The EUR Gets a Boost from Economic Sentiment and Industrial Production Figures

It was a relatively busy Eurozone economic calendar. Industrial production figures from Italy and economic sentiment figures for Germany and the Eurozone were in focus.

Italian Industrial Production

According to istat, industrial production fell by 0.1% in March, reversing a 0.1% increase in February. Economists had forecast a 0.4% rise. Production rose by 0.9%, quarter-on-quarter, in the 1st quarter of this year.

Year-on-year production was up 37.7% in March. In February, production had been down by 0.8%. Economists had forecast a 37.2% jump.

Economic Sentiment

In May, Germany’s ZEW Economic Sentiment Indicator jumped from 70.7 to 84.4, with the Current Conditions Indicator rising from -48.8 to -40.1.

Economists had forecast the German Economic Sentiment Indicator to rise to 72.0 and for the Germany’s Current Conditions Indicator to rise from -48.8 to -41.3.

For the Eurozone, the Economic Sentiment Indicator jumped from 66.3 to 84.0. Economists had forecast a rise to 65.0.

Market Impact

Ahead of the numbers the EUR had risen to a pre-stat high $1.21494 before falling to a pre-stat and current day low $1.21231.

In response to the marked year-on-year increase in industrial production figures, the EUR rose to a high $1.21643 ahead of the ZEW numbers.

The ZEW Economic Sentiment figures provided further support, with the EUR striking a post-stat and current day high $1.21693.

At the time of writing, the EUR was up by 0.30% to $1.21660.

EURUSD 110521 Hourly Chart

Next Up

JOLTs job openings from the U.S…

European Equities: Economic Data from the Eurozone and the U.S in Focus

Economic Calendar:

Tuesday, 11th May 2021

German ZEW Current Conditions (May)

German ZEW Economic Sentiment (May)

Eurozone ZEW Economic Sentiment (May)

Wednesday, 12th May 2021

German CPI (MoM) (Apr) Final

French CPI (MoM) (Apr) Final

French HICP (MoM) (Apr) Final

Eurozone Industrial Production (MoM) (Mar)

Friday, 14th May 2021

Spanish CPI (YoY) (Apr) Final

Spanish HICP (YoY) (Apr) Final

The Majors

It was a mixed start to the week for the European majors on Monday following gains from the previous week.

The EuroStoxx600 rose by 0.10% to a new record high, with the CAC40 ekeing out a 0.01% gain, while the DAX30 ended the day flat.

Economic data from the Eurozone were limited to Eurozone investor sentiment figures, which provide some early support.

The lack of stats left the majors in the hands of market sentiment towards the economic outlook.

Government plans to ease further containment measures and reopen borders for tourism continued to deliver support.

The Stats

Investor confidence figures were in focus in the early part of the European session.

In May, the Sentix Investor Confidence Index surged from 13.1 to 21.0. Economists had forecast a modest increase to 14.0.

From the U.S

There were no material stats from the U.S to provide the majors with direction late in the session.

The Market Movers

For the DAX: It was a mixed day for the auto sector on Monday. BMW led the way, rising by 1.07%, with Daimler ending the day up by 0.11%. Continental and Volkswagen fell by 0.73% and by 0.09% respectively, however.

It was also a mixed day for the banks. Deutsche Bank fell by 1.11%, while Commerzbank rallied by 2.97%.

From the CAC, it was a bullish day for the banks. Credit Agricole and Soc Gen rallied by 3.93% and by 2.91% respectively, with BNP Paribas rising by 1.90%.

It was also a bullish day for the French auto sector. Stellantis NV rose by 0.17%, with Renault rallying by 3.50%.

Air France-KLM ended the day flat, while Airbus SE slipped by 0.01%.

On the VIX Index

It was back into the green for the VIX on Monday, bringing a run of 3 consecutive days in the red to an end.

Reversing a 9.24% slide from Friday, the VIX jumped by 17.80% to end the day at 19.66.

The NASDAQ slid by 2.55%, with the S&P500 ending the day down by 1.04%. For the Dow, it was a more modest 0.10% loss on the day.

VIX 110521 Daily Chart

The Day Ahead

It’s a relatively quiet day ahead on the European economic data front. ZEW Economic Sentiment figures for Germany and the Eurozone are due out later this morning.

With sensitivity to the numbers having picked up of late, expect the numbers to influence.

From the U.S, JOLTs job openings will also draw interest late in the European session following disappointing NFP numbers from last week.

Following the pullback in U.S stocks on Monday, the European majors could come under pressure going into the session.

The Futures

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

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

European Equities: Futures Point Northwards with No Major Stats to Provide Direction

Economic Calendar:

Monday, 10th May 2021

Eurozone Sentix Investor Confidence (May)

Tuesday, 11th May 2021

German ZEW Current Conditions (May)

German ZEW Economic Sentiment (May)

Eurozone ZEW Economic Sentiment (May)

Wednesday, 12th May 2021

German CPI (MoM) (Apr) Final

French CPI (MoM) (Apr) Final

French HICP (MoM) (Apr) Final

Eurozone Industrial Production (MoM) (Mar)

Friday, 14th May 2021

Spanish CPI (YoY) (Apr) Final

Spanish HICP (YoY) (Apr) Final

The Majors

It was a bullish end to the week for the European majors on Friday following a mixed session on Thursday.

The EuroStoxx600 rose by 0.99% to close out the week at a record high, with the CAC40 gaining 0.45%. Leading the way, however, was the DAX30, which ended the day up by 1.34%.

Economic data and corporate earnings from Germany delivered the upside for the DAX30 on the day.

Hopes of a swifter economic recovery amidst pickup in vaccination rates across the EU also supported the broader market.

The Stats

It was a relatively busy day on the Eurozone economic calendar on Friday.

German industrial production and trade data for March were the key stats from the Eurozone.

German Industrial Production

Industrial production increased by 2.5% in March, reversing a revised 1.9% decline from February. Economists had forecast a 2.3% rise.

According to Destatis,

  • Production in industry excl. energy and construction increased by 0.7%.
  • Within industry, the production of intermediate goods was up by 1.2%.
  • More significantly, the production of consumer goods jumped by 2.9%, while the production of capital goods slipped by 0.4%.
  • Outside industry, energy production was up by 2.4%, with the production in construction surging by 10.8%.
  • Compared with March 2020, industrial production was up 5.1%.

German Trade

In March, Germany’s trade surplus narrowed from €18.9bn to €14.3bn. Economists had forecast a widening to €19.5bn.

According to Destatis,

  • In March 2021, exports were up 1.2% and imports 6.5% compared with February 2021.
  • German exports increased by 16.1% compared with March 2020, with imports up by 15.5%.

Trade with EU countries:

  • Germany exported good to the value of €67.5bn to EU member states (+21.2%), with imports from EU member states of €57.7bn (+18.4%).
  • Exports to euro area countries increased by 22.6%, with imports up by 16.2%.

Trade with non-EU countries:

  • Compared with March 2020, exports to third countries increased by 10.8%, with imports rising by 12.2%.

Trade with the UK:

  • Exports to the UK fell by 13.2% when compared with March 2020, while imports rose by 1.6%.

Others:

  • German exports to China jumped by 37.9% when compared with March 2020.
  • Exports to the U.S rose by 8.8%.

From the U.S

Labor market numbers were back in focus on Friday.

In April, nonfarm payrolls rose by just 266K, falling well short of a forecasted 978k rise. The participation rate ticked up from 61.5% to 61.7%, contributing to a rise in the unemployment rate from 6.0% to 6.1%.

The only positive was a pickup in wage growth at the turn of the quarter. In the April month, average hourly earnings jumped by 0.7%, reversing a 0.1% decline from March.

The Market Movers

For the DAX: It was a mixed day for the auto sector on Friday. Continental rose by 1.91%, with Daimler and BMW gaining 0.61% and 0.02% respectively. Volkswagen fell by 0.94%, however, to buck the trend.

It was also a mixed day for the banks. Deutsche Bank rose by 1.07%, while Commerzbank ended the day down by 0.43%.

Leading the way on the day was Adidas AG, which jumped by 7.99% following an upward revision to its current year outlook.

From the CAC, it was a relatively bearish day for the banks. Credit Agricole fell by 1.67%, with BNP Paribas and Soc Gen seeing losses of 0.24% and 0.06% respectively.

It was a mixed day for the French auto sector. Stellantis NV rose by 0.19%, while Renault ended the day down by 0.70%.

Air France-KLM founded much-needed support, rallying by 4.14%, with Airbus SE rising by 1.67%.

On the VIX Index

It was a third consecutive day in the red for the VIX on Friday, marking a 4th day in the red from 7 sessions.

Following on from a 3.97% fall on Thursday, the VIX slid by 9.24% to end the day at 16.69.

The NASDAQ rose by 0.88%, with the Dow and the S&P500 gaining 0.66% and 0.74% respectively.

VIX 100521 Daily Chart

The Day Ahead

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

The lack of stats will leave the European majors in the hands of corporate earnings and COVID-19 news from the weekend in focus.

Expect the European majors to take their cues from the U.S markets late in the session.

The Futures

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

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

The Week Ahead – Economic Data, Central Bank Chatter, and COVID-19 Vaccine News in Focus

On the Macro

It’s a quieter week ahead on the economic calendar, with 50 stats in focus in the week ending 14th May. In the week prior, 57 stats had been in focus.

For the Dollar:

In the 1st half of the week, JOLT’s job openings and inflation figures are due out.

Expect inflation figures for April on Wednesday to have the greatest impact on the Dollar.

Later in the week, wholesale inflation and jobless claims figures will be in focus on Thursday.

While wholesale inflation figures will draw interest, the markets will be looking for another fall in jobless claims. Avoiding a return to 500k levels would give riskier assets a boost.

At the end of the week, retail sales, industrial production, and prelim consumer sentiment figures wrap things up.

Expect the retail sales and consumer sentiment figures to be the key drivers.

In the week, the Dollar ended the week down by 1.15% to 90.233.

For the EUR:

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

On Tuesday, German and Eurozone ZEW economic sentiment figures for May will provide the EUR with direction.

Expect the numbers to influence.

The focus will then shift to industrial production figures for the Eurozone on Wednesday. With little else for the markets to consider, we can expect some EUR sensitivity to the numbers.

Through the 2nd half of the week, finalized inflation figures from Germany, France, and the Eurozone are also due out. Barring marked revision from prelim numbers, however, we don’t expect too much influence on the EUR.

From the ECB, the ECB’s monetary policy meeting minutes will also draw interest.

The EUR ended the week up by 1.21% to $1.2166.

For the Pound:

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

Retail sales figures for April are due out on Tuesday ahead of a busy Wednesday.

The markets will be looking for another jump in spending as the UK economy reopens.

On Wednesday, 1st quarter GDP numbers are due out along with industrial and manufacturing production and trade data.

While we expect the GDP numbers to be key, March manufacturing production and trade figures will also draw attention.

On the monetary policy front, BoE Governor Bailey is also scheduled to speak in the week. Any comments on the economy or monetary policy will provide the Pound with direction.

The Pound ended the week up by 1.17% to $1.3984.

For the Loonie:

It’s another quiet week ahead on the economic calendar.

Economic data is limited to manufacturing sales and wholesale sales figures due out on Friday.

On the monetary policy front, BoC Governor Macklem is scheduled to speak on Thursday.

With little else for the markets to consider, we can expect crude oil inventory numbers and OPEC and IEA monthly reports to also provide direction.

The Loonie ended the week up 1.26% to C$1.21000 against the U.S Dollar.

Out of Asia

For the Aussie Dollar:

It’s another relatively quiet week ahead.

Key stats include business confidence and retail sales figures on Monday and consumer sentiment figures on Wednesday.

With the RBA looking for business investment and consumer spending to support the recovery, expect the numbers to influence.

Late in the week, wage growth figures for the 1st quarter will also provide direction.

The Aussie Dollar ended the week up by 1.66% to $0.7844.

For the Kiwi Dollar:

It’s a relatively quiet week ahead.

On Wednesday, electronic card retail sales are due out ahead of business PMI numbers on Friday.

Following some positive numbers from March, the markets will be looking for further improvement to support the Kiwi.

The Kiwi Dollar ended the week up by 1.62% to $0.7278.

For the Japanese Yen:

It is a quiet week ahead. Household spending figures for March will be in focus on Tuesday.

Another jump in spending would provide some hope of a speedier economic recovery that should support the Yen.

The Japanese Yen rose by 0.65 to ¥108.60 against the U.S Dollar.

Out of China

It’s a quieter week ahead.

Inflation figures for April are due out on Tuesday. While the numbers tend to influence market risk sentiment, the markets are expecting a pickup in inflationary pressures. This should, therefore, limit the impact on the global financial markets.

The Chinese Yuan ended the week up by 0.64% to CNY6.4332 against the U.S Dollar.

Geo-Politics

While there are no major risks to consider, the markets will need to continue to eye U.S – China relations.

There’s also the progress towards a new Iran nuclear agreement to track in the week.

The Weekly Wrap – Economic Data and Market Risk Sentiment Sink the Greenback

The Stats

It was a busy week on the economic calendar, in the week ending 7th May.

A total of 57 stats were monitored, following 61 stats from the week prior.

Of the 57 stats, 33 came in ahead forecasts, with 24 economic indicators coming up short of forecasts. There were no stats that were in line with forecasts in the week.

Looking at the numbers, 30 of the stats reflected an upward trend from previous figures. Of the remaining 27 stats, 26 reflected a deterioration from previous.

For the Greenback, it was back in the red. In the week ending 7th May, the Dollar Spot Index slid by 1.15 % to 90.233. In the previous week, the Dollar had risen by 0.48% to 91.207.

Out of the U.S

It was a mixed set of numbers from the U.S.

Both the manufacturing and services sector saw slower growth in April, according to the market’s preferred ISM surveys.

Ahead of Friday’s nonfarm payroll figures, however, labor market numbers had been upbeat.

In April, nonfarm payrolls increased by 742k in April according to the ADP. Payrolls had risen by 565k in March.

The weekly jobless claims figures were also upbeat. In the week ending 30th April, initial jobless claims fell from 590k to 498k.

At the end of the week, however, it was nonfarm payrolls and unemployment figures that were key.

In April, nonfarm payrolls rose by just 266K, falling well short of a forecasted 978k rise. The participation rate ticked up from 61.5% to 61.7%, contributing to a rise in the unemployment rate from 6.0% to 6.1%.

In the equity markets, the NASDAQ fell by 1.51%, while the Dow and the S&P500 saw gains of 2.67% and 1.23% respectively.

Out of the UK

It was a relatively busy week.

Finalized private sector PMIs were in focus in the week. At the end of the week, April’s construction PMI was in focus but had a muted impact on the Pound.

The stats were skewed to the positive in the week.

In April, the manufacturing PMI increased from 58.9 to 60.9, coming in ahead of a prelim 60.7.

The services PMI increased from 56.3 to 61.0, coming in ahead of a prelim 60.1.

As a result of the upward revisions, the composite PMI rose from 56.4 to 60.7, which was up from a prelim 60.0.

While the stats were positive, the BoE monetary policy decision on Thursday was the main event, however.

On Thursday, the BoE left rates and the QE total unchanged, which was in line with market expectations.

There was no dissent, with all in favor of standing pat on policy.

While standing pat, the BoE announced slower bond purchases in response to a sharp upward revision to growth forecasts for 2021.

The BoE revised up growth for 2021 from 5.0% to 7.25%.

In the week, the Pound rose by 1.17% to end the week at $1.1.3984. In the week prior, the Pound had fallen by 0.39% to $1.3822.

The FTSE100 ended the week up by 2.29%, following a 0.45% gain from the previous week.

Out of the Eurozone

It was a busy week on the economic data front.

Through the 1st half of the week, private sector PMI figures for April were in focus.

Manufacturing sector activity continued to lead the way. The Eurozone’s Manufacturing PMI rose from 62.5 to 62.9. Service sector activity across the Eurozone also returned to growth, with the Eurozone services PMI rising from 49.6 to 50.5.

Other stats in the week included German retail sales, industrial production, and trade data.

These stats were also positive EUR and the European majors. While Germany’s trade surplus narrowed, both retail sales and industrial production were on the rise in March.

Even the narrowing of the trade surplus was positive. A larger jump in imports over exports pointed to increased demand.

From the ECB, the Economic Bulletin was also in focus. While talking of uncertainty near-term, there was optimism over the medium term, which was EUR positive.

For the week, the EUR rose by 1.21% to $1.2166. In the week prior, the EUR had fallen by 0.64% to $1.2020.

The CAC40 rose by 1.85%, with the DAX30 and EuroStoxx600 ended the week up by 1.74% and by 1.69% respectively.

For the Loonie

It was a busier week.

In the 1st half of the week, building permits and trade data were in focus.

Canada’s trade balance fell from C$1.04bn surplus to a C$1.14bn deficit in March.

At the end of the week, employment figures and the Ivey PMI for April also provided direction.

In April, employment fell by 207.1k, partially reversing a 303.1k jump in March. As a result, the unemployment rate increased from 7.5% to 8.1%.

The Ivey PMI fell from 72.9 to 60.6 in the month of April. Economists had forecast a decline to 60.5.

Despite the stats, the markets were in a forgiving mood followed the BoC’s more hawkish outlook.

In the week ending 7th May, the Loonie rose by 1.26% to C$1.2100. In the week prior, the Loonie had jumped by 1.51% to C$1.2288.

Elsewhere

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

In the week ending 7th May, the Aussie Dollar rallied by 1.66% to $0.7844, with the Kiwi Dollar ending the week up by 1.62% to $0.7278.

For the Aussie Dollar

It was a relatively quiet week.

In the 1st half of the week, manufacturing and trade data were in focus. It was a mixed set of numbers.

While manufacturing sector activity picked up, a fall in exports led to a marked narrowing in the trade surplus in March. The surplus narrowed from A$7.529bn to A$5.574bn. Economists had forecast a widening to A$8.000bn.

In the 2nd half of the week, building approvals were in focus, which had a muted impact on the Aussie Dollar.

On the monetary policy front, the RBA was also in action in the week.

The RBA left the cash rate unchanged at 0.1% on Tuesday, which was in line with expectations. There was a more hawkish tone within the RBA Rate Statement, however.

Growth forecasts for 2021 were revised up from 3.5% in February to 4.75% in the latest statement. The RBA also projected that unemployment will fall to a 2008 low 4.5% next year.

In spite of the revisions, the RBA stood by its policy outlook, with the cash rate to remain unchanged until 2024. The RBA did state, however, that it would decide whether to extend its government bond purchases at the July meet.

At the end of the week, the RBA’s Statement of Monetary Policy was also in focus on Friday. Upward revisions to economic growth and unemployment forecasts for 2021 were key takeaways from the statement.

For the Kiwi Dollar

It was a quiet week.

Employment figures for the 1st quarter were in focus along with March building consents and business confidence.

In the 1st quarter, employment increased by 0.6%, following a 0.6% rise in the 4th quarter of last year. As a result of the pickup in employment, the unemployment rate eased from 4.9% to 4.7%.

Business confidence figures were also positive, with the ANZ Business Confidence Index rising from -2 to +7 in May.

All the sub-components were on the rise in May. Export, investment, and employment intentions all saw strong increases as did capacity utilization and profit expectations.

For the Japanese Yen

It was a quiet week.

Finalized private sector PMIs for April were in focus in the week.

In April, the services PMI rose from 48.3 to 49.5, with firms optimistic over the ongoing vaccination programs globally.

The Japanese Yen rose by 0.65% to ¥108.60 against the U.S Dollar. In the week prior, the Yen had fallen by 1.33% to ¥109.31.

Out of China

It was a busier week on the data front.

The market’s preferred Caixin survey private sector PMIs and trade data were in focus in the week.

For April, the services PMI increased from 54.3 to 56.3. New orders grew at the fastest pace in 5-months, with the pace of job creation also accelerating. The pickup in the pace of hiring was supported by elevated optimism across the sector.

Trade data was also market risk positive, with imports (+43.1%) and exports (+32.3%) seeing marked increases in April. The U.S Dollar trade surplus widened from $13.80bn to $42.86bn.

In the week ending 7th May, the Chinese Yuan rose by 0.64% to CNY6.4332. In the week prior, the Yuan had risen by 0.33% to CNY6.4749.

The CSI300 fell by 2.49%, with the Hang Seng ended the week down by a more modest 0.40%.

European Equities: A Week in Review – 07/05/21

The Majors

It was a bullish week for the European majors in the week ending 7th May, with the EuroStoxx600 closing out at a record high on Friday.

The CAC40 rose by 1.85%, with the DAX30 and the EuroStoxx600 ended the week up by 1.74% and by 1.69% respectively.

Corporate earnings and a pickup in the vaccination rate across the EU provided the European majors with support.

Private sector PMIs from member states and the Eurozone and economic data from Germany were also positive, adding to the upside in the week.

The Stats

Through the 1st half of the week, private sector PMI figures for April were in focus.

Manufacturing sector activity continued to lead the way. The Eurozone’s Manufacturing PMI rose from 62.5 to 62.9. Service sector activity across the Eurozone also returned to growth, with the Eurozone services PMI rising from 49.6 to 50.5.

Other stats in the week included German retail sales, industrial production, and trade data.

These stats were also positive for the European majors. While Germany’s trade surplus narrowed, both retail sales and industrial production were on the rise in March.

Even the narrowing of the trade surplus was positive. A larger jump in imports than exports pointed to increased demand.

From the ECB, the Economic Bulletin was also in focus. While talking of uncertainty near-term, there was optimism over the medium term, which was market positive.

From the U.S

It was a mixed set of numbers from the U.S.

Both the manufacturing and services sector saw slower growth in April, according to the market’s preferred ISM surveys.

Ahead of Friday’s nonfarm payroll figures, however, labor market numbers were upbeat.

In April, nonfarm payrolls increased by 742k in April according to the ADP. Payrolls had risen by 565k in March.

The weekly jobless claims figures were also upbeat. In the week ending 30th April, initial jobless claims fell from 590k to 498k.

At the end of the week, market optimism overshadowed disappointing official nonfarm payrolls and unemployment figures.

In April, nonfarm payrolls rose by just 266K, falling well short of a forecasted 978k rise. The participation rate ticked up from 61.5% to 61.7%, contributing to a rise in the unemployment rate from 6.0% to 6.1%.

The Market Movers

From the DAX, it was a mixed week for the auto sector. Volkswagen slid by 2.65%, with Daimler falling by 1.19%. BMW and Continental found support, however, rising by 0.67% and by 1.56% respectively.

It was also a mixed week for the banking sector. Deutsche Bank slipped by 0.43% after the previous week’s 18.43% jump, while Commerzbank rose by 2.19%.

From the CAC, it was a bullish week for the banks. Soc Gen led the way, rallying by 5.24%, with BNP Paribas gaining 2.60%. Credit Agricole ended the week flat, however.

It was another bullish week for the French auto sector. Stellantis NV rallied by 8.18%, with Renault ending the week up by 1.85%.

Air France-KLM slipped by 0.15%, with Airbus falling by 1.57%.

On the VIX Index

It was back into the red for the VIX in the week ending 7th May. Marking a 7th weekly fall in 10-weeks, the VIX fell by 10.32%. Reversing a 7.39% gain from the previous week, the VIX ended the week at 16.69.

4-days in the red from 5 sessions, which included a 9.24% fall on Friday, delivered the downside in the week for the VIX.

For the week, the Dow and the S&P500 ended the week up by 2.67% and by 1.23% respectively, while the NASDAQ fell by 1.51%.

VIX 080521 Weekly Chart

The Week Ahead

It’s a quieter week ahead on the Eurozone economic calendar.

On Tuesday, German and Eurozone ZEW economic sentiment figures for May will provide the EUR with direction.

Expect the numbers to influence.

The focus will then shift to industrial production figures for the Eurozone on Wednesday. With little else for the markets to consider, we can expect some sensitivity to the numbers.

Through the 2nd half of the week, finalized inflation figures from Germany, France, and the Eurozone are also due out. Barring marked revision from prelim numbers, however, we don’t expect too much influence on the majors.

From the U.S, inflation figures for April should have a muted impact on the majors following the FED’s latest reassurances.

Wholesale inflation and jobless claims figures will be in focus on Thursday.

While wholesale inflation figures will draw interest, the markets will be looking for another fall in jobless claims. Avoiding a return to 500k levels should support riskier assets.

At the end of the week, retail sales, industrial production, and prelim consumer sentiment figures wrap things up.

Expect the retail sales and consumer sentiment figures to be the key drivers.

The German Economy Was Back in Focus and Delivered the EUR Mixed Signals

Following positive trade and service sector data from China ahead of the European open, the German economy was back in focus this morning.

Industrial production and trade data for March were the key stats from the Eurozone ahead of the European open.

German Industrial Production

Industrial production increased by 2.5% in March, reversing a revised 1.9% decline from February. Economists had forecast a 2.3% rise.

According to Destatis,

  • Production in industry excl. energy and construction increased by 0.7%.
  • Within industry, the production of intermediate goods was up by 1.2%.
  • More significantly, the production of consumer goods jumped by 2.9%, while the production of capital goods slipped by 0.4%.
  • Outside industry, energy production was up by 2.4%, with the production in construction surging by 10.8%.
  • Compared with March 2020, industrial production was up 5.1%.

German Trade

In March, Germany’s trade surplus narrowed from €18.9bn to €14.3bn. Economists had forecast a widening to €19.5bn.

According to Destatis,

  • In March 2021, exports were up 1.2, with  imports up 6.5% compared with February 2021.
  • German exports increased by 16.1% compared with March 2020, with imports up by 15.5%.

Trade with EU countries:

  • Germany exported goods to the value of €67.5bn to EU member states (+21.2%), with imports from EU member states of €57.7bn (+18.4%).
  • Exports to euro area countries increased by 22.6%, with imports up by 16.2%.

Trade with non-EU countries:

  • Compared with March 2020, exports to third countries increased by 10.8%, with imports rising by 12.2%.

Trade with the UK:

  • Exports to the UK fell by 13.2% when compared with March 2020, while imports rose by 1.6%.

Others:

  • German exports to China jumped by 37.9% when compared with March 2020.
  • Exports to the U.S rose by 8.8%.

Market Impact

Ahead of the numbers the EUR had risen to a pre-stat high $1.20699.

In response to the numbers, the EUR slipped to a post-stat and current day low $1.2053 before rising to a post-stat and current day high $1.20893.

At the time of writing, the EUR was up by 0.06% to $1.20725.

EURUSD 070521 Hourly Chart

Next Up

ECB President Lagarde ahead of April labor market figures from the U.S.

US Stock Indexes Edge Higher in Pre-Market Trade as Investors Await US Labor Market Report

The major U.S. indexes are trading higher during the pre-market session as investors awaited Friday’s major U.S. jobs report that should reveal some important clues as to the pace of the U.S. labor market recovery.

At 02;00 GMT, June E-mini S&P 500 Index futures are trading 4203.50, up 9.25 or +0.22%. June E-mini NASDAQ-100 Index futures are at 13655.00, up 57.25 or +0.42% and June E-mini Dow Jones Industrial Average futures are trading 34478, up 36 or +0.10%.

Thursday Recap

Stocks were mostly higher on Thursday with the cash market Dow rising 0.9%, the benchmark S&P 500 Index gaining 0.8% and the tech-driven NASDAQ Composite gaining 0.4%.

Ahead of Friday’s opening, the Dow is up about 2% for the week, the S&P 500 Index has gained about 0.49% and the NASDAQ Composite was down more than 2.3%.

The blue chip Dow Jones Industrial Average hit a record high on Thursday, as economically sensitive stocks rose after an upbeat weekly jobless claims report, while vaccine makers fell as President Joe Biden backed plans to waive patents on COVID-19 shots.

Cyclical sectors including the S&P 500 financials and industrials rose after a Labor Department report showed initial claims for state unemployment benefits totaled a seasonally adjusted 498,000 for the week ended May 1 compared to 590,000 in the prior week. Ahead of the report, traders were pricing in a reading of 527,000.

Vaccine Makers Fall

Shares in Pfizer Inc, Moderna Inc, Johnson & Johnson and Novavax Inc, all involved in the making of COVID-19 vaccines, fell between 0.2% and 1.7%.

The S&P 500 healthcare sector slipped 0.8%, while the NASDAQ biotechnology index dropped 1.2%.

Moderna’s shares cut some losses after it said countries around the globe would continue buying its COVID-19 vaccine for years even if patents on the shots are waived.

Focus Shifts to Friday’s US Non-Farm Payrolls Report

Investors are now awaiting the Non-Farm Payrolls report on Friday for clues on the strength of the labor market and potentially the U.S. Federal Reserve’s stance on monetary policy.

The Labor Department is set to publish April’s jobs report at 12:30 GMT on Friday. Economists polled by Dow Jones expect 1 million payrolls to have been added last month and the unemployment rate is expected to have fallen to 5.8% from 6.0%.

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

European Equities: Economic Data from Germany and the U.S in Focus Once More

Economic Calendar:

Friday, 7th May 2021

German Industrial Production (MoM) (Mar)

German Trade Balance (Mar)

ECB President Lagarde Speech

The Majors

It was a mixed day for the European majors on Thursday following Wednesday’s rebound. The CAC40 and the DAX30 ended the day with gains of 0.28% and 0.17% respectively. The EuroStoxx600 bucked the trend, however, with a 0.22% loss.

Economic data from the Eurozone and the U.S provided the European majors with support on Thursday.

Ahead of today’s nonfarm payrolls, the weekly jobless claims and factory orders from Germany impressed. Corporate earnings results added further support on the day.

Both France’s Soc Gen and Italy’s UniCredit delivered better than expected earnings results, supporting bank stocks.

Tech stocks were a drag once more, as were pharma stocks that struggled following U.S President Biden’s call for pharmas to waive COVID-19 patents. From the EU, a push back by German Chancellor Merkel and EU drug companies limited the damage, however.

The Stats

It was a busy day on the Eurozone economic calendar on Thursday. Key stats included German factory orders and Eurozone retail sales figures.

In March, factory orders rose by 3.0%, month-on-month, following a 1.2% increase in February. Economists had forecast a 1.7% rise.

According to Destatis,

  • Domestic orders increased by 4.9% and foreign orders by 1.6% month-on-month.
  • New orders from the euro area increased 0.7% and by 2.2% from other countries.
  • Manufacturers of intermediate goods saw new orders increase by 2.8%.
  • Consumer goods manufacturers saw new orders jump by 8.5%, with orders for capital goods up 2.5%.
  • When compared with February 2020, which was the month before restrictions were imposed, turnover was 3.4% lower.
  • Compared on the same month a year earlier, new orders were up 27.8%.

The Eurozone

In March, retail sales rose by 2.7% month-on-month following a 4.2% increase in February. Economists had forecast a 1.5% rise.

According to Eurostat,

  • Retail sales for non-food products increased by 4.6% and by 1.0% for food, drinks, & tobacco.
  • Automotive fuel sales fell by 2.9% in the month.
  • By member state, The Netherlands (+8.4%) and Germany and Lithuania (both 7.7%) registered the largest monthly increases.
  • Austria (-1.9%) registered the largest monthly decline, however.
  • Compared with March 2020, retail sales was up by 12.0%.
  • The volume of retail trade increased by 25.0% for non-food products and by 17.1% for automotive fuels.
  • Sales of food, drinks, & tobacco fell by 1.1%, however.

The ECB Economic Bulletin

From the ECB, the Economic Bulletin was also in focus early in the European session.

Salient points from the summary section included:

  • The near-term economic outlook remains clouded by uncertainty about the resurgence of the pandemic and the roll-out of vaccine campaigns.
  • Persistently high rates of infection and the resultant extension and tightening of containment measures continue to constrain economic activity in the short-term.
  • Looking ahead, progress on the vaccination front and the envisaged gradual relaxation of containment measures reinforce the expected firm economic rebound in 2021.
  • While inflation has picked up, underlying price pressures remained subdued in the context of significant economic slack and still weak demand.
  • Global economic activity remained on a solid recovery path at the turn of the year, despite the resurgence of the pandemic.
  • While incoming economic data, surveys, and high-frequency indicators suggest a contraction in Q1, these point to a resumption of growth in the 2nd
  • Restrictions on mobility and social interaction still limit activity in the services sector. There are signs, however, of a bottoming-out.
  • Consumers remain cautious in view of the pandemic and its impact on employment and earnings.
  • Over the medium term, the recovery of the euro area economy is expected to be driven by a recovery in domestic and global demand, supported by favorable financing conditions and fiscal stimulus.

From the U.S

Weekly jobless claims were in focus later in the European session. In the week ending 30th April, initial jobless claims fell from a revised 590k to 498k. Economists had forecast a decline to 540k.

Other stats included prelim unit labor costs and nonfarm productivity figures for the 1st quarter. The stats had a muted impact on the European majors.

The Market Movers

For the DAX: It was a mixed day for the auto sector on Thursday. BMW and Daimler rose by 0.77% and by 0.79% respectively, with Continental gaining 0.68%. Volkswagen slid by 1.71%, however, to buck the trend.

It was also a mixed day for the banks. Deutsche Bank rose by 1.13%, while Commerzbank ended the day down by 0.56%.

From the CAC, it was a relatively bullish day for the banks. Soc Gen jumped by 5.46% following its better than expected earnings results. BNP Paribas and Credit Agricole saw modest gains of 0.02% and 0.69% respectively, however.

It was a mixed day for the French auto sector. Stellantis NV rose by 0.45%, while Renault ended the day down by 0.25%.

Air France-KLM fell by 2.61%, while Airbus SE rose by 0.19%.

On the VIX Index

It was a second consecutive day in the red for the VIX on Thursday, marking a 3rd day in the red from 6 sessions.

Following on from a 1.69% fall on Wednesday, the VIX declined by 3.97% to end the day at 18.39.

The Dow and the S&P500 rose by 0.93% and by 0.82% respectively, with the NASDAQ ending the day up by 0.37%.

VIX 070521 Daily Chart

The Day Ahead

It’s a relatively busy day ahead on the Euro area economic calendar. Key stats include German industrial production and trade data for March. On the monetary policy front, ECB President Lagarde is also scheduled to speak later today. Any comments on the economy or monetary policy will influence.

Ahead of the European open, trade data and private sector PMI figures from China will set the tone.

From the U.S, nonfarm payrolls and unemployment figures will also provide direction late in the European session.

Away from the economic calendar, expect further discussion on Biden’s COVID-19 patent waiver plans to also draw interest.

The Futures

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

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

German Factory Orders Deliver EUR Support Early in the Session

It was a quieter start to the day on the Eurozone economic calendar on Thursday. Key stats included German factory orders.

In March, factory orders rose by 3.0%, month-on-month, following a 1.2% increase in February. Economists had forecast a 1.7% rise.

According to Destatis,

  • Domestic orders increased by 4.9% and foreign orders by 1.6% month-on-month.
  • New orders from the euro area increased 0.7% and by 2.2% from other countries.
  • Manufacturers of intermediate goods saw new orders increase by 2.8%.
  • Consumer goods manufacturers saw new orders jump by 8.5%, with orders for capital goods up 2.5%.
  • When compared with February 2020, which was the month before restrictions were imposed, turnover was 3.4% lower.
  • Compared on the same month a year earlier, new orders were up 27.8%.

Market Impact

Ahead of the numbers the EUR had fallen to a pre-stat and current day low $1.19932.

In response to the numbers, the EUR slipped to a post-stat low $1.20051 before rising to a post-stat and current day high $1.20278.

At the time of writing, the EUR was up by 0.16% to $1.20228.

EURUSD 060521 Hourly Chart

Next Up

Eurozone retail sales figures followed by the weekly jobless claim figures from the U.S. Prelim U.S unit labor cost and nonfarm productivity figures for the 1st quarter are due out but will likely have limited impact on the broader markets.

From the ECB, the Economic Bulletin is also due out shortly…

European Equities: Economic Data from Germany, the Eurozone, and the U.S in Focus

Economic Calendar:

Thursday, 6th May 2021

German Factory Orders (MoM) (Mar)

IHS Markit Construction PMI (Apr)

Eurozone Retail Sales (MoM) (Mar)

Friday, 7th May 2021

German Industrial Production (MoM) (Mar)

German Trade Balance (Mar)

ECB President Lagarde Speech

The Majors

It was a bullish day for the European majors on Wednesday, which were on the rebound from Tuesday’s pullback. The DAX30 rallied by 2.12%, with the CAC40 and the EuroStoxx600 ending the day up by 1.40% and by 1.82% respectively.

Corporate earnings, economic data, and a pickup in vaccination rates across the EU supported the more optimistic economic outlook.

With the EU making progress on the vaccination front, plans across the EU to reopen borders this summer also delivered a boost.

The Stats

It was a particularly busy day on the economic calendar. Service sector PMI figures for Italy and Spain were in focus early in the session.

Finalized services and composite PMIs from France, Germany, and the Eurozone also drew attention.

In April, Spain’s services PMI rose from 48.1 to 54.6, while Italy’s services PMI slipped from 48.6 to 47.3.

Economists had forecast PMIs of 50.0 and 49.8 respectively.

From France, the services PMI rose from 47.9 to 50.3, which was down from a prelim 50.4.

Germany’s services PMI fell from 50.8 to 49.9, which was down from a prelim 50.1.

The Eurozone

For the Eurozone, the Services PMI rose from 49.6 to 50.5, which was up from a prelim 50.3. As a result, the composite PMI increased from 53.2 to 53.8, which was up from a prelim 53.7.

According to the finalized Markit Composite Survey,

  • The latest data from the private sector indicated the fastest expansion since July and the second best in over two-and-a-half years.
  • Goods producers continued to lead the way, with output rising at a rate little changed from March’s record.
  • Service sector output returned to growth following 7-months of continuous contraction.
  • Germany led the way again in terms of overall growth, supported by strong manufacturing sector growth.
  • A jump in service sector activity in Spain saw private sector growth at its strongest in over 2-years.
  • Growth in both France and Italy was modest in April, while growth in France was the best in the past 8-months.

The Details

  • New orders across the private sector rose at the most marked pace in over two-and-a-half years.
  • Firms reported higher sales in both domestic and international markets.
  • The rate of backlog growth was the sharpest for 39-months and supported a pickup in hiring.
  • Firms increased staffing levels to the strongest degree for 2-years.
  • Optimism across the private sector reached its highest since composite data were first available in mid-2012.

From the U.S

It was a busy day, with ADP nonfarm employment change and service sector PMIs in focus late in the European session.

In April, nonfarm payrolls increased by 742k according to the ADP, which was up from 517k in March. Economists had forecast a rise of 800k.

From the services sector, the ISM Non-Manufacturing PMI slipped from 63.7 to 62.7, coming up short of a forecasted 64.3.

Finalized Markit survey services and composite PMIs for April were also out but had a muted impact on the majors.

The Market Movers

For the DAX: It was a mixed day for the auto sector on Wednesday. Daimler rallied by 2.57%, with BMW and Volkswagen gaining 1.25% and 1.55% respectively. Continental bucked the trend, however, falling by 0.20%.

It was a bullish day for the banks. Deutsche Bank rose by 1.89%, with Commerzbank ended the day up by 0.78%.

From the CAC, it was a bullish day for the banks. BNP Paribas rallied by 3.49%, with Credit Agricole and Soc Gen gaining 1.95% and 1.87% respectively.

It was also a bullish day for the French auto sector. Stellantis NV jumped by 7.25% off the back of better-than-expected earnings results. Renault ended the day up by 3.13%.

Air France-KLM fell by 1.72%, with Airbus SE slipping by 0.17%.

On the VIX Index

It was back into the red for the VIX on Wednesday, marking a 2nd daily loss in 5-sessions.

Partially reversing a 6.39% gain from Tuesday, the VIX fell by 1.69% to end the day at 19.15.

The NASDAQ fell by 0.37%, while the Dow and the S&P500 saw gains of 0.29% and 0.07% respectively.

VIX 060521 Daily Chart

The Day Ahead

It’s a relatively busy day ahead on the European economic data front. Key stats include German factory orders and Eurozone retail sales figures.

Expect March factory orders from Germany to have a greater impact on the European majors.

From the U.S, weekly jobless claims figures will also provide direction later in the session.

The Futures

In the futures markets, at the time of writing, the Dow Mini was down by 2 points.

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

April Service PMIs Fail to Deliver a EUR Bounce Back

It was a particularly busy day on the economic calendar. Service sector PMI figures for Italy and Spain were in focus early in the session.

Finalized services and composite PMIs from France, Germany, and the Eurozone also drew attention.

Member State PMIs

In April, Spain’s services PMI rose from 48.1 to 54.6, while Italy’s services PMI slipped from 48.6 to 47.3.

Economists had forecast PMIs of 50.0 and 49.8 respectively.

From France, the services PMI rose from 47.9 to 50.3, which was down from a prelim 50.4.

Germany’s services PMI fell from 50.8 to 49.9, which was down from a prelim 50.1.

The Eurozone

For the Eurozone, the Services PMI rose from 49.6 to 50.5, which was up from a prelim 50.3. As a result, the composite PMI increased from 53.2 to 53.8, which was up from a prelim 53.7.

According to the finalized Markit Composite Survey,

  • The latest data from the private sector indicated the fastest expansion since July and the second best in over two-and-a-half years.
  • Goods producers continued to lead the way, with output rising at a rate little changed from March’s record.
  • Service sector output returned to growth following 7-months of continuous contraction.
  • Germany led the way again in terms of overall growth, supported by strong manufacturing sector growth.
  • A jump in service sector activity in Spain saw private sector growth at its strongest in over 2-years.
  • Growth in both France and Italy was modest in April, while growth in France was at its best in the past 8-months.

The Details

  • New orders across the private sector rose at the most marked pace in over two-and-a-half years.
  • Firms reported higher sales in both domestic and international markets.
  • The rate of backlog growth was the sharpest for 39-months and supported a pickup in hiring.
  • Firms increased staffing levels to the strongest degree for 2-years.
  • Optimism across the private sector reached its highest since composite data were first available in mid-2012.

Market Impact

Through the release of the PMI figures, the EUR fell to a low and a current day low $1.19860 before rising to a high $1.19981.

The upside was short-lived, however, with the EUR easing back.

At the time of writing, the EUR was down by 0.17% to $1.19941.

EURUSD 050521 Hourly Chart

Next Up

April ISM Non-Manufacturing PMI and finalized Markit Services and Composite PMI numbers from the U.S are due out. Ahead of the private sector numbers, ADP nonfarm employment change figures will also influence.

European Equities: Private Sector PMIs and ADP Nonfarm Figures in Focus

Economic Calendar:

Wednesday, 5th May 2021

Spanish Services PMI (Apr)

Italian Services PMI (Apr)

French Services PMI (Apr) Final

German Services PMI (Apr) Final

Eurozone Markit Composite PMI (Apr) Final

Eurozone Services PMI (Apr) Final

Thursday, 6th May 2021

German Factory Orders (MoM) (Mar)

IHS Markit Construction PMI (Apr)

Eurozone Retail Sales (MoM) (Mar)

Friday, 7th May 2021

German Industrial Production (MoM) (Mar)

German Trade Balance (Mar)

ECB President Lagarde Speech

The Majors

It was a particularly bearish day for the European majors on Tuesday. The DAX30 slid by 2.49%, with the CAC40 and the EuroStoxx600 ending the day down by 0.89% and by 1.43% respectively.

With no material stats from the Eurozone to provide direction on the day, a tech sector sell-off weighed on the European majors. Following Monday’s pullback, the NASDAQ continued to fall back on Tuesday, dragging tech stocks in Europe into the red.

News of anticipated supply shortages in the auto sector weighed heavily on the DAX30 in particular, with the auto sector joining tech stocks in the deep red.

The Stats

It was a particularly quiet day on the economic calendar, with no material stats from the Eurozone to provide direction.

From the U.S

It was a relatively busy day, with factory orders and trade data for March in focus late in the European session.

Factory orders increased by 1.1%, following a 0.5% decline in February. Economists had forecast a 1.3% rise.

The trade deficit widened from $70.4bn to $74.4bn in March. Economists had forecast a widening to $74.50bn.

The Market Movers

For the DAX: It was a particularly bearish day for the auto sector on Tuesday. Daimler tumbled by 5.20%, with BMW and Volkswagen sliding by 3.08% and by 3.94% respectively. Continental saw a more modest 1.03% loss on the day.

It was another mixed day for the banks. Deutsche Bank slid by a further 2.49%, while Commerzbank ended the day up by 0.52%.

From the CAC, it was a bearish day for the banks. Soc Gen slid by 2.23%, with BNP Paribas and Credit Agricole falling by 0.77% and by 1.15% respectively.

It was also a bearish day for the French auto sector. Stellantis NV and Renault ended the day with losses of 0.52% and 2.02% respectively.

Air France-KLM fell by 1.19%, with Airbus SE sliding by 3.18%.

On the VIX Index

It was back into the green for the VIX on Tuesday, marking a 3rd rise in 4-sessions.

Reversing a 1.61% fall from Monday, the VIX rose by 6.39% to end the day at 19.48.

The NASDAQ and the S&P500 fell by 1.88% and by 0.67% respectively, while the Dow eked out a 0.06% gain.

VIX 050521 Monthly Chart

The Day Ahead

It’s a busy day ahead on the European economic calendar. Key stats include service sector PMIs from Italy and Spain. Finalized numbers for Germany, France, and the Eurozone are also due out.

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

From the U.S, ADP nonfarm employment change and the market’s favored ISM Non-Manufacturing PMI will also influence later in the day.

The Futures

In the futures markets, at the time of writing, the Dow Mini was up by 61 points, with the DAX up by 117 points.

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

Wall Street Losses Expected to Drag Asia-Pacific Shares Lower on Opening

Asia-Pacific shares are expected to open lower on Wednesday with traders taking their cues from a steep plunge in mega-cap growth shares on Wall Street. Investors dumped the higher risk tech shares for protection in more defensive parts of the market.

All 11 major S&P 500 sectors were down, with technology communication services and consumer discretionary falling more than 2% each. Meanwhile, the defensive consumer staples, utilities and real estate sectors fell the least.

Tuesday Recap

Stocks in the Asia-Pacific region were mixed on Tuesday with major markets in Japan and China still closed for bank holidays.

Hong Kong’s Hang Seng index settled 0.70% higher. South Korea’s KOSPI Index was up 0.64% and China’s Shanghai Index finished down 0.81%. In Australia, the S&P/ASX 200 Index closed up 0.56%.

Investors Eyeing COVID-19 Outbreak in India

Investors continued to monitor the COVID-19 situation in India as it shows little signs of slowing down. The World Health Organization said last week that one in every three new coronavirus cases globally is being reported in India.

Reserve Bank of Australia Holds Policy Steady

The Reserve Bank of Australia (RBA) left its key rates at near zero for a fifth straight meeting on Tuesday and pledged to keep policy supper loose for a prolonged period even as the economy recovers at a rapid pace from the COVID-19-led downturn.

The RBA reiterated its commitment to keep the cash rate at the record-low of 0.1% for as long as is needed to pull down unemployment and push inflation higher.

The RBA’s as-expected decision comes as it painted a rosy picture of the A$2 trillion ($1.55 trillion) economy, and upgraded the growth forecast to 4.75% over 2021, from its February forecast of 3.5%.

Australia Shares Rise as Central Bank Upgrades Growth Forecast

Australian shares closed higher on Tuesday as the central bank raised its economic growth forecast and kept interest rates on hold, with commodity-related stocks leading the way on the benchmark index.

Gold and mining stocks led the gains on strong metals prices, while tech stocks lost ground. The metals and mining index climbed 2.3%. Big miners BHP Group and Rio Tinto added 2.6% and 2.5%, respectively.

Energy Leads Hong Kong Stocks Higher on Pandemic Recovery Signs

Hong Kong shares settled higher on Tuesday, with energy stocks leading the gains on signs of recovery from the coronavirus pandemic as major economies around the world reopen.

The sub-index of the Hang Seng tracking energy shares rose 2.3%, while the IT sector edged up 0.05%, the financial sector climbed 0.78% and the property sector gained 0.52%.

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

European Equities: Futures Point to the Red with No Major Stats from the Eurozone to Consider

Economic Calendar:

Wednesday, 5th May 2021

Spanish Services PMI (Apr)

Italian Services PMI (Apr)

French Services PMI (Apr) Final

German Services PMI (Apr) Final

Eurozone Markit Composite PMI (Apr) Final

Eurozone Services PMI (Apr) Final

Thursday, 6th May 2021

German Factory Orders (MoM) (Mar)

IHS Markit Construction PMI (Apr)

Eurozone Retail Sales (MoM) (Mar)

Friday, 7th May 2021

German Industrial Production (MoM) (Mar)

German Trade Balance (Mar)

ECB President Lagarde Speech

The Majors

It was a bullish start to the week for the European majors on Monday. The CAC40 and the DAX30 rose by 0.61% and by 0.66% respectively, with EuroStoxx600 ending the day up by 0.58%.

Economic data from the Eurozone delivered the European majors with support through the early part of the session.

From the U.S, stats were market negative, however, limiting the upside on the day.

The Stats

It was a busy day on the economic calendar on Monday. Manufacturing PMI figures for Italy and Spain were in focus along with finalized PMIs for France, Germany, and the Eurozone. German retail sales also drew attention ahead of the European open.

German Retail Sales

In March, retail sales jumped by 7.7% month-on-month, following an upwardly revised 2.7% increase in February.

According to Destatis,

  • Compared to the pre-crisis month of February 2020, retail sales were up by 4.4%.
  • Year-on-year, retail sales was up by 11.0%, which was the strongest year-on-year increase since records began back in 1994.

Member State Manufacturing PMIs

Spain’s Manufacturing PMI rose from 56.9 to 57.7 in April, with Italy’s Manufacturing PMI increasing from 59.8 to 60.7. Economists had forecast PMIs of 59.0 and 61.0 respectively.

From France, the Manufacturing PMI declined from 59.3 to 58.9, which was down from a prelim 59.2.

Germany’s Manufacturing PMI fell from 66.6 to 66.2 which was down from a prelim 66.4.

The Eurozone

The Manufacturing PMI rose from 62.5 to 62.9 in April. This was down from a prelim 63.3.

According to the Markit Survey,

  • Operating conditions improved at a rate that surpassed March’s survey record.
  • Growth was broad-based, with both the investment and intermediate goods categories registering considerable gains.
  • Importantly, manufacturers of investment goods recorded the most marked improvement on record.
  • Consumer goods also saw a marked improvement in operating conditions, while lagging the two other categories.
  • The Netherlands led the way, positing a record high PMI followed by Germany.
  • Growth rates for both output and new orders remained closed to March’s survey records.
  • Firms reported rising market confidence, with new orders rising sharply as a result of signs that both manufacturers and clients are anticipating a sharp increase in activity in the coming months.
  • New export orders also rose at a considerable pace in April.
  • Product growth was limited, however, due to some degree of capacity constraints.
  • As a result of product shortages, input prices rose at the 2nd fastest rate on record.
  • Firms raised their own charges to the strongest degree in over 18-years of available data.
  • Manufacturers increased payrolls for the third consecutive month and by the largest number since Feb-2018.
  • According to the latest data, manufacturers were at their most optimistic in nearly 9-years.

From the U.S

Manufacturing PMI figures were also in focus late in the European session.

In April, the ISM Manufacturing PMI fell from 64.7 to 60.7, falling below a forecasted 65.0.

Also market positive was an increase in the Markit Manufacturing PMI from 59.1 to 60.5. This was down marginally from a prelim 60.6, however.

The Market Movers

For the DAX: It was a bullish day for the auto sector on Monday. Volkswagen rallied by 2.49%, with BMW rising by 1.78%. Continental and Daimler saw more modest gains of 0.21% and 0.22% respectively.

It was a mixed day for the banks. Deutsche Bank slid by 1.99%, while Commerzbank ended the day up by 1.93%.

From the CAC, it was a relatively bullish day for the banks. Credit Agricole and Soc Gen rose by 0.20% and by 0.25% respectively, with BNP Paribas gaining 0.13%.

It was a bullish day for the French auto sector. Stellantis NV and Renault ended the day with gains of 1.43% and 1.77% respectively.

Air France-KLM rose by 1.38%, while Airbus SE slipped by 0.03%.

On the VIX Index

After 2 consecutive days in the green, it was back into the red for the VIX on Monday

Partially reversing a 5.68% gain from Friday, the VIX fell by 1.61% to end the day at 18.31.

The NASDAQ slipped by 0.48%, while the Dow and the S&P500 rose by 0.70% and by 0.27% respectively.

VIX 040521 Monthly Chart

The Day Ahead

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

The lack of stats will leave the majors in the hands of trade data and factory orders from the U.S.

On the day, the markets will also consider corporate earnings and COVID-19 news updates from the EU and around the world.

The Futures

In the futures markets, at the time of writing, the Dow Mini was down by 59 points, with the DAX down by 21 points.

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

German Retail Sales and April Manufacturing PMIs Give the EUR a Boost

It was a busy day on the economic calendar on Monday. Manufacturing PMI figures for Italy and Spain were in focus along with finalized PMIs for France, Germany, and the Eurozone. German retail sales also drew attention ahead of the European open.

German Retail Sales

In March, retail sales jumped by 7.7% month-on-month, following an upwardly revised 2.7% increase in February.

According to Destatis,

  • Compared to the pre-crisis month of February 2020, retail sales were up by 4.4%.
  • Year-on-year, retail sales was up by 11.0%, which was the strongest year-on-year increase since records began back in 1994.

Member State Manufacturing PMIs

Spain’s Manufacturing PMI rose from 56.9 to 57.7 in April, with Italy’s Manufacturing PMI increasing from 59.8 to 60.7. Economists had forecast PMIs of 59.0 and 61.0 respectively.

From France, the Manufacturing PMI declined from 59.3 to 58.9, which was down from a prelim 59.2.

Germany’s Manufacturing PMI fell from 66.6 to 66.2 which was down from a prelim 66.4.

The Eurozone

The Manufacturing PMI rose from 62.5 to 62.9 in April. This was down from a prelim 63.3, however.

According to the Markit Survey,

  • Operating conditions improved at a rate that surpassed March’s survey record.
  • Growth was broad-based, with both the investment and intermediate goods categories registering considerable gains.
  • Importantly, manufacturers of investment goods recorded the most marked improvement on record.
  • Consumer goods also saw a marked improvement in operating conditions, while lagging the two other categories.
  • The Netherlands led the way, posting a record high PMI followed by Germany.
  • Growth rates for both output and new orders remained closed to March’s survey records.
  • Firms reported rising market confidence, with new orders rising sharply as a result of signs that both manufacturers and clients are anticipating a sharp increase in activity in the coming months.
  • New export orders also rose at a considerable pace in April.
  • Product growth was limited, however, due to some degree of capacity constraints.
  • As a result of product shortages, input prices rose at the 2nd fastest rate on record.
  • Firms raised their own charges to the strongest degree in over 18-years of available data.
  • Manufacturers increased payrolls for the third consecutive month and by the largest number since Feb-2018.
  • According to the latest data, manufacturers were at their most optimistic in nearly 9-years.

Market Impact

Through the release of the German retail sales figures earlier in the day, the EUR fell to a post-stat low and a current day low $1.20131before finding support.

Driven by impressive manufacturing PMI numbers and a sharp rise in German consumer spending, the EUR rallied to a post-stat and current day high $1.20557.

At the time of writing, the EUR was up by 0.30% to $1.20549.

EURUSD 030521 Hourly Chart

Next Up

ISM Manufacturing PMI and finalized Markit Manufacturing PMI numbers for April. After the European close, FED Chair Powell will also draw attention.

European Equities: Manufacturing PMI and Retail Sales in Focus

Economic Calendar:

Monday, 3rd May 2021

German Retail Sales (MoM) (Mar)

Spanish Manufacturing PMI (Apr)

Italian Manufacturing PMI (Apr)

French Manufacturing PMI (Apr) Final

German Manufacturing PMI (Apr) Final

Eurozone Manufacturing PMI (Apr) Final

Wednesday, 5th May 2021

Spanish Services PMI (Apr)

Italian Services PMI (Apr)

French Services PMI (Apr) Final

German Services PMI (Apr) Final

Eurozone Markit Composite PMI (Apr) Final

Eurozone Services PMI (Apr) Final

Thursday, 6th May 2021

German Factory Orders (MoM) (Mar)

IHS Markit Construction PMI (Apr)

Eurozone Retail Sales (MoM) (Mar)

Friday, 7th May 2021

German Industrial Production (MoM) (Mar)

German Trade Balance (Mar)

ECB President Lagarde Speech

The Majors

It was a relatively bearish end to the week for the European majors on Friday. The CAC40 fell by 0.53%, with the DAX30 and the EuroStoxx600 ending the day down by 0.12% and by 0.28% respectively.

Economic data from the Eurozone weighed on the European majors at the end of the week.

1st quarter GDP numbers from Germany and the Eurozone in particular left the majors in the red, with French consumer spending figures also a drag on Friday.

From the U.S, positive economic data failed to support the majors, with the latest round of stats pointing to economic divergence stemming from extended COVID-19 containment measures across the Eurozone.

The Stats

It was a busy day on the economic calendar on Friday.

From France, consumer spending, inflation, and 1st quarter GDP figures were in focus.

German and Eurozone GDP numbers for the 1st quarter also drew attention alongside prelim Eurozone inflation figures for April.

French Data

In March, consumer spending fell by 1.1% reversing a 0.3% rise from February. Economists had forecast a 0.4% rise.

Inflationary pressures picked up in April, according to prelim figures. The annual rate of inflation accelerated from 1.1% to 1.3%.

While consumption figures disappointed at the end of the 1st quarter, GDP numbers came in ahead of forecasts.

The French economy expanded by 0.4% in the 1st quarter, coming in ahead of a forecasted 0.1% growth. In the 4th quarter, the economy had contracted by 1.4%.

German Economy

In the 1st quarter, the German economy contracted by 1.7%, which was worse than a forecasted 1.5% contraction. The German economy had expanded by a modest 0.3% in the 4th quarter.

Year-on-year, the economy contracted by 3.3% in the 1st quarter. The economy had contracted by 2.7% in the final quarter of last year. Economists had forecast a contraction of 3.6%.

The Eurozone

For the Eurozone, inflationary pressures continued to pick up, with the annual rate of inflation accelerating from 1.3% to 1.6% in April.

In the 1st quarter, the Eurozone economy contracted by 0.6%, quarter-on-quarter, and by 1.8% compared with Q1 2020.

Economists had forecast a quarterly contraction of 0.8% and a year-on-year contraction of 2.0%.

In the 4th quarter, the economy had contracted by 0.7% quarter-on-quarter and by 4.9% year-on-year.

While the Eurozone economy contracted once more in the 1st quarter, the unemployment rate eased from 8.2% to 8.1%.

From the U.S

The FED’s preferred inflation measure and personal spending were in focus alongside finalized consumer sentiment and Chicago PMI figures.

Aligned with stats from earlier in the week, economic data from the U.S continued to impress at the end of the week.

In March, the core PCE Price Index increased by 1.8% year-on-year, up from 1.4% in February. Personal spending was also on the rise, supported by improving labor market and economic conditions. Spending jumped by 4.2%, reversing a 1.0% decline from February.

In April, the Michigan Consumer Sentiment index increased from 86.5 to 88.3, up from a prelim 87.4. Consumer expectations were also on the rise, with the consumer expectations index increasing from 79.7 to 82.7, up from a prelim 79.7.

Also positive, was a jump in the Chicago PMI from 66.3 to 72.1 in April.

The Market Movers

For the DAX: It was another mixed day for the auto sector on Friday. BMW and Continental fell by 0.86% and by 0.58% respectively, with Volkswagen declining by 0.16%. Daimler bucked the trend, rising by 0.16%.

It was also a mixed day for the banks. Deutsche Bank fell by 0.48%, while Commerzbank ended the day up by 0.86%.

From the CAC, it was a mixed day for the banks. Credit Agricole rose by 0.23%, while BNP Paribas and Soc Gen fell by 0.82% and 0.65% respectively.

It was a bearish day for the French auto sector. Stellantis NV and Renault ended the day down by 0.14% and by 0.33% respectively.

Air France-KLM fell by 1.88%, with Airbus SE slipping by 0.06%.

On the VIX Index

It was a second consecutive day in the green for the VIX on Friday.

Following on from a 1.91 gain from Thursday, the VIX rose by 5.68% to end the day at 18.61.

The NASDAQ and the S&P500 fell by 0.85% and by 0.72% respectively, with the Dow ending the day down by 0.54%.

VIX 030521 DailyChart

The Day Ahead

It’s a busy day ahead on the European economic calendar. German retail sales figures are due out along with manufacturing PMIs for Italy and Spain.

Finalized manufacturing PMIs for France, Germany, and the Eurozone are also due out.

Barring marked revision to prelim figures, Italy ad the Eurozone’s PMIs and German retail sales will have the greatest influence.

From the U.S, ISM Manufacturing PMI figures for April will also provide the majors with direction late in the session.

The Futures

In the futures markets, at the time of writing, the Dow Mini was up by 117 points, with the DAX up 23 points.

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

The Week Ahead – Central Banks, Economic Data, and COVID-19 in Focus

On the Macro

It’s a quieter week ahead on the economic calendar, with 57 stats in focus in the week ending 7th May. In the week prior, 61 stats had been in focus.

For the Dollar:

In the 1st half of the week, private sector PMIs and ADP nonfarm employment change figures are in focus.

Expect the market’s favored ISM Non-Manufacturing PMI and ADP figures to be key.

The focus will then shift to the weekly jobless claim figures on Thursday ahead of the NFP numbers on Friday.

Expect nonfarm payroll figures and the unemployment rate to be the main area of focus late in the week.

On the monetary policy front, FED Chair Powell is scheduled to speak early in the week. The markets will be looking for any break from the script.

In the week, the Dollar ended the week up by 0.46% to 91.280.

For the EUR:

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

Monday through Wednesday, private sector PMIs for Italy and Spain and German retail sales figures are in focus.

While retail sales are key, expect Italy and the Eurozone’s private sector PMIs to be key.

Late in the week, the German economy is back in focus.

German factory orders, industrial production, and trade data are due out. Following some disappointing GDP numbers last week, we can expect EUR sensitivity to the stats.

On the monetary policy front, ECB President Lagarde is due to speak at the end of the week…

The EUR ended the week down by 0.64% to $1.2020.

For the Pound:

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

Finalized private sector PMIs will be in focus in a shortened week.

Expect any revisions to the services PMI to be key.

The main event of the week, however, is the BoE’s monetary policy decision on Thursday.

While the BoE is expected to stand pat, any dissent and hawkish talk give the Pound a boost.

The Pound ended the week down by 0.39% to $1.3822.

For the Loonie:

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

On Tuesday, trade data for March will influence ahead of April employment and Ivey PMI figures on Friday.

Expect the employment figures to be the key driver at the end of the week.

The Loonie ended the week up 1.51% to C$1.2288 against the U.S Dollar.

Out of Asia

For the Aussie Dollar:

It’s a relatively quiet week ahead.

Key stats include manufacturing data at the start of the week and trade data on Tuesday.

Building approvals are also due out on Wednesday but will likely have a muted impact on the Aussie Dollar.

While we can expect the trade data to have the greatest impact, the RBA monetary policy decision is the main event of the week on Tuesday.

Any hawkish chatter and expect the Aussie Dollar to eye a return to $0.80 levels.

The Aussie Dollar ended the week down by 0.30% to $0.7716.

For the Kiwi Dollar:

It’s a relatively quiet week ahead.

On Wednesday, employment figures for the 1st quarter are due out ahead of building consent numbers on Thursday.

Expect the employment change figures to be key in the week. The markets will be looking from a pickup in hiring to support a sustainable economic recovery.

The Kiwi Dollar ended the week down by 0.51% to $0.7162.

For the Japanese Yen:

It is a quiet week ahead, with the Japan markets closed Monday through Wednesday.

Economic data is limited to finalized private sector PMIs for April. Barring any marked revision from prelim figures, however, we don’t expect too much impact on the Yen.

The Japanese Yen rose by 0.85 to ¥107.88 against the U.S Dollar.

Out of China

It’s a busy week ahead.

Through the 1st half of the week, the market’s preferred Caixin survey PMI numbers are due out. Expect the manufacturing PMI for April to have the greatest impact on Tuesday.

At the end of the week, April trade figures will also be in focus.

A continued surge in both imports and exports would support riskier assets.

The Chinese Yuan ended the week up by 0.33% to CNY6.4749 against the U.S Dollar.

Geo-Politics

U.S and China and U.S and Russia relations remain the main areas of focus in the week ahead.

The markets will also need to monitor any chatter from Iran, however.

Corporate Earnings

While a number of the big names have released earnings results, a large number are still scheduled to release results in the week ahead.

From the U.S, big names include CVS Health Corp (Tues), ICHOR Holdings (Tues), and FOX Corp (Wed).

US Dollar Index Spikes Higher as Major Currencies Give Back Weekly Gains

The U.S. Dollar closed higher last week with all of its gains coming on Friday. The headlines said the rally was fueled by month-end profit-taking, but Treasury yields edged higher for the week and most of the U.S. economic reports beat the forecasts so there may be more to the move than end-of-the-month position-squaring.

The Fed was dovish as expected but this wasn’t news since Fed Chairman Powell and his policymaking colleagues have been telegraphing this for months. Nonetheless, the headliner writers blamed central bank policy for the weakness ahead of Friday.

Last week, the June U.S. Dollar Index settled at 91.270, up 0.431 or +0.47%.

Dollar Index Component Breakdown

Breaking down the week into the Dollar Index’s main components the Euro lost 0.63%, the British Pound fell 0.51% and the Japanese Yen closed 1.35% lower. The Canadian Dollar rose 1.46% and the Swiss Franc was up 0.07%.

The Australian and New Zealand Dollars were down 0.49% and 0.47% for the week, respectively. However, the commodity-linked currencies aren’t a component of the dollar index.

The Euro fell sharply on Friday, erasing all of its weekly gains just one day after reaching its highest level since February 26.

Reuters reported on Friday that the Euro Zone economy dipped into a second technical recession after a smaller than expected contraction in the first quarter, but is now firmly set for a recovery as pandemic curbs are lifted amid accelerating vaccination campaigns, economists said.

The British Pound also wiped out its weekly gains on Friday as investors dumped the Sterling ahead of next week’s Bank of England policy meeting. Few analysts expect major changes to the Bank of England’s policy settings next Thursday, although some see the central bank slowing its bond-buying.

The Japanese Yen was weak against the U.S. Dollar all week as rising Treasury yields helped widen the spread over Japanese Government bond yields, making the U.S. Dollar a more attractive asset.

The Canadian Dollar rose against the greenback in a move that was sparked on Wednesday as investors cheered domestic retail sales data and the Federal Reserve stuck to its dovish stance, trailing the Bank of Canada on moves to reduce emergency support for the economy.

The Fed held interest rates and its monthly bond-buying program steady, nodding to the U.S. economy’s growing strength but giving no sign it was ready to reduce its support for the recovery.

In contrast, the Bank of Canada signaled the prior week it could start hiking rates from their record lows in late 2022 and cut the pace of its bond purchases.

Essentially, Canadian Government bond yields rose faster than U.S. Government bond yields, making the Canadian Dollar a more attractive asset.

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

US Stocks – Apple, Alphabet Drag Wall Street Lower on Friday, but S&P 500 Posts 5% Gain in April

The major U.S. stock indexes closed lower on Friday, dragged down by weakness in major tech-related companies despite the release of strong quarterly earnings reports earlier in the week.

Just one day after the S&P 500 Index posted a record high close, Apple, Google-parent Alphabet and Facebook each fell more than 1%, giving back gains following upbeat quarterly numbers this week.

Cash Market Performance

In the cash market on Friday, the benchmark S&P 500 Index settled at 4181.17, down 30.30 or -0.72%. The blue chip Dow Jones Industrial Average finished at 33874.85, down 185.51 or -0.55% and the tech-driven NASDAQ Composite closed at 13962.68, down 119.87 or -0.86%.

Major Index Monthly Performances

Most of the 11 major S&P 500 sector indexes were lower, with technology and materials down more than 1%, while energy dropped 2.2%.

Despite Friday’s weakness, the S&P 500 Index notched its third straight month of gains in April, adding more than 5% to the index as investors bet on a big economic and profit recovery from the pandemic. The NASDAQ posted its six consecutive month of gains, boosted by impressive results from big technology companies. The Dow Jones finished in positive territory for the third month in a row.

Stocks on the Move

Amazon, the last of Wall Street’s mega-cap tech companies to publish results, reported a record first-quarter profit. Despite the bullish news, the stock finished down 0.11%.

Twitter plunged on user growth results and second-quarter revenue guidance that fell short of analysts’ forecasts. Twitter shares fell 15.2% on Friday.

Apple came under some slight pressure after the European Union said the company’s App Store was breaching its competition rules. The shares dropped 1.5%.

Chevron Corp shed more than 3% after its first-quarter profit fell 29%, hit by weaker refining margins and production losses.

AbbVie Inc rose 0.6% after it reported strong results and raised its 2021 earnings forecast, helped by demand for its rheumatoid arthritis drug in the Unites States.

Earnings Updates

While mega-cap favorites posted largely strong earnings in the first quarter, their shares have struggled to maintain the upward trajectory that many had coming into reporting season.

Of the 303 companies in the S&P 500 that have reported so far, 87.1% have topped analysts’ earnings estimates, with Refinitiv IBES data now predicting a 46.3% jump in profit growth.

US economic News

Data on Friday showed U.S. consumer spending rebounded in March amid a surge in income as households received additional COVID-19 pandemic relief money from the government. March spending jumped a better-than-expected 4.2%, while personal incomes surged by a massive 21.1% amid more fiscal stimulus.

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