European Equities: The G20 Summit Sets the Majors Up for a Bounce

Economic Calendar:

Monday, 1st July

  • Spanish Manufacturing PMI (Jun)
  • Italian Manufacturing PMI (Jun)
  • French Manufacturing PMI (Jun) Final
  • German Manufacturing PMI (Jun) Final
  • German Unemployment Change (Jun)
  • German Unemployment Rate (Jun)
  • Eurozone Manufacturing PMI (Jun) Final
  • Eurozone Unemployment Rate (May)

Tuesday, 2nd July

  • German Retail Sales m/m (May)

Wednesday, 3rd 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

Thursday, 4th July

  • Eurozone Retail Sales m/m (May)

Friday, 5th July

  • German Factory Orders m/m (May)
  • German Industrial Production m/m (May)

The Majors

The European majors bounced back on Friday, with the DAX30 leading the way, rallying by 1.04% to end the week up by 0.48%.

For the CAC40, a 0.83% gain brought a 5 day run of losses to an end, with the CAC40 ending the week up by 0.19%. The EuroStoxx600 ended the day up by 0.7% to leave the index with a 0.03% gain for the week.

Support for the major came from positive chatter from the U.S administration ahead of Trump’s planned meeting with China’s Premier Xi.

The Stats

Economic data out of the Eurozone included prelim June inflation figures out of France, Italy and the Eurozone. May consumer spending figures out of France were also in focus.

The stats were skewed to the positive, with French consumer spending rising by 0.4% in May. Inflation also picked up in June, with the Eurozone’s core annual rate of inflation rising from 0.8% to 1.1%. Forecasts were for a 1% rise. The Eurozone’s annual rate of inflation held steady at 1.2%.

According to Eurostat, supporting inflation were

  • Food, alcohol & tobacco, energy, and services, with estimates pointing to 1.6% increases.
  • The annual rate of non-energy industrial goods was forecasted to increase by just 0.2%.

Out of the U.S, a contraction in Chicago’s manufacturing sector failed to impact risk sentiment. Inflation held steady at 1.6%, according to the FED’s preferred core PCE price index figures. While easing from a 0.6% rise in April, personal spending rose by 0.4%, which was in line with forecasts.

In contrast to the CB Consumer Confidence figures released earlier in the week, the Michigan Consumer Sentiment Index came in at 98.2. While down from May’s 100.0, the index came in ahead of a prelim 97.9.

The Market Movers

From the DAX, bank stocks were on the move. Deutsche Bank was amongst the front runners on Friday, rallying by 1.41%, with Commerzbank up by 1.92%. From the auto sector, Continental ended the day up by 1.01%. Daimler and Volkswagen also made gains on the day, rising by 1.14% and by 0.43% respectively. BMW bucked the trend, however, falling by 0.2%.

From the CAC, BNP Paribas and Credit Agricole gained 0.77% and 0.52% respectively, while Renault jumped by 1.54% on the day.

The Day Ahead

It’s a busy day ahead.

Key stats due out of the Eurozone include finalized French, German, and Eurozone manufacturing PMI numbers for June. Ahead of the numbers, Italy and Spain’s manufacturing PMIs will also be in focus. Later in the morning, Eurozone unemployment figures will likely have a muted impact on the majors.

Any revisions to Germany’s PMI will influence the DAX and the EuroStoxx600 in particular. Hopes of an end to the U.S – China trade war would limit any impact, however.

While we can expect some direction from the numbers, positive updates from the G20 Summit from Saturday will drive demand for the majors through the day.

At the time of writing, the DAX was up by 100.5 points. The Dow Mini was up by 202 points.

European Equities: The G20 Summit Kicks Off and Will Drive the Majors

Economic Calendar:

Friday, 28th June

  • French Consumer Spending m/m (May)
  • French CPI m/m (June) Prelim
  • French HICP m/m (June) Prelim
  • Spanish GDP q/q (Q1)
  • Italian CPI m/m (Jun) Prelim
  • Eurozone Core CPI y/y (Jun) Prelim
  • Eurozone CPI y/y (Jun) Prelim

The Majors

The European majors had a repeat of Wednesday. The DAX30 managed a 2nd consecutive day in the green, rising by 0.21%, while the CAC40 and EuroStoxx600 continued to struggle.

It was a 5th consecutive day in the red for the CAC40, which ended the day with a 0.13% loss, while the EuroStoxx600 ended the day flat.

Both Washington and Beijing delivered statements of intent ahead of the G20 that gets underway today. Comments suggested that neither China nor the U.S has any interest in backing down at this juncture.

The Stats

Economic data out of the Eurozone included prelim June inflation figures out of Spain and Germany and Eurozone business confidence figures.

June inflation figures were mixed on Thursday. Spain’s annual rate of inflation softened from 0.8% to 0.4% in June, while Germany’s annual rate of inflation picked up from 1.4% to 1.6%.

While inflation figures were mixed, business confidence figures disappointed. The Business Confidence Indicator fell from 0.30 to 0.17 in June. According to figures released by the EU Commission, production expectations, coupled with negative sentiment towards overall and export orders books weighed. A deterioration in the level of stocks also contributed to the fall.

Out of the U.S, there were no major shocks. Finalized 1st quarter GDP numbers were in line with 2nd prelims. Initial jobless claims picked up from 217k to 227k, the marginal increase not enough to ruffle the markets’ feathers.

The Market Movers

From the DAX, bank stocks found further support, with Deutsche Bank and Commerzbank rising by 1.94% and by 0.98% respectively. For the auto sector, it was a mixed bag. Continental and Volkswagen saw red, falling by 0.09% and by 0.16% respectively. BMW (+0.74%) and Daimler (+0.58%) managed to end the day in positive territory.

Leading the way on the day was Bayer (“BAYN”), which jumped by 5.19%, with ThyssenKrupp finding further support, up by 2.22%. ThyssenKrupp continued to find support on the possible buyout of its planned elevator business unit. For Bayer, the company announced that it has hired a legal team to battle a lawsuit resulting from its acquisition of Monsanto.

From the CAC, BNP Paribas and Credit Agricole gained 0.68% and 1.16% respectively, while Renault slipped by 0.09%.

The Day Ahead

It’s a busy week ahead.

French consumer spending and finalized Spanish 1st quarter GDP numbers are due out. On the inflation front, French, Italian and the Eurozone’s prelim June inflation figures will also be in focus.

From the U.S, the FED’s preferred Core PCE Price index and personal spending figures are due out ahead of Chicago’s June PMI and finalized consumer sentiment figures.

A shift in sentiment towards a near-term FED rate cut weighed on the majors mid-week. Softer inflation figures would be positive for the majors.

It goes without saying, however, that the stats will play second fiddle once more. Updates from the G20 Summit will be the key driver on the day. Expect a panic sell-off if trade talks go nowhere…

Trump has a vested interest in getting trade talks back on track as he kicks off his presidential election campaign. A recession would certainly suggest that he just doesn’t have the walk to go with the talk…

At the time of writing, the DAX was up by 40.5 points. The Dow Mini was up by 55 points.

European Equities: It’s the Eve of the G20 Summit…

Economic Calendar:

Thursday, 27th June

  • Spanish HICP (YoY) (Jun)
  • Eurozone Business Confidence
  • German CPI m/m  (Jun) Prelim

Friday, 28th June

  • French Consumer Spending m/m (May)
  • French CPI m/m (June) Prelim
  • French HICP m/m (June) Prelim
  • Spanish GDP q/q (Q1)
  • Italian CPI m/m (Jun) Prelim
  • Eurozone Core CPI y/y (Jun) Prelim
  • Eurozone CPI y/y (Jun) Prelim

The Majors

The European majors had a mixed session on Wednesday. While the DAX30 ended the day up by 0.14%, the CAC40 and EuroStoxx600 fell by 0.25% and by 0.31% respectively.

Chatter from the U.S ultimately drove the majors. A pullback on expectations of a near-term FED rate cut weighed at the start of the day, following FED Chair Powell comments in the previous U.S session.

Sentiment towards the U.S – China trade talks at tomorrow’s G20 Summit provided some support following optimistic chatter from the administration.

The Stats

Economic data out of the Eurozone on Wednesday included German consumer confidence figures and French employment numbers.

The stats were skewed to the negative on the day. The German consumer climate index eased from 10.10 to 9.80 in July. Forecasts were for a fall to 10.00.

According to the latest GfK survey,

  • The propensity to buy increased in June, while income expectations deteriorated, weighing on the headline figure.
  • The income expectations indicator tumbled by 12.2 points to 45.5 points, its lowest level since March 2017. The indicator stood at 57.5 points this time last year.
  • Consumer sentiment towards the economic outlook improved, with the economic expectations indicator rising by 0.7 points to 2.4 points. In spite of the monthly rise, the indicator remains 17 points below the same time last year.
  • Alongside the improved economic outlook, the propensity to buy indicator rose by 3.2 points to 53.7 points. Compared to the figure from this time last year, the indicator is down 1.4 points.

French jobseekers were on the rise, increasing from 3,372.9k to 3,376.5k.

Out of the U.S economic data included trade and durable goods orders numbers. The numbers were mixed, with core durable goods orders rising by 0.3%, whilst durable goods orders fell by 1.3% in May.

Trade numbers were also negative, with the U.S goods trade deficit widened from $70.92bn to $74.55bn in May.

The Market Movers

From the DAX, the auto and financial sectors were amongst the front runners on Wednesday. Deutsche Bank rallied by 3.91%, with Commerzbank ending the day up by 1.57%. From the auto sector, BMW rallied by 2.46%, with Daimler (+1.61%), Volkswagen (+1.57%) and Continental (+1.10%) all at the top of the table.

Leading the way on the day was ThyssenKrupp, which jumped by 5.44% off the back of news of a possible bid for its elevator unit

From the CAC, bank stocks were also on the rise, with BNP Paribas and Credit Agricole gaining 1.74% and 1.47% respectively.

The Day Ahead

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

June prelim inflation figures are due out of Spain and Germany, with the Eurozone’s business confidence numbers also in focus. Softer inflation figures would provide support, as the markets look to the ECB’s assurances of further easing should inflationary pressures soften.

From the U.S, finalized 1st quarter GDP numbers and the weekly jobless claims will also provide direction.

With the G20 Summit starting tomorrow, any chatter on trade or Iran will likely overshadow the numbers on the day.

At the time of writing, the DAX was up by 46.5 points. The Dow Mini was up by 65 points.

European Equities: Stats, the G20 and Iran Are in Focus

Economic Calendar:

Wednesday, 26th June

  • GfK German Consumer Climate (Jul)
  • France Jobseekers Total

Thursday, 27th June

  • Spanish HICP (YoY) (Jun)
  • Eurozone Business Confidence
  • German CPI m/m  (Jun) Prelim

Friday, 28th June

  • French Consumer Spending m/m (May)
  • French CPI m/m (June) Prelim
  • French HICP m/m (June) Prelim
  • Spanish GDP q/q (Q1)
  • Italian CPI m/m (Jun) Prelim
  • Eurozone Core CPI y/y (Jun) Prelim
  • Eurozone CPI y/y (Jun) Prelim

The Majors

The European majors saw red again on Tuesday. Leading the way down was the DAX for a second consecutive, falling by 0.38%.

For the CAC40 and EuroStoxx600, the losses were more modest, with the pair ending the day down by 0.13% and by 0.10% respectively.

Pressure on the majors continued to come from rising tensions in the Middle East as Trump rolls out fresh sanctions on Iran. Market jitters ahead of this week’s G20 Summit also weighed on risk appetite on the day.

There’s a lot riding on progress being made at the G20, where Trump and Xi are scheduled to meet…

The Stats

There were no material stats out of the Eurozone on Tuesday to provide direction.

Out of the U.S economic data included new home sales and consumer confidence figures.

The stats were skewed to the negative, with new home sales sliding by 7.8% in May and the Consumer Confidence Index sliding from 131.3 to 121.5. The Index was at its lowest level since September 2017.

According to the latest CB Consumer Confidence Survey,

  • The Present Situation Index, fell from 170.7 to 162.6, with the Expectations Index falling from 105.0 to 94.1.

While the market focus was on China and Iran, the weak numbers certainly didn’t help on the day.

The Market Movers

From the DAX, the auto sector continued to stumble. Continental led the way down, falling by 1.66%. Daimler fell by 0.84% off the back of Monday’s 3.18% slide. BMW and Volkswagen ended the day down by 0.82% and by 0.87% respectively.

Bank stocks were mixed on the day, however. While Deutsche Bank rose by 0.11%, Commerzbank slid by 1.19% on the day.

From the CAC, bank stocks fell for a 2nd consecutive day. BNP Paribas fell by 0.74%, with Credit Agricole ending the day down by 1.11%. From the auto sector, Renault joined the German autos in the red with a 2.03% slide. Ongoing friction between Nissan and Renault added to the downside on the day.

The Day Ahead

It’s a relatively quiet day ahead. Germany’s GfK Consumer Climate figures will be in focus. Following disappointing business climate numbers, the consumer sector will need to provide support.

Forecasts are negative for the majors.

From elsewhere, U.S Durable Goods Orders will be watched closely.

Outside of the stats, expect market jitters ahead of this week’s G20 Summit to continue to linger, with chatter from Iran to also influence.

At the time of writing, the DAX was down by 35.5 points. The Dow Mini was up by 2 points.

S&P 500 Pulling Back From New Record, Reversal? The U.S. Stock Market In

The U.S. stock market indexes lost 0.1% on Friday, following an intraday advance. The S&P 500 index reached the new record high of 2,964.15, but then it came back to the 2,950 mark again. The index gained more than 230 points from its early June local low of around 2,729. Both the Dow Jones Industrial Average and the Nasdaq Composite lost 0.1% on Friday.

The nearest important resistance level of the S&P 500 index is now at 2,960-2,965, marked by the mentioned new record high. On the other hand, the support level is at 2,950. The next support level remains at 2,930-2,935, marked by the recent consolidation.

The broad stock market broke above the last year’s high in the early May. But then the S&P 500 index retraced all of the April’s advance. The market also broke below its two-month-long upward trend line in the early May. And then it got back higher following breaking above the month-long downward trend line. On Friday the broad stock market reached the new record high. However, it remains close to the previous medium-term highs:

Close to Friday’s Record High

The index futures contracts trade between +0.1% and +0.2% vs. their Friday’s closing prices, so the expectations before the opening of today’s trading session are slightly positive. The European stock market indexes have been mixed so far. There will be no new important economic data announcements today.

The broad stock market will likely fluctuate following last week’s rally and the Friday’s record-breaking intraday advance. We may see an attempt at getting back to the all-time high. However, there may be another short-term profit-taking action at some point.

The S&P 500 futures contract trades within an intraday consolidation, as it remains slighlty below the new record high. The nearest important resistance level is at 2,960-2,970. On the other hand, the support level is now at 2,945-2,950, among others. The futures contract is now below the recent upward trend line, as the 15-minute chart shows:

Nasdaq Slightly Below 7,800 Mark

The technology Nasdaq 100 futures contract follows a similar path this morning, as it trades within an intraday consolidation. The nearest important resistance level is at 7,800. On the other hand, the support level is at 7,650-7,700, marked by the recent resistance level. The Nasdaq futures contract remains below the 7,800 level, as we can see on the 15-minute chart:

Big Cap Tech Stocks – Short-Term Pause or Some Topping Pattern?

Let’s take a look at the Apple, Inc. stock (AAPL) daily chart (chart courtesy of http://stockcharts.com). The stock is now close to the resistance level of $200, following breaking above the downward trend line in the early June. It still looks like an upward correction:

Now let’s take a look at the daily chart of Microsoft Corp. (MSFT). The stock reached the new record high of $137.73 on Friday. It broke above the short-term consolidation last week. But will it continue upwards? We could see another profit-taking action at some point. The resistance level is at around $140, marked by the previous medium-term upward trend line:

Dow Jones Closer to Last Year’s Record High

The Dow Jones Industrial Average has been relatively weaker than the broad stock market since February. The resistance level remained at around 26,800-27,000, marked by the last year’s topping pattern and the record high of 26,951.8. On Friday the index reached the new medium-term high, following breaking above its late April consolidation. However, it remains below the last year’s all-time high:

Nikkei Going Sideways

Let’s take a look at the Japanese Nikkei 225 index. It retraced more of its recent decline last week. But the market continues to trade along the previous local lows and the medium-term consolidation:

The S&P 500 index reached the new record high on Friday, before reversing its upward course and closing slightly lower. So was it a downward reversal or just a quick profit-taking action before another leg higher? We could see some more volatility following the recent advances.

Concluding, the S&P 500 index will likely open slightly higher today. Then we may see some more short-term consolidation along the previous medium-term highs and the new record high.

Thank you.

Paul Rejczak 
Stock Trading Strategist 
Sunshine Profits – Effective Investments through Diligence and Care


Disclaimer

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

European Equities: Iran Sanctions and the G20 Remain in Focus

Economic Calendar:

Wednesday, 26th June

  • GfK German Consumer Climate (Jul)

Thursday, 27th June

  • Spanish HICP (YoY) (Jun)
  • Eurozone Business Confidence
  • German CPI (MoM) (Jun) Prelim

Friday, 28th June

  • French Consumer Spending m/m (May)
  • French CPI m/m (June) Prelim
  • French HICP m/m (June) Prelim
  • Spanish GDP q/q (Q1)
  • Italian CPI m/m (Jun) Prelim
  • Eurozone Core CPI y/y (Jun) Prelim
  • Eurozone CPI y/y (Jun) Prelim

The Majors

The European majors saw red at the start of the week. Leading the way down was the DAX, which slid by 0.53%. For the CAC40 and EuroStoxx600, the losses were more modest, with the pair ending the day down by 0.12% and by 0.25% respectively.

Rising tensions in the Middle East continued to pin back the European majors. Chatter from the Oval Office and the threat of fresh sanctions added to the market angst.

The Stats

Economic data out of the Eurozone was on the heavier side on Monday.

Germany’s Business Climate Index and sub-indexes provided direction in the early part of the European session.

According to the June IFO Report,

  • The IFO Business Climate Index fell from 97.9 to 97.4 in June, which was the lowest level since November 2014.
  • In manufacturing, the business climate index fell further, attributed to falling new orders. The sub-index fell from 3.9 to 1.5. In June 2018, the sub-index stood at 24.2.
  • The services sector also became less optimistic, with the service sector business climate sub-index falling from 21.0 to 20.0
  • Sentiment towards current conditions improved marginally in June. The IFO Current Conditions Index rose from 100.6 to 100.8.
  • By contrast, the IFO Expectations Index slid from 95.2 to 94.2.

While Germany’s Business Climate Index was in line with forecast, particularly weak sentiment added to the negative sentiment on the day.

The Market Movers

From the DAX, Daimler tumbled by 3.18% off the back of a profit warning to drag the auto sector into the red. Continental fell by 1.8%, with BMW and Volkswagen ended the day down by 1.2% and by 0.05% respectively.

Bank stocks were also in the red on the day. Deutsche Bank slid by 1.25%, while Commerzbank fell by 0.62%.

From the CAC, BNP Paribas slid by 0.71%, with Credit Agricole ending the day down by 0.34%. From the auto sector, Renault joined the German autos in the red with a 1% fall on the day.

The Day Ahead

There are no material stats due out of the Eurozone through the day.

The lack of stats will place focus on U.S consumer confidence figures due out later in the day.

Outside of the stats, we can expect the markets to continue to focus on chatter from Iran and the Oval Office. The rise in tensions could complicate trade talks between the U.S and China.

Exports to India and China account for the lion’s share of Iran’s oil exports. Trump could use Iran as a pawn to nudge trade talks with China along. The last thing that the U.S needs is a China – Iran allegiance to muddy the waters in the Gulf…

At the time of writing, the DAX was up by 18 points. The Dow Mini was up by 43 points.

European Equities: German Business Confidence and Geopolitics in Focus

Economic Calendar:

Monday, 24th June

  • German IFO Current Conditions / German IFO Expectations / German IFO Business Climate

Wednesday, 26th June

    • GfK German Consumer Climate (Jul)

      Thursday, 27th June

  • Spanish HICP (YoY) (Jun)
  • Eurozone Business Confidence
  • German CPI (MoM) (Jun) Prelim

Friday, 28th June

  • French Consumer Spending (MoM) (May)
  • French CPI (MoM) (June) Prelim
  • French HICP (MoM) (June) Prelim
  • Spanish GDP (QoQ) (Q1)
  • Italian CPI (MoM) (Jun) Prelim
  • Eurozone Core CPI (YoY) (Jun) Prelim
  • Eurozone CPI (YoY) (Jun) Prelim

The Majors

The European majors ended the week on the back foot. The DAX30 and CAC40 both fell by 0.13%, while the EuroStoxx600 fell by 0.36%.

It was a bullish week, however. The CAC40 led the way, rallying by 2.99% with the DAX30 ending the week up by 2.01%. The EuroStoxx600 trailed with a 1.57% gain.

News of a planned meeting between Trump and Xi at the coming week’s G20 Summit provided support through the week.

Adding to the upside was a dovish FED and some ECB President jawboning mid-week. 7 FOMC members projected 2 rate cuts for the year. ECB President Draghi also assured the markets of ECB support should inflationary pressures fail to build.

Rising tensions between the U.S and Iran weighed on risk appetite at the end of the week, however. News of Trump pulling out from a military strike on Iran at the 11th hour raised the prospects of military action in the near-term.

A lack of support from allies left the U.S President isolated, with few world leaders wanting to be embroiled in a conflict with Iran.

Trump has now promised tougher sanctions to bring the country to its knees. It remains to be seen how Iran responds…

The Stats

Economic data out of the Eurozone was on the heavier side on Friday.

June prelim private sector PMI numbers provided some direction in the early part of the day.

The numbers were skewed to the positive side on Friday.

The Eurozone’s manufacturing PMI rose from 47.7 to 47.8, with the services sector rising from 55.4 to 55.6. The upward trends led to the composite rising from 51.8 to 52.1. According to the latest Eurozone Markit Composite,

  • While growth remained weak, the prelim PMI hit a 7-month high in June.
  • The service sector PMI activity index hit a 7-month high, while the manufacturing PMI output index hit a 2-month low.
  • In spite of the 2-month low, the manufacturing PMI hit a 2-month high.
  • While private sector activity picked up, optimism fell to its lowest level since late-2014.
  • Export orders for both goods and services fell to the weakest level since January.
  • On the positive labor market conditions improved.

From the U.S

From the U.S, the private sector PMI figures were less impressive. The services sector PMI fell from 50.9 to 50.7, with the manufacturing PMI falling from 50.5 to 50.1.

In spite of the negative sentiment towards the economic outlook, housing sector data was on the positive side. Existing homes sales rose by 2.5% in May, with falling mortgage rates providing support. 30-year fixed rates fell from 4.14% to 3.99% through the month.

The Market Movers

From the DAX, Wirecard led the way on the day, rising by just 0.67%. Continental ended the day flat from the auto sector, while BMW (-0.67%), Daimler (-0.41%), and Volkswagen (-0.24%) saw red on the day.

The banking sector saw red on the day, with Deutsche Bank and Commerzbank falling by 0.66% and by 0.18% respectively.

From the CAC, BNP Paribas slid by 0.89%, with Credit Agricole ending the day down by 0.62%. From the auto sector, Renault found strong support, rallying by 2.37% to buck the trend on the day.

The Day Ahead

It’s a relatively quiet day ahead on the economic calendar. There are no material stats due out of the U.S, leaving the markets to focus on German business sentiment figures.

If the prelim Composite PMI is anything to go by, the IFO Business Climate Index could surprise this morning. According to the Markit survey, while German service sector confidence fell to the lowest level since October 2014 confidence across the manufacturing sector improved in June.

Outside of the stats, any rising tensions between the U.S and Iran will need to be considered along with any chatter on trade.

At the time of writing, the DAX was down by 45 points. The Dow Mini was up by 51 points.

European Equities: Private Sector PMI Numbers in the Driving Seat

Economic Calendar:

Friday, 21st June

  • French Manufacturing PMI (Jun) Prelim
  • French Services PMI (Jun) Prelim
  • German Manufacturing PMI (Jun) Prelim
  • German Services PMI (Jun) Prelim
  • Eurozone Manufacturing PMI (Jun) Prelim
  • Eurozone Markit Composite PMI (Jun) Prelim
  • Eurozone Services PMI (Jun) Prelim

The Majors

The European majors ended the day in the green on Thursday. Leading the way was the DAX30, which rose by 0.38% to lock in a 2.14% gain for the current week. Close behind were the CAC40 and EuroStoxx600, which rose by 0.31% and by 0.36% respectively.

A 4th consecutive day of gains for the CAC40 delivered a 3.13% gain for the current week, Monday through Thursday.

The promise of monetary policy support from the ECB and a material shift in the FED’s monetary policy outlook contributed to the upward moves.

Hopes of a resolution to the U.S – China trade dispute at next week’s G20 Summit also supported on the day.

On the geopolitical risk front, news of Iran shooting down a U.S drone had a relatively muted impact on the majors, whilst providing support to crude oil prices.

The Stats

Economic data out of the Eurozone was on the lighter side on Thursday.

In the early part of the session, the ECB Economic Bulletin provided further guidance on how the ECB views the economic outlook. The theme was largely unchanged, with the ECB projecting global growth to decelerate this year. A projected decline was attributed to high and rising policy and political uncertainty, coupled with the effects of the U.S – China trade war.

The Euro area overview,

  • Incoming economic data and survey information point to weaker growth in the 2nd and 3rd quarters of this year.
  • Euro area services and construction sectors have shown resilience and labor market conditions continue to improve.
  • Economic expansion will continue to be supported by favorable financing conditions and a mildly expansionary euro area fiscal stance.
  • Improving labor market conditions and rising wages are also expected to support.

Macroeconomic projections for the Euro area:

  • The ECB projects the economy to grow by 1.2% in 2019, by 1.4% next year and by 1.4% in 2021.
  • Compared with the March forecasts, growth for this year was revised up by 0.1 percentage points. Growth for next year was revised down by 0.2 percentage points.
  • Risks to the Euro area growth outlook remain tilted to the downside.

Later in the European session, Eurozone consumer confidence figures failed to provide support. According to prelim figures, the Eurozone consumer confidence index fell from -6.5 to -7.2 for June.

From the U.S

The Philly FED Manufacturing Index numbers also disappointed. According to the June report, the Index fell from 16.6 to 0.3. In spite of the weak headline number, the survey’s future activity indexes showed some improvement, whilst remaining lackluster.

  • For the month of June, the current new orders index fell by 3 points, while the shipments index fell by 11 points.
  • In spite of the fall in current new orders, firms continued to report increases in employment, while the employment index fell from 18.2 to 15.4.
  • The future new orders index increased by 10 points, with the future shipments index increasing by 13 points.
  • The survey also pointed to a moderation in price pressures.

The Market Movers

From the DAX, Infineon Tech led the way, rallying by 3.75% as trade war jitters eased ahead of the weekend. The shift in sentiment towards the U.S – China trade war also provided support to the auto sector.

Volkswagen led the way on the day, rising by 1.21%. BMW (+0.87%) and Continental (0.70%) also made solid gains following the upside on Wednesday. Daimler trailed the pack, rising by just 0.39% on the day.

Things were less rosy for the banking sector, however. Deutsche Bank fell by 0.87%, while Commerzbank tumbled by 3.37%.

From the CAC40, BNP Paribas and Credit Agricole also saw heavy losses on the day, falling by 1.91% and by 2.93% respectively.

Talks of an FBI investigation into Deutsche Bank for money laundering contributed to the downside across the sector.

The Day Ahead

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

Prelim private sector PMI numbers for France, Germany and the Eurozone are due out in the early part of the day.

While ECB President Draghi assured the support of the ECB should things fail to improve, the majors will remain sensitive to the numbers.

It’s not just the Euro area economy that’s struggling and, while the Trump and Xi will meet next week, an immediate resolution to the ongoing trade war is unlikely.

The quarter is rapidly coming to an end and forecasts are for the economy to slow further in the current quarter and the next.

Outside of the Eurozone, U.S private sector PMIs will also be in focus.

How long the markets can benefit from the promise of monetary policy easing remains to be seen…

At the time of writing, the DAX was down by 11 points. The Dow Mini was down by 20 points.

European Equities: FED Reaction and Geopolitics to Provide Direction

Economic Calendar:

Thursday, 20th June

  • ECB Economic Bulletin  
  • Eurozone Consumer Confidence Flash

Friday, 21st June

  • French Manufacturing PMI (Jun) Prelim
  • French Services PMI (Jun) Prelim
  • German Manufacturing PMI (Jun) Prelim
  • German Services PMI (Jun) Prelim
  • Eurozone Manufacturing PMI (Jun) Prelim
  • Eurozone Markit Composite PMI (Jun) Prelim
  • Eurozone Services PMI (Jun) Prelim

The Majors

The European majors had a mixed day on Wednesday. While the CAC40 eked out a 0.16% gain to make it 3 consecutive days in the green, the DAX30 slipped by 0.19%. The EuroStoxx600 ended the day flat.

Investors were looking ahead to the FED’s outlook on rates and economic projections that were released after the European close.

There was some support for the majors following further affirmation of Trump’s planned meeting with China Premier Xi at the G20 Summit.

The Stats

Economic data out of the Eurozone was on the lighter side on Wednesday.

Germany wholesale inflation figures for May released ahead of the European open, failed to provide direction early on in the day.

According to Destatis, producer prices of industrial products fell by 0.1% in May, month-on-month. Year-on-year, producer prices increased by 2.5%. Compared with the corresponding month of the year prior, producer prices rose by 1.9%.

  • Energy prices jumped by 4.5% on an annual basis, compared with a 0.6% fall in April 2019.
  • Prices of capital goods increased by 1.6%, compared with a 0.1% rise in April 2019.

Post the European close, the FED delivered a more dovish outlook on policy, but it was perhaps not as dovish as some had hoped for.

From the economic projections, whilst holding median growth forecasts unchanged for the current year at 2.1%, forecasts for 2020 were revised up to 2.0%.

In contrast, inflation forecasts were revised down from 1.8% to 1.5% for this year and down from 2% to 1.9% for next year.

While the markets and the U.S President had been hoping for a near-term rate cut, the FED remains in a wait-and-see mode vis-a-vis the ongoing U.S – China trade war.

The median projection for this year remained steady at 2.4%. The central tendency widened, however, from a March projection of 2.4 – 2.6 to 1.9 – 2.4.

7 of the 17 FOMC members projected 2 rate cuts this year, while 1 member projected a single rate cut. FED Chair Powell also stated in the press conference that the case for a rate cut had strengthened.

The Market Movers

From the DAX, Continental led the way on Wednesday, rallying by 3.65%. The gains across the auto sector were broad-based, with Daimler (+1.95%), Volkswagen (+1.4%) and BMW (+1.09%) amongst the top performers.

Bank stocks also got a boost, with Deutsche Bank rising by 1.75%. Commerzbank rallied by 2.8% on the day.

From the CAC40, Renault continued to buck the trend, falling by 0.27% following Tuesday’s 2.6% tumble. The banking sector found support, however. BNP Paribas rose by 1.76%, while Credit Agricole rallied by 2.28% on the day.

The Day Ahead

It’s another quiet day on the economic calendar. Flash consumer confidence figures are due out of the Eurozone. In the early part of the day, the ECB economic bulletin will be the main area of focus.

We can expect the European majors to also respond to the FOMC economic projections and press conference from late on Wednesday.  The latest projections should provide support to the European majors, though a sliding Dollar may limit any upside for the DAX.

On the geopolitical front, the latest UK Leadership ballot results may also draw some attention. With Rory Stewart out of the race on Wednesday, the prospects of a no-deal Brexit have risen as Boris Johnson remains the clear favorite.

From the U.S, Philly FED Manufacturing PMI figures will also influence. Forecasts are negative for the majors.

At the time of writing, the DAX was up by 30.5 points. The Dow Mini was up by 78 points.

European Equities: It’s All About The FED

Economic Calendar:

Wednesday, 19th June

  • German PPI (MoM) (May)

Thursday, 20th June

  • ECB Economic Bulletin  
  • Eurozone Consumer Confidence Flash

Friday, 21st June

  • French Manufacturing PMI (Jun) Prelim
  • French Services PMI (Jun) Prelim
  • German Manufacturing PMI (Jun) Prelim
  • German Services PMI (Jun) Prelim
  • Eurozone Manufacturing PMI (Jun) Prelim
  • Eurozone Markit Composite PMI (Jun) Prelim
  • Eurozone Services PMI (Jun) Prelim

The Majors

The European majors found their wings on Tuesday. The CAC40 rallied by 2.2%, following a 0.43% gain on Monday to lead the way. The DAX30 and EuroStoxx600 weren’t far behind with gains of 2.03% and 1.67% respectively.

It was a double whammy for the majors on the day. Talks of further monetary policy stimulus spurred on the majors early on in the European session. The CAC40 and DAX30 bounced back from early losses off the back of ECB President Draghi commenting on the ECB’s willingness to deliver more monetary policy support should inflation fail to pick up.

The expectation of a dovish FED and a more willing ECB were both positives on the day. Hopes of progress on trade talks between the U.S and China was also positive. News of Trump and Xi’s planned meeting at the G20 Summit certainly contributed to the upside on the day.

The Stats

Economic data out of the Eurozone was on the heavier side on Tuesday.

Germany and the Eurozone’s economic sentiment figures and the Eurozone’s inflation and trade data provide direction early on in the day.

According to the latest ZEW survey, the German economic sentiment index fell from -2.1 to -21.1 in June. The current conditions index was also in decline, falling from 8.2 to 7.8. The Eurozone economic sentiment index fell from -1.6 to -20.2.

From the Eurozone, the trade surplus narrowed from €22.5bn to €15.7bn in April. According to figures released by Eurostat,

  • Exports of goods to the rest of the world increased by 5.2% year-on-year in April.
  • Imports of goods from the rest of the world increased by 6.6% over the same period.
  • Intra-euro area trade rose by 3% compared with April 2018.

Of less influence were the Eurozone’s finalized inflation figures, which were in line with prelim and forecasts.

According to finalized numbers, the Eurozone’s annual rate of core inflation also eased back from 1.3% to 0.8% in May.

The Market Movers

From the DAX, Lufthansa was the worst performer for a 2nd consecutive day, sliding by 1.73%, with only a handful of stocks in the red on the day.

Leading the way on the day was ThyssenKrupp which rallied by 4.02%.

Deutsche Bank and Commerzbank also found strong support, surging by 3.62% and 1.82% respectively. The auto sector also benefited from the shift in sentiment. Continental led the way, rallying by 2.15%. BMW (+1.93%), Daimler (+1.97%) and Volkswagen (+1.70%) weren’t far behind.

From the CAC40, Renault bucked the trend, sliding by 2.6%. The rest of the components ended the day with solid gains. From the banking sector, BNP Paribas and Credit Agricole rose by 1.82% and by 1.35% respectively.

The Day Ahead

Economic data is on the lighter side in the day ahead. German wholesale inflation figures are due out that will likely have a muted impact on the majors.

We will expect the European majors to tread carefully ahead of the FED interest rate decision, economic projections and press conference. The European markets will close ahead of the FED decision.

With no stats due out of the U.S, the markets will have little else to focus on through the latter part of the day.

U.S President Trump has already attempted to swing the vote in favor of a rate cut. It’s unlikely to have an influence, however, with FED impartiality key.

At the time of writing, the DAX was down by 1.5 points. The Dow Mini was up by 16 points.

S&P 500 Stuck at 2,900, Still No Clear Direction

The U.S. stock market indexes lost 0.1-0.5% on Friday, as they extended their short-term consolidation. The S&P 500 index gained more than 180 points from its previous week’s Monday’s local low recently. It is currently 2.3% below its May the 1st record high of 2,954.13. The Dow Jones Industrial Average lost 0.1% and the Nasdaq Composite lost 0.5% on Friday.

The nearest important resistance level of the S&P 500 index remains at 2,900-2,910. The resistance level is also at 2,930-2,950. On the other hand, the support level is at 2,875-2,880. The next support level remains at 2,830-2,850.

The broad stock market broke above the last year’s high in the early May. But then the S&P 500 index retraced all of the April’s advance. The market also broke below its two-month-long upward trend in the early May. And then it got back higher following breaking above the month-long downward trend line:

More Short-Term Uncertainty

The index futures contracts trade between -0.05% and +0.05% vs. their Friday’s closing prices, so the expectations before the opening of today’s trading session are virtually flat. The European stock market indexes have been mixed so far. Investors will wait for some economic data announcements today: Empire State Manufacturing Index, NAHB Housing Market Index at 10:00 a.m.

The broad stock market will likely further extend its short-term fluctuations following last week’s rally. The S&P 500 index may fluctuate below the mentioned resistance level of 2,900.

The S&P 500 futures contract trades within an intraday consolidation following an overnight decline. The market remains below the resistance level of around 2,890-2,900. On the other hand, the support level is at 2,865-2,875. The futures contract remains slightly above its short-term upward trend line, as the 15-minute chart shows:

Nasdaq Still at 7,500

The technology Nasdaq 100 futures contract follows a similar path, as it trades within an intraday consolidation. The market extended its rally a week ago, following breaking above the resistance level of 7,250-7,300. Then it broke above the 7,500 mark and entered a short-term consolidation. It got close to the 7,600 mark on Tuesday, before reversing downwards. The nearest important resistance level remains at 7,550-7,600. The Nasdaq futures continues to trade along the 7,500 mark this morning, as we can see on the 15-minute chart:

Apple, Microsoft Going Sideways

Let’s take a look at the Apple, Inc. stock (AAPL) daily chart. The stock got back to the resistance level of around $200, following breaking above the downward trend line in the early June. For now, it looks like an upward correction. However, if the stock gets back above $200, we could see more buying pressure:

Chart courtesy of http://stockcharts.com

Now let’s take a look at the daily chart of Microsoft Corp. (MSFT). The stock accelerated its uptrend in late April. Since then, the market was trading within a consolidation. In the early June it broke below the support level, but then it got back higher. It reached the new record high of $134.24 on Tuesday a week ago, before reversing its intraday uptrend once again:

Dow Jones Remains at 26,000

The Dow Jones Industrial Average has been relatively weaker than the broad stock market since February. The resistance level remained at around 26,800-27,000, marked by the last year’s topping pattern and the record high of 26,951.8. Recently the blue-chip stocks’ gauge followed the broad stock market, as it accelerated the downtrend. The market broke below its important 200-day moving average, but then it got back higher. For now, it looks like a flat correction within an uptrend:

Nikkei Also Going Sideways

Let’s take a look at the Japanese Nikkei 225 index. It retraced some more of its recent decline last week. However, the market remains close to the 21,000 mark. The index continues to trade along its previous local lows:

The S&P 500 index traded within a short-term consolidation last week, as investors took short-term profits off the table following the early June rally. Will the broad stock market get back to the record high? There have been no confirmed negative signals so far.

Concluding, the S&P 500 index will likely open virtually flat today. Then we could see more short-term fluctuations ahead of this week’s important economic data releases.

Thank you.

Paul Rejczak
Stock Trading Strategist
Sunshine Profits – Effective Investments through Diligence and Care


Disclaimer

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

European Equities: Economic Data and Trade War Chatter in Focus

Economic Calendar:

Tuesday, 18th June

  • German ZEW Current Conditions (Jun)
  • German ZEW Economic Sentiment (Jun)
  • Eurozone ZEW Economic Sentiment (Jun)
  • Eurozone Core CPI (YoY) (May) Final
  • Eurozone CPI (YoY) (May) Final
  • Eurozone CPI (MoM) (May)
  • Eurozone Trade Balance (Apr)

Wednesday, 19th June

  • German PPI (MoM) (May)

Thursday, 20th June

  • ECB Economic Bulletin  
  • Eurozone Consumer Confidence Flash

Friday, 21st June

  • French Manufacturing PMI (Jun) Prelim
  • French Services PMI (Jun) Prelim
  • German Manufacturing PMI (Jun) Prelim
  • German Services PMI (Jun) Prelim
  • Eurozone Manufacturing PMI (Jun) Prelim
  • Eurozone Markit Composite PMI (Jun) Prelim
  • Eurozone Services PMI (Jun) Prelim

The Majors

It was a mixed day for the European majors on Monday. The DAX30 and EuroStoxx600 both fell by 0.09%, while the CAC40 managed a 0.43% gain on the day.

Trade war chatter on the day continued to pressure the majors. Chatter from the U.S administration continued to suggest possible tariffs on auto imports. Trump is also reportedly more than happy to impose fresh tariffs on an additional $300bn worth of Chinese goods should progress not be made at the G20 Summit next week.

The Stats

Economic data on Monday was limited to Eurozone 1st quarter wage growth figures. According to figures released by Eurostat, the only member state to report a fall in wages was Greece. Wages fell by 0.2%. Eurozone wages grew by 2.5% in the quarter, falling short of a forecasted 2.6% rise. Wages grew by 2.3% in the 4th quarter of last year.

The stats had a muted impact on the majors, with the markets focused on the week ahead.

From the U.S, the NY Empire State Manufacturing Index fell from +17.80 to -8.60 in June. It was the largest monthly decline on record.

While the numbers didn’t send the European majors into a spin, they will certainly place further uncertainty over how the FED will project growth through the remainder of the year and how dovish FED members will be.

The Market Movers

From the DAX, Lufthansa sunk by 11.79% following a profit warning, pulling the DAX30 into the red on the day.

From the auto sector, Continental also saw heavy losses, falling by 2.14%. BMW (-0.4%), Daimler (-0.07%), and Volkswagen (-0.13%) all following Continental into the red. It’s a tough time for the sector, with the threat of tariffs and concerns over the global economic outlook limiting any upside.

It was a mixed session for the banks, with Deutsche Bank rising by 0.36%, whilst Commerzbank fell by 0.26%.

From the CAC40, the banking sector was also mixed. BNP Paribas fell by 0.26%, whilst Credit Agricole gained 0.73%.

Renault also managed to buck the trend on the day, rising by 0.81%. The biggest mover on the day was Airbus, which rallied by 2.11%, supported by the announcement of a new single-aisle long-range plane. Scheduled for rollout in 2023, the single-aisle aircraft is reported to have a range of 4,700 nautical miles.

The Day Ahead

Economic data is on the heavier side in the day ahead. German and Eurozone economic sentiment figures due out later this morning will provide direction.

The Eurozone’s finalized May inflation figures and trade data are also due out later in the day.

We can expect German economic sentiment figures to be the key driver in the early part of the day.

From the U.S, housing starts and building permits are due out. While the numbers tend not to have a material impact on the majors, any particularly weak numbers could be yet another alarm bell. The housing sector is traditionally an economic barometer.

Outside of the stats, ECB Draghi will also speak in a number of scheduled speeches, which could deliver support should there be any EUR jawboning…

At the time of writing, the DAX was down by 12 points. The Dow Mini was up by 25 points.

European Equities: Geopolitics and Monetary Policy in Focus

Economic Calendar:

Monday, 17th June

  • French CPI m/m (May) Final

Tuesday, 18th June

  • German ZEW Current Conditions (Jun)
  • German ZEW Economic Sentiment (Jun)
  • Eurozone ZEW Economic Sentiment (Jun)
  • Eurozone Core CPI (YoY) (May) Final
  • Eurozone CPI (YoY) (May) Final
  • Eurozone CPI (MoM) (May)
  • Eurozone Trade Balance (Apr)

Wednesday, 19th June

  • German PPI (MoM) (May)

Thursday, 20th June

  • ECB Economic Bulletin  
  • Eurozone Consumer Confidence Flash

Friday, 21st June

  • French Manufacturing PMI (Jun) Prelim
  • French Services PMI (Jun) Prelim
  • German Manufacturing PMI (Jun) Prelim
  • German Services PMI (Jun) Prelim
  • Eurozone Manufacturing PMI (Jun) Prelim
  • Eurozone Markit Composite PMI (Jun) Prelim
  • Eurozone Services PMI (Jun) Prelim

The Majors

The European majors saw red on Friday. Leading the way down was the DAX30, which fell by 0.6%, reversing a 0.44% gain from Thursday to end the week up 0.42%.

For the CAC40 and the EuroStoxx600, the losses were more modest. The CAC40 fell by 0.15% to end the week up 0.07%, while the EuroStoxx600 fell by 0.4% on the day to end the week up by 0.48%.

The majors came under pressure following an attack on oil tankers in the Gulf on Thursday. U.S President Trump blamed Iran for the attack building tension between the two countries.

While oil prices found support from the attack, concerns over the economic outlook added to the downside on the day.

The impact of the ongoing U.S – China trade war continues to be reflected in China’s economic data, which showed a further weakening in spite of government support.

The Stats

Economic data on Friday was limited to finalized French and Italian May inflation figures that had a muted impact on the majors.

Positive U.S retail sales figures failed to give the majors a boost late in the day, with the latest monthly IEA report delivering more doom and gloom to the markets.

The IEA cut its global oil demand growth forecasts for a 2nd consecutive month, attributing the downward revision to the extended U.S – China trade war and the possibility of a recession.

Earlier in the day, China Industrial production rose by just 5% in May, year-on-year, with fixed asset investment rising by just 5.6%.

The Market Movers

From the DAX, Infineon Technologies (“IFX”) was the worst performer, sliding by 5.4% as global tech stocks continue to struggle amidst the ongoing U.S – China trade war. Global demand for chips is expected to weaken.

From the auto sector, Daimler (-1.2%) and Volkswagen (-0.87%) were also amongst the worst performers on the day. BMW and Continental also saw red, the pair falling by 0.57% and by 1.02% respectively.

The banking sector was also under pressure with Deutsche Bank and Commerzbank falling by 0.72% and by 1.5% respectively.

From the CAC40, the banking sector also saw red, with BNP Paribas and Credit Agricole falling by 0.58% and by 0.87% respectively.

Renault managed to buck the trend on the day, gaining a modest 0.23%.

The Day Ahead

There are no material stats due out of the Eurozone to provide the majors with direction on the day.

While, we can expect market reaction to this afternoon’s NY Empire State Manufacturing Index numbers, U.S – China trade war chatter and any further rise in tensions in the Middle East will likely be the key drivers on the day.

At the time of writing, the DAX was up by 17 points. The Dow Mini was up by 61 points. The upside came off the back of better than anticipated U.S retail sales figures on Friday that supported the Asian majors early on.

European Equities: A Bullish Day or Will Trump and U.S Retail Sales Hurt?

Economic Calendar:

Friday, 14th June

  • French CPI m/m (May) Final
  • French HICP m/m (May) Final
  • Italian CPI m/m (May) Final

The Majors

The European majors managed to hold onto positive territory on Thursday. The DAX30 led the way, rising by 0.44% to reverse Wednesday’s 0.33% loss. The EuroStoxx600 eked out a 0.16% gain to partially reverse Wednesday’s 0.3% loss. The CAC40 ended the day with just a 0.01% gain following Wednesday’s 0.62% fall.

Support came from better sentiment towards the U.S – China trade war. In spite of the better sentiment, President Trump threatened more tariffs should no deal be reached.

News also hit the wires on Thursday of more than 600 U.S companies urging the U.S President to bring an end to the extended trade war. With pressure on the U.S President and the U.S economy mounting, next week’s G20 Summit could be last chance saloon for a resolution.

More tariffs would certainly put a greater strain on both economies, but of greater significance, would also put doubts into whether Trump could win a 2nd term.

The Stats

Economic data was on the lighter side on Wednesday. Stats included Germany’s finalized inflation figures for May and the Eurozone’s April industrial production numbers.

According to Eurostat, Eurozone industrial production fell by 0.5% in April, month-on-month, which was in line with forecast.

  • Member states with the largest falls in industrial production were Germany (-2.3%) and Latvia (-2.0%). Ireland (+3.6%) and Portugal (+2.9%) recorded the highest increases in production.
  • By sector, durable consumer goods (-1.4%) and intermediate durable goods (-1%) weighed.
  • Partially offsetting the decline was a 0.2% increase in production of non-durable consumer goods and a 1.4% increase in energy production.
  • Year-on-year, industrial production fell by 0.4%.
  • Germany had the largest year-on-year fall in production, falling by 3.4%, followed by the Netherlands, down by 2.7%
  • Lithuania (+13.8%) and Ireland (+6.9%) recorded the largest increases in production, year-on-year.

On the inflation front, German consumer prices rose by just 0.2% in May, according to finalized figures, which was in line with forecast. Consumer prices had risen 1% in April.

Outside of the Eurozone, economic data was on the lighter side, with U.S economic data having a muted impact.

Oil prices were on the rise, however, after an attack on a tanker in the Gulf.

The Market Movers

From the DAX, Wirecard led the way, rallying by 1.89%. In spite of the upward momentum through the day, the auto sector was mixed. Continental and Daimler fell by 0.41% and by 0.17% respectively. BMW (+0.4%) and Volkswagen (+0.11%) managed to closed out the day in positive territory.

The banking sector failed to benefit from the upside on the day, with Deutsche Bank ending the day down 0.03%. Commerzbank managed to eke out a 0.1% gain, however.

From the CAC40, it was also a mixed day for the banking sector. BNP Paribas fell by 0.1%, whilst Credit Agricole gained 0.1%. From the auto sector, Renault reversed most of Wednesday’s 1.31% loss with a 1.13% gain on the day.

The Day Ahead

Economic data due out of the Eurozone is limited to French and Italian finalized inflation figures. We can expect the stats to have a muted impact on the European majors later this morning.

U.S retail sales figures due out later this afternoon will have a greater influence on the day.

Outside of the stats, chatter from the Oval Office on trade will continue to have an impact. Trump’s Twitter account tends to be quite active going into the weekends…

With the G20 now just around the corner, the U.S President may look to turn on the heat on China.

At the time of writing, the DAX was up by 15 points. The Dow Mini was up by 46 points.

European Equities: Trade Woes Could Reignite Concerns over the Economy…

Economic Calendar:

Thursday, 13th June

  • German CPI m/m (May) Final
  • Eurozone Industrial Production m/m (Apr)

Friday, 14th June

  • French CPI m/m (May) Final
  • French HICP m/m (May) Final
  • Italian CPI m/m (May) Final

The Majors

The European majors saw red for the 1st time this week. Leading the way down was the CAC40, which fell by 0.62%. For the DAX30 and EuroStoxx600, the losses were more modest. The DAX30 fell by 0.33%, with the EuroStoxx600 ending the day with a 0.3% loss.

Support from the U.S – Mexico agreement ran out of steam on Wednesday, with the markets reacting to the latest U.S – China trade war news.

At the start of the week, Trump had threatened to rollout tariffs on an additional $300bn worth of Chinese goods should Premier Xi fail to attend the G20 Summit.

China responded on Wednesday, promising to react with tough measures should the U.S take further steps against China.

The Stats

Economic data was on the lighter side on Wednesday. Stats included French 1st quarter nonfarm payroll figures and finalized Spanish inflation numbers.

A larger than forecast 0.4% rise in nonfarm payrolls had a muted impact on the majors. Forecasts were for a 0.3%, quarter-on-quarter, rise following a 0.3% increase in the 4th quarter of last year.

Spain’s inflation figures also failed to provide direction, in spite of an easing in inflationary pressures. The annual rate of inflation eased from 1.5% to 0.8% in May, which was in line with prelim figures. Baseline inflation held steady at 0.9%, which was also in line prelim figures.

The markets had been expected inflationary pressures to ease in May and possibly further in June as oil prices continue to slide.

From the U.S, there was a similar trend, with the annual rate of core inflation easing back from 2.1% to 2.0% in May. Forecasts were for baseline inflation to hold steady at 2.1%. Month-on-month, core consumer prices rose by just 0.1%, as did headline consumer prices.

With the markets already having reacted to the FED Chair’s chatter last week, there was little support from the numbers. The latest U.S inflation figures now question whether a single rate cut will be enough…

The Market Movers

From the DAX, the auto sector hit reverse over the shift in sentiment towards trade. Continental led the way down, falling by 1.28%. Daimler (-0.53%), BMW (-0.48%) and Volkswagen (-1.13) also saw red on the day.

Things were not much better in the banking sector, with Deutsche Bank and Commerzbank falling by 0.83% and by 1.6% respectively.

From the CAC40, BNP Paribas and Credit Agricole fell by 1.0% and 1.19% respectively, with Renault also seeing red, falling by 1.31%.

With oil prices on the slide, Total was amongst the heaviest losers on the day, sliding by 2.73%.

The Day Ahead

Finalized German inflation figures are due out later this morning along with the Eurozone’s industrial production numbers for April.

German consumer prices are forecasted to rise by 0.2%, which is in line with prelim, while well below a 1% rise in April.

We would expect the inflation figures to continue to have a muted impact on the majors. The Eurozone’s industrial production figures will likely influence, however. Eurozone industrial production is forecast to fall by 0.5% in April, following a 0.3% decline in March.

Anything worse than forecast would add further pressure on the majors. The latest trade rhetoric will have the majors more sensitive to the numbers.

From the U.S, barring dire weekly jobless claims figures, import and export price data are unlikely to have a material impact.

The markets will need to continue to look out for any trade war chatter, however…

At the time of writing, the DAX was down by 7 points. The Dow Mini was up by 6 points.

European Equities: Are the Majors Running out of Gas?

Economic Calendar:

Wednesday, 12th June

  • French Nonfarm Payrolls q/q (Q1)
  • Spanish CPI y/y (May) Final
  • Spanish HICP y/y (May) Final

Thursday, 13th June

  • German CPI m/m (May) Final
  • Eurozone Industrial Production m/m (Apr)

Friday, 14th June

  • French CPI m/m (May) Final
  • French HICP m/m (May) Final
  • Italian CPI m/m (May) Final

The Majors

It was another day in the green for the European majors. The DAX30 played catch-up, leading the day with a 0.92% rally. The CAC40 rose by 0.48% to make it a 0.83% gain for the current week, with the EuroStoxx600 up by 0.69%.

A lack of material economic data out of the Eurozone was positive for the majors, with the latest U.S President Trump threat of more tariffs having a muted impact on the majors.

The U.S President is looking to force China Premier Xi to attend the G20 Summit at the end of the month. Trump has threatened China with tariffs on an additional $300bn worth of Chinese goods should Xi fail to attend…

Prospects of a near-term FED rate cut, China stimulus, and the U.S – Mexico deal continued to provide support on Tuesday. It was quite a different story for the U.S majors, which struggled.

The Stats

There were no stats to provide direction for the majors on the day. The Asian markets provided support going into the European session.

Out of China, further government stimulus supported the Asian markets earlier in the day, with CSI300 rallying by 3.01%.

The Market Movers

From the DAX, the Auto sector was mixed on the day. Continental was amongst the top performers, rallying by 1.75%. Daimler (+0.85%) and Volkswagen (+0.35%) were also on the rise, while BMW bucked the trend, falling by 0.66%.

The banking sector found support, with Deutsche Bank ending the day up 0.93%. Commerzbank saw a more modest 0.8% rise on the day.

From the CAC40, BNP Paribas and Credit Agricole gained just 0.18% and 0.05% respectively, while Renault rose by 1.16%.

The Day Ahead

Spanish finalized inflation figures and French nonfarm payroll numbers for the 1st quarter are due out later this morning.

We can expect the numbers to have a muted impact on the European majors through the day. ECB President Draghi, speaking this morning, could influence should there be any negative chatter on the economic outlook.

U.S inflation figures due out later this afternoon could weigh should the numbers come in ahead of expectations.

With support for the majors coming from hopes of a FED move, inflation would need to soften to support the shift in sentiment towards monetary policy.

We’ve seen the majors find support on China stimulus and the hopes of a rate cut by the FED. Expectations are that the ECB would follow the FED should there be any policy easing. While that’s a positive down the road for the majors, risk sentiment could be tested should trade war tensions between the U.S and China build ahead of the G20.

Trump’s latest threat is likely to further test China’s willingness to play ball with the U.S.

At the time of writing, the DAX was down by 42 points. The Dow Mini was down by 28 points.

European Equities: Risk Appetite Could Be Tested on the Day Ahead

Economic Calendar:

Wednesday, 12th June

  • Spanish CPI (YoY) (May)
  • Spanish HICP (YoY) (May)

Thursday, 13th June

  • German CPI (MoM) (May)
  • Eurozone Industrial Production (MoM) (Apr)

 

Friday, 14th June

  • French CPI (MoM) (May)
  • French HICP (MoM) (May)
  • Italian CPI (MoM) (May)

The Majors

It was a positive start to the week for the CAC40 and EuroStoxx600, while the German markets were closed for the day.

The CAC40 gained 0.34%, with the EuroStoxx600 rising by 0.21% on the day. Support came from gains from the Asian session and continued to find support from the U.S – Mexico deal and the more dovish FED.

All-important labor market figures have disappointed of late and led to expectations of a more dovish FED at next week’s FOMC.

The Stats

There were no stats to provide direction for the majors on the day.

The lack of stats left the majors to continue to respond to easing trade tensions and hopes of a near-term FED rate cut.

Out of China, a pickup in exports was positive for the morning, through a slide in imports tempered any major rally in Europe.

April JOLTs job opening figures from the U.S had little impact on sentiment as the markets continued to take weak data as a sign of a further extension to cheap funding.

The Market Movers

Looking at the CAC40, bank stocks found strong support on the day. BNP Paribas rallied by 1.63%, with Credit Agricole ending the day with a 1.99% gain.

From the auto sector, Renault also saw sizeable gains on the day, rising by 2.59%.

Elsewhere, Italy’s UniCredit S.p.A rallied by 2.22%.

The Day Ahead

There are no material stats due out of the Eurozone to provide direction to the majors.

The lack of stats could test market risk appetite ahead of U.S wholesale inflation figures due out later in the day.

Following the Friday U.S – Mexico agreement, market focus will likely return to the economic outlook and sentiment towards the U.S – China trade war. Trump has issued a new threat of fresh tariffs. This time it is dependent upon Chinese Premier Xi’s attendance at the G20.

There was some positive reaction to China’s May trade figures, which revealed a narrowing of the trade surplus with the U.S since the start of the year. The numbers will need to continue to reflect a downward trend in the months ahead to support the view of a material shift in trade terms.

It remains to be seen whether the narrowing in the trade surplus was attributed to weaker demand, however.

At the time of writing, the DAX30 futures was up 14.5 points. The Dow Mini was up by 34 points.

European Equities: The Bulls Will Be Looking To Springboard off the Asian Session

Economic Calendar:

Wednesday, 12th June

  • Spanish CPI (YoY) (May)
  • Spanish HICP (YoY) (May)

Thursday, 13th June

  • German CPI (MoM) (May)
  • Eurozone Industrial Production (MoM) (Apr)

Friday, 14th June

  • French CPI (MoM) (May)
  • French HICP (MoM) (May)
  • Italian CPI (MoM) (May)

The Majors

The European majors closed out the week on a high note on Friday, with the CAC40 leading the way, rising by 1.62%. The DAX30 and EuroStoxx600 saw more modest gains of 0.77% and 0.93% respectively.

Market reaction to news of an agreement between the U.S and Mexico and disappointing data out of the U.S provide direction on the day.

For the week, the CAC40 and DAX30 rose by 3% and 2.72% respectively.

The Stats

Economic data out of the Eurozone was on the lighter side on Friday, with key stats limited to German industrial production and trade data.

There was no support from the European stats on the day, with industrial production sliding by 1.9% in April.

According to Destatis, the production of intermediate goods and production of capital goods slid by 2.1% and by 3.3% respectively. The production of consumer goods fell by just 0.8% month-on-month. Year-on-year, industrial production fell by 1.8% in April.

Trade data also disappointed. Germany’s trade surplus narrowed from €20bn to €17bn in April, raising yet another economic red flag.

According to figures released by Destatis, exports fell by 3.7% month-on-month, while imports fell by 1.3%. Year-on-year, exports fell by 0.5%, while imports increased by 2.1%.

  • German exports to Euro countries fell by 0.5% in April, while imports from Euro countries increased by 2.5%, month-on-month.
  • Exports of good to countries outside of the EU increased by 4% year-on-year, while imports increased by just 2.4%.

From outside of the U.S, U.S wage growth and nonfarm payrolls also came in worse than forecasted, with just 75,000 jobs added in May. Wage growth eased to 3.1% year-on-year, the disappointing numbers raised the stakes for the FED to act sooner rather than later, ultimately providing support to the European and U.S markets.

The Market Movers

In spite of the Friday gain, auto stocks continued to struggle on Friday.

On the DAX, BMW and Volkswagen were amongst the worst performing, falling by 0.56% and by 0.43% respectively. Continental and Daimler managed to avoid red with gains of 0.13% and 0.02% respectively.

Bank stocks were also mixed, with Deutsche Bank rising by 0.05%, while Commerzbank fell by 0.26%. Weak economic data out of the Eurozone and the U.S provided little support to the sector on the day.

From the CAC, BNP Paribas continued to see red, falling by 0.46%. Credit Agricole managed to partially reverse Thursday’s 1.68% slide, rising by 0.49%. Renault also found support, rising by 2.07% on the day.

The Day Ahead

There are no material stats due out of the Eurozone today, with economic data out of the U.S limited to April’s JOLTs job openings.

The lack of stats will leave the CAC40 and EuroStoxx600 in the hands of sentiment towards trade and monetary policy on the day. German’s Frankfurt Stock Exchange is closed for the day, which will likely lead to lower volumes on the day.

At the time of writing, the Dow Mini was up by 63 points, with the Hang Seng leading the way amongst the Asian majors, up by 2.03%.

When the Worse is Better: Markets Grew on Stimulus Hopes from CB’s

Thursday was the second day of negotiations on trade and migration between the representatives of the U.S. and Mexico. During the day, there were reports that the US administration may postpone the date for the introduction of tariffs, which is now scheduled on Monday. Reports of a softening position supported the risk-on mood on the markets, reinforcing the purchase of stocks.

Stocks

US stocks rose 1% on Thursday. SPX rose 3.9% this week after touching 2.5-month lows. Today is NFP- day, and trading activity can be reduced until the release of the U.S. statistics. Further rebound from the current 2850 may lead SPX to an important MA(50) level at that is at 2870 now. At the same time, it is worth noting that the markets have been growing in recent days in anticipation of stimulus from central banks, so the worse the data is, the higher the hopes for a softening of policies that supports stocks.

EURUSD

The European Central Bank on Thursday moved the date before which it promises not to raise interest rates, but at the same time, it did not make hints about soften the policy in the near future. According to money market futures, the likelihood of interest rates cut by 10 bp this year fell from 75% before Draghi’s speech to 45% at the moment. The change in expectations provoked a surge in EURUSD to 1.1300. As earlier this week, the growth of the single currency was stopped as it approached this mark. The single currency has been falling since yesterday evening to 1.1260. Nevertheless, EURUSD remains above the former of resistance line of the downward channel, reflecting the possible likely reversal of the euro trend from a decline to growth.

Gold

Gold unsuccessfully tried to hit $1340 on Wednesday and Thursday, which eventually turned into increased selling pressure. The end-of-week factor plays its role, as after strong dynamics market participants are trying to take profits. This is especially relevant now, before the release of important data on the US labour market.

NFP

U.S. Non-Farm Payrolls (scheduled to 12:30 GMT) often have the strongest influence on the markets, deviating markedly from expectations. Market analysts at the beginning of the week, on average, predicted an increase in employment by 180K in May. However, the sharply negative ADP report on employment in the private sector (an increase of 27K against the expected 185K) caused the alertness of market participants. Other labour market indicators are causing much less concern. Weekly unemployment claims changed slightly over the month. Manufacturing ISM Employment Index added 1.3 points to 53.7. Non-manufacturing ISM Employment Index added 4.4 points to 58.1. Such a sharp increase can be a reflection of both a strong number of employed people and growth in wages in the sector.

This article was written by FxPro

European Equities: Stats and Trade Talk to Wrap Up the Week

Economic Calendar:

Friday, 7th June

  • German Industrial Production m/m) (Apr)
  • German Trade Balance (Apr)

The Majors

The European majors saw red for the 1st time in the week on Thursday. Leading the way down was the CAC40, which fell by 0.26%, closely followed by the DAX30 that ended the day down by 0.23%. The EuroStoxx600 saw a more modest loss of just 0.02% on the day.

In spite of the Thursday pullback, the majors have managed to claw back some of last week’s losses, assuming that there’s no meltdown later today.

While the U.S majors found support on hopes that tariffs on Mexico would be delayed to allow talks to continue, the European majors suffered at the hands of the ECB.

The Stats

Economic data was on the lighter side on Thursday. German factory orders provided direction ahead of finalized Eurozone GDP numbers for the 1st quarter.

German factory orders increased by 0.3% in April, coming in ahead of a forecasted 0.1%, whilst softer than an upwardly revised 0.8% increase in March.

According to figures released by Destatis,

  • Domestic orders increased by 0.8%, with foreign orders rising by 1.1% in April, month-on-month.
  • New orders from the Euro area fell by 5.8%, while new orders from other countries increased by 5.7%.
  • The monthly increase was attributed to a 0.9% increase in orders for capital goods and a 0.1% increase in new orders for consumer goods.
  • A 0.4% fall in new orders for intermediate goods was a drag in April.

Finalized Eurozone GDP numbers for the 1st quarter were in line with prelim figures, which had a muted impact on the majors as focus shifted to the ECB.

The ECB

In line with expectations, the ECB held interest rates at 0%, margin facility lending at 0.25% and deposit facility rates -0.4%. While the ECB held rates unchanged, forward guidance shifted. The ECB announced that it will leave rates unchanged at least until the first half of next year. This was extended beyond a previous hold through 2019.

While the forward guidance was unexpected, the ECB delivered on its round 3 of LTLRO, which provided initial support for the majors in spite of a rise in the EUR.

The extended hold on rates through to mid-2020 ultimately weighed, however, pulling the majors into the red. The ECB maintained a dovish tone, with Draghi giving assurances that the ECB would do more should the need arise but it wasn’t vintage Draghi jawboning.

In a rare occurrence, the EUR actually gained 0.49% on ECB press conference day, in spite of the rollout of round 3 of the TLTRO and negative sentiment towards the economy.

The Market Movers

It was a relatively choppy day for the DAX. The DAX had found support from better than expected factory orders numbers out of Germany and improved sentiment towards the Trump trade war. The ECB ultimately weighed. The DAX saw a 0.8% gain reverse to a 0.68% loss before finding support late in the day.

Bank and auto stocks were once in the firing line. Deutsche Bank and Commerzbank fell by 2.48% 1.28% respectively. Daimler and BMW were also amongst the worst performing stocks, falling by 0.93% and by 0.6% respectively. Continental saw more modest losses of 0.24%, with Volkswagen down by just 0.13%.

From the CAC, BNP Paribas slid by 1.74%, with Credit Agricole also seeing heavy losses, down by 1.68%. Renault was the worst performer on the day. Renault slid by 6.41% on news of Fiat Chrysler pulling out of merger talks.

The Day Ahead

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

On the data front, German and French industrial production figures and trade data are due out.

We can expect the focus to be on the German numbers due out ahead of the market open.

From outside of the Eurozone, U.S nonfarm payroll and wage growth figures will also provide direction later in the day. Weak numbers would support a sooner rather than later move by the FED…

At the time of writing, the DAX30 was up 60.5 points, with the Dow Mini up by 27 points.