures kick things off on Tuesday along with prelim inflation figures from Germany.

The focus will then shift to French consumer spending and German unemployment figures on Wednesday.

With the ECB expecting a consumer driven economic pickup in Q2, both sets of numbers will need to be positive.

On Wednesday, prelim Eurozone inflation figures for June will also influence, however.

Manufacturing sector activity becomes the area of focus on Thursday. Manufacturing PMIs for Italy and Spain are due out along with finalized numbers for France, Germany, and the Eurozone.

Barring marked revisions to prelim numbers, expect Italy and the Eurozone’s PMIs to have the greatest impact.

Later in the day on Thursday, unemployment numbers for the Eurozone will also draw interest.

At the end of the week, German retail sales wrap things up…

From the U.S, consumer confidence, weekly jobless claims, ISM manufacturing PMIs, and nonfarm payrolls will provide direction.

Manufacturing PMI numbers from China will also provide riskier assets with direction in the week, however.

On the monetary policy front, FOMC and ECB member chatter will need monitoring in the week.

The Weekly Wrap – Dollar Gives Up Ground as Economic Data and Powell Question Divergence

The Stats

It was a quieter week on the economic calendar, in the week ending 25th June.

A total of 49 stats were monitored, which was down from 61 stats in the week prior.

Of the 49 stats, 24 came in ahead forecasts, with 22 economic indicators coming up short of forecasts. There were 3 stats that were in line with forecasts in the week.

Looking at the numbers, 25 of the stats reflected an upward trend from previous figures. Of the remaining 24 stats, 21 reflected a deterioration from previous.

For the Greenback, economic data and FED Chair Powell testimony weighed. In the week ending 25th June, the Dollar Spot Index slipped by 0.41% to 91.851. In the previous week, the Dollar had rallied by 2.32% to 92.225.

Out of the U.S

It was quiet start to the week.

The markets had to wait until Wednesday for June’s prelim private sector PMI numbers.

It was a mixed bag for the markets. While manufacturing sector activity picked up, the pace of service sector growth slowed in June.

The services PMI fell from 70.4 to 64.8, while the manufacturing PMI rose from 62.1 to 62.6.

On Thursday, core durable goods and jobless claims figures disappointed. In the week ending 18th June, initial jobless claims saw a modest decline from 418k to 411k.

Core durable goods orders failed to impress, rising by just 0.3%. Economists had forecast a 0.8% rise off the back of a 1.7% jump in April.

At the end of the week, the focus then shifted to inflation and personal spending figures.

In May, personal spending stalled, falling short of a forecasted 0.4% rise. In April, spending had risen by 0.9%.

Inflationary pressures were on the rise, however, aligned with market expectations. The FED’s preferred Core PCE Price Index rose by 3.4% year-on-year, following a 3.1% increase in April. This was in line with forecasts.

Other stats included finalized consumer sentiment and expectation figures that had a muted impact on the markets.

In the equity markets, the Dow rallied by 3.44%, with the NASDAQ and the S&P500 rising by 2.35% and by 2.74% respectively.

Out of the UK

It was a relatively quiet week, with industrial trend orders and prelim private sector PMIs in focus.

In June, the CBI Industrial Trend Orders increased from 17 to 19.

It was the only positive stat of the week, however, with private sector activity seeing slower growth in June.

The Manufacturing PMI fell from 65.6 to 64.2, with the Services PMI declining from 62.9 to 61.7.

While the stats were negative for the Pound, the BoE monetary policy decision was the main event of the week.

On Thursday, the BoE left policy unchanged, which was in line with market expectations.  The minutes pointed to a meaningful review in August, when the MPC is furnished with the latest projections. A unanimous vote in favor of a hold on interest rates weighed on the Pound on the day, however.

Adding to the downside for the Pound was a continued rise in new cases of the Delta strain of the coronavirus.

In the week, the Pound rose by 0.50% to end the week at $1.3879. In the week prior, the Pound had fallen by 2.45% to $1.3810.

The FTSE100 ended the week up by 1.69%, reversing a 1.63% fall from the previous week.

Out of the Eurozone

It was a busy week.

Consumer confidence figures on Tuesday improved marginally in June, providing limited EUR support.

On Wednesday, private sector PMIs for June were positive, however.

Germany’s manufacturing PMI rose from 64.4 to 64.9, with the services PMI increasing from 52.8 to 58.1.

France’s services PMI was also on the rise, increasing from 56.6 to 57.4. Manufacturing sector growth slowed, however, with the PMI falling from 59.4 to 58.6.

As a result, the Eurozone’s manufacturing PMI held steady at 63.1, while the services PMI increased from 55.2 to 58.0.

The pickup in service sector activity drove the composite PMI to a 180-month high 59.2.

In the second half of the week, business and consumer sentiment figures for Germany were in focus.

In June, the Ifo Business Climate Index rose from 99.2 to 101.8 in June. Economists had forecast an increase to 100.6.

The Business Expectations sub-index increased from 102.9 to 104.0, with the Current Assessment sub-index climbing from 95.7 to 99.6. Economists had forecasted increases to 103.9 and to 97.8 respectively.

For July, the GfK consumer climate indicator increased from -6.9 to -0.3, coming in ahead of a forecasted -4.0. The pickup in consumer confidence supported the ECB’s outlook on consumer spending.

The ECB

On the monetary policy front, ECB President Lagarde delivered an optimistic outlook on the economy early in the week.

The ECB’s Economic Bulletin also drew attention on Thursday.

Salient points from the Bulletin included:

  • The latest data signal a bounce-back in services activity and ongoing dynamism in manufacturing production.
  • Economic activity is expected to accelerate in the 2nd half of this year, as further containment measures are lifted.
  • A pickup in consumer spending, strong global demand, and accommodative fiscal and monetary policies will lend crucial support to the recovery.
  • Uncertainties remain, however, as the near-term economic outlook continues to depend on the course of the pandemic and on how the economy responds after reopening.
  • Inflation has picked up as a result of transitory factor and an increase in energy prices. It is expected to rise further through the 2nd half of the year before declining as temporary factors fade out.
  • Headline inflation is expected to remain below the Governing Council’s aim over the projection horizon.

For the week, the EUR rose by 0.61% to $1.1935. In the week prior, the EUR had fallen by 2.50% to $1.1863.

The EuroStoxx600 ended the week up by 1.23%, with the CAC40 and the DAX30 gaining 0.82% and by 1.04% respectively.

For the Loonie

It was another quiet week. Retail sales figures for April disappointed on Wednesday. Sales slid by 5.7%, reversing a 3.6% jump from March. Core retail sales tumbled by 7.2%, reversing a 4.3% rise from March.

In the week ending 25th June, the Loonie rose by 1.39% to C$1.2292. In the week prior, the Loonie had tumbled by 3.15% to C$1.2465.

Elsewhere

It was a bullish week for the Aussie Dollar and the Kiwi Dollar.

In the week ending 25th June, the Aussie Dollar rose by 1.48% to $0.7590, with the Kiwi Dollar gaining 1.98% to $0.7073.

For the Aussie Dollar

It was a quiet week. Prelim retail sales figures for May were the key stats of the week.

The numbers were Aussie Dollar negative, with retail sales rising by just 0.1% in May. While negative, the impact was limited. May’s disappointing figure was attributed to a reintroduction of COVID-19 restrictions in the State of Victoria.

For the Kiwi Dollar

It was a relatively quiet week.

Consumer sentiment and trade data were in focus.

In the 2nd quarter, consumer sentiment improved, with the Westpac Consumer Sentiment Index rising from 105.2 to 107.1.

While the headline figure was positive, the sub-indexes for a good time to buy and 5-year economic outlook fell in the quarter.

At the end of the week, trade data provided the Kiwi Dollar with support.

In May, New Zealand’s trade surplus widened from NZ$414m to NZ$469m.

Year-on-year, the trade balance fell from a NZ$760m surplus to a NZ$62m deficit. This was the first annual deficit since the year ended June 2020.

While dairy goods exports were on the rise, car imports by value hit an all-time high as the COVID-19 pandemic recovery continued.

For the Japanese Yen

It was a quieter week.

Mid-week, prelim private sector PMIs for June delivered mixed results ahead of inflation figures on Friday.

Japan’s manufacturing PMI fell from 53.0 to 51.5, while the services PMI rose from 46.5 to 47.2.

The numbers were far from compelling, suggesting status quo on the monetary policy front for the foreseeable future.

At the end of the week, inflation figures were Yen positive. Tokyo core consumer prices held steady in June, year-on-year. In May, core consumer prices had fallen by 0.2% year-on-year.

The Japanese Yen fell by 0.49% to ¥110.750 against the U.S Dollar. In the week prior, the Yen had fallen by 0.63% to ¥110.210.

Out of China

There were no material stats to draw attention in the week.

At the start of the week, the PBoC left loan prime rates unchanged, which was in line with market expectations

In the week ending 25th June, the Chinese Yuan fell by 0.05% to CNY6.4562. In the week prior, the Yuan had fallen by 0.90% to CNY6.4531.

The CSI300 and the Hang Seng ended the week up by 2.69% and by 1.69% respectively.