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.

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.

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.

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.

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.

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.

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.

European Equities: A Week in Review – 30/04/21

The Majors

It was a mixed week for the European majors in the week ending 30th April.

The CAC40 rose by 0.18%, while the DAX30 and the EuroStoxx600 ended the week down by 0.94% and by 0.34% respectively.

After a positive start to the week, a string of disappointing economic data from the Eurozone weighed on the DAX30 and EuroStoxx600.

Corporate earnings results and market optimism towards the economic recovery provided support to the European majors, however.

The Stats

In the 1st half of the week, German business and consumer confidence waned as a result of the latest spike in new COVID-19 cases.

In the 2nd half of the week, stats were also skewed to the negative weighing on the EUR.

While the French economy managed to avoid a contraction in Q1, both Germany and the Eurozone’s economies contracted.

The contraction was aligned with ECB President Lagarde’s outlook and the latest downward revision to Germany’s economic forecasts.

Inflation for the Eurozone and member states, unemployment figures from Germany and the Eurozone, and French consumer spending figures also drew attention.

Consumer spending hit reverse in France while inflationary pressures picked up in France and across the Eurozone.

Unemployment from Germany disappointed, while the Eurozone’s unemployment rate declined from 8.2% to 8.1%.

From the U.S

In the 1st half of the week, core durable goods and consumer confidence figures were in focus.

The stats were skewed to the positive. Core durable goods reversed a 0.3% fall, with a 1.6% rise in March.

More significantly, the CB Consumer Confidence Index jumped from 109.0 to 121.7.

In the 2nd half of the week, GDP, jobless claims, personal spending, and inflation figures were in focus.

The stats were also skewed to the positive, supporting market optimism towards the economic outlook.

In the 1st quarter, the economy expanded by 6.4%, following 4.3% growth in the 4th quarter of last year.

Jobless claims figures were also positive, with initial jobless claims falling from 566k to 553k in the week ending 23rd April.

At the end of the week, personal spending also impressed, jumping by 4.2% to reverse a 1% fall from February.

Inflationary pressures were on the rise, with the FED’s preferred Core PCE Price Index rising by 1.8% in March, year-on-year. In February, the index was up by 1.4%. Following the FED’s assurances from earlier in the week, however, the uptick had a muted impact on the markets.

On the monetary policy front, the FED stood pat on policy, which was in line with expectations. FED Chair Powell continued to reassure the markets that there would be no tapering to the asset purchasing program or shift in interest rates any time soon.

The assurances supported riskier assets late in the week.

The Market Movers

From the DAX, it was a mixed week for the auto sector. Volkswagen slid by 5.51%, with BMW and Continental falling by 3.49% and by 4.83% respectively. Daimler bucked the trend, rising by 0.33%.

It was a bullish week for the banking sector. Deutsche Bank jumped by 18.43%, with Commerzbank rallying by 11.22%.

From the CAC, it was a bullish week for the banks. BNP Paribas and Credit Agricole saw gains of 5.70% and 5.75% respectively. Soc Gen led the way, however, rallying by 10.35%.

It was another bearish week for the French auto sector. Renault and Stellantis NV ended the week down by 0.56% and by 4.02% respectively.

Air France-KLM slipped by 0.28%, while Airbus rose by 1.50%.

On the VIX Index

It was a 2nd consecutive weekly gain for the VIX in the week ending 30th April. Following a 6.65% gain from the previous week, the VIX rose by 7.39% to end the week at 18.61.

3-days in the green from 5 delivered the upside in the week for the VIX.

For the week, the S&P500 ended the week up by 0.02%, while the NASDAQ and the Dow fell by 0.39% and by 0.50% respectively.

VIX 010521 Weekly Chart

The Week Ahead

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

From the Eurozone key stats include private sector PMIs for Italy and Spain and finalized PMIs for France, Germany, and the Eurozone.

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

From Germany, retail sales, factory orders, industrial production, and trade data will also garner plenty of interest.

Economic data from the U.S will also influence. The market’s preferred ISM survey-based PMI numbers, ADP nonfarm employment change, weekly jobless claims, and nonfarm payrolls will be in focus.

From the previous week, U.S economic data continued to support the optimistic economic outlook. Positive stats would support the majors following FED Chair Powell’s assurance on the policy front.

Economic data from China will also influence, with the market’s preferred Caixin survey PMI numbers due out.

European Equities: A Month in Review – April 2021

The Majors

It was yet another bullish month for the European majors in April, which logged a 3rd consecutive monthly gain.

The CAC40 rose by 3.33% to lead the way, with the DAX30 and EuroStoxx600 gaining 0.85% and 1.85% respectively.

After a bearish start to the year, with January having delivered heavy losses, the CAC40 was up 12.93% year-to-date. The DAX30 and EuroStoxx600 weren’t far behind, with year-to-date gains of 10.33% and 9.65% respectively.

Economic data, corporate earnings, and continued assurances from the ECB and the FED delivered support in April. Stats in the final week, which included Q1 GDP numbers, delivered some disappointment, however.

Market optimism towards the economic outlook, as the EU began to play catch up on the vaccination front also delivered support. This was in spite of the reintroduction of lockdown measures that continued to weigh on the economy.

The Stats

It was a busy month on the Eurozone economic calendar and another important one.

Private sector activity continued to be a key area of interest for the markets, with GDP numbers also garnering plenty of interest. In April, while German firms reported a slight slowdown in private sector growth, the Eurozone’s manufacturing PMI hit a new all-time high.

More importantly, the services sector also returned to growth in April, with the PMI hitting an 8-month high.

The continued pickup in private sector activity came in spite of the upward trend in new COVID-19 cases worldwide.

GDP numbers for France, Germany, and the Eurozone delivered mixed results, however.

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.

The French economy expanded by 0.4% in the 1st quarter, coming in ahead of a forecasted 0.1% growth. The economy had contracted by 1.4% in Q42020.

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

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

Other key stats in the month included business and consumer confidence figures from Germany and the Eurozone.

From Germany, factory orders, industrial production, and trade data were also in focus.

The stats were skewed to the negative, with industrial production in decline and Germany’s trade surplus narrowing in February.

There was an increase in factory orders, however, albeit at a slower pace than in January.

Inflation figures for the Eurozone and member states had a muted impact on the majors, however, with the ECB expecting inflationary pressures to ease later in the year.

From the U.S

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

Key in the month were improving labor market conditions and a further pickup in private sector activity.

For March, nonfarm payrolls surged by 916k, following a 468k jump in February. While the participation rate increased from 61.4% to 61.6, the unemployment rate fell from 6.2% to 6.0%.

Jobless claim figures were also pointing to an improvement in labor market conditions.

In the month, initial jobless claims fell to a low 553k in the week ending 23rd April. This was the lowest level since the sharp spike in claims at the start of the pandemic.

Initial jobless claims had hit an all-time high of 6,606k back in the week ending 2nd April 2020.

Improving labor market conditions supported a pickup in consumer confidence in the quarter.

Retail sales bounced back in March, with core retail sales surging by 8.4% to reverse a 2.7% decline from February. Personal spending figures for March also impressed, with spending rising by 4.2% reversing a 1% fall from February.

With consumer confidence on the rise, consumption drove a pickup in service sector activity. In April, the CB Consumer Confidence Index increased from 109.0 to 121.7. The pickup painted a positive outlook on the consumption front in the near-term.

1st quarter GDP numbers from the U.S also impressed, with the economy expanding by 6.4%. In the 4th quarter, the economy had expanded by 4.3%.

Monetary Policy

There were no major surprises from the ECB, with ECB President Lagarde talking of a possible contraction in the 1st quarter.

For the markets, the ramp up in bond purchases was good enough…

From the FED, FED Chair Powell continued to quash any talk of a shift in monetary policy outlook and any tapering. The FED Chair reassured the markets that there would be plenty of warning before the FED even considering any tapering to its asset purchasing program.

The Market Movers

For the DAX: It was a bearish month for the auto sector in April. Volkswagen slid by 9.21% to partially reverse a 37.96% surge from March.

BMW and Daimler ended the month down by 5.94% and by 2.35% respectively, while Continental slipped by 0.09%.

It was a bullish month for the banks, however. Deutsche Bank rallied by 13.80%, with Commerzbank gaining 4.97%.

From the CAC, it was another bullish month for the banking sector. BNP Paribas and Credit Agricole rose by 2.91% and by 4.21% respectively. Soc Gen led the way once more, however, gaining 6.05%.

It was a bearish month for the auto sector. Renault and Stellantis NV ended the month down by 9.21% and by 8.43% respectively.

Air France-KLM slid by 9.10%, while Airbus SE rose by 3.52%.

On the VIX Index

It was a 3rd consecutive month in the red for the VIX in April, delivering a 5th monthly decline in 8-months. Following on from a 30.59% slide in March, the VIX fell by 4.07% to end the month at 18.61.

In March, the Dow rose by 2.71%, with the NASDAQ and the S&P500 ending the month up by 5.40% and by 5.24% respectively.

VIX 010521 Monthly Chart

The Month Ahead

Mid-way through the 2nd quarter, we can expect even greater focus on the Eurozone economic calendar. While the markets will look for manufacturing sector activity to deliver, service sector conditions will also need to improve further.

An easing of containment measures would be needed to support a marked pickup in service sector activity. This would, therefore, likely place greater emphasis on vaccination rates for France, Germany, and Italy in particular.

Labor market conditions and consumer and business confidence will need to improve to support a pickup in hiring and business investment.

From the U.S, nonfarm payrolls, service sector activity, spending, and consumer confidence will continue to remain key areas of focus.

Out of China, trade data and private sector PMIs will also provide direction.

On the monetary policy front, the markets will remain wary of any shift in monetary policy outlook, particularly from the FED.

Geopolitics will also garner some interest, with China, Russia, and Iran remaining key areas of focus.

European Equities: It’s A Busy Economic Calendar With GDP Figures in Focus

Economic Calendar:

Friday, 30th April 2021

French GDP (QoQ) (Q1)

German GDP (QoQ) (Q1)

German GDP (YoY) (Q1)

Spanish GDP (QoQ) (Q1)

Italian CPI (MoM) (Apr) Prelim

Eurozone CPI (YoY) (Apr) Prelim

Eurozone Unemployment Rate (Mar)

Eurozone GDP (QoQ) (Q1)

Eurozone GDP (YoY) (Q1)

The Majors

It was a relatively bearish day for the European majors on Thursday. The DAX30 fell by 0.90%, with the CAC40 and the EuroStoxx600 seeing losses of 0.07% and 0.26% respectively.

Economic data from the U.S failed to prevent a pullback from early gains, with stats from Germany disappointing.

The downside came amidst positive earnings results from both side of the Atlantic. From the Eurozone, Airbus returned to profit, with Total SE beating estimates.

The Stats

It was a busier day on the economic calendar on Thursday. The German economy was back in focus, with unemployment and inflation figures the key stats of the day.

Prelim April inflation figures from Spain and finalized consumer confidence figures from the Eurozone were also out. The stats had a muted impact on the European majors.

German Unemployment

In April, unemployment increased by 9k, reversing a 6k decline from March. Economists had forecast a 10k decline.

While unemployment rose in the month, the unemployment rate held steady at 6.0%.

German Inflation

In April, consumer prices rose by 0.7% month-on-month, according to prelim figures. In March, consumer prices had risen by 0.5%.

According to Destatis,

  • The annual rate of inflation ticked up from 1.7% to 2.0%.
  • Prices for goods increased by 2.6% compared with the same month a year earlier.
  • Energy prices were up by 7.9%, with food prices up by 1.6%.
  • Prices for services were up by 1.6%.

From the U.S

GDP and the weekly jobless claim figures were in focus.

In the 1st quarter, the U.S economy expanded by 6.4%, following 4.3% growth in the 4th quarter of last year. Economists had forecast growth of 6.1%.

Jobless claim figures were also positive for riskier assets. In the week ending 23rd April, initial jobless claims fell from 566k to 553k. This was marginally higher than a forecast of 549k.

The Market Movers

For the DAX: It was a bearish day for the auto sector on Thursday. Continental and Volkswagen slid by 4.07% and by 3.15% respectively. BMW and Daimler ended the day with losses of 2.09% and 1.68% on the day.

It was another bullish day for the banks, however. Deutsche Bank rallied by 3.54 %, with Commerzbank gaining by 2.12%.

From the CAC, it was a relatively bullish day for the banks. Soc Gen rose by 0.89%, with BNP Paribas and Credit Agricole gaining 0.65% and 0.71% respectively.

It was a bearish day for the French auto sector. Stellantis NV and Renault slid by 3.81% and by 4.19% respectively.

Air France-KLM ended the day flat, while Airbus SE gained 0.70%.

On the VIX Index

It was back into the green for the VIX on Thursday.

Reversing a 1.59% fall from Wednesday, the VIX rose by 1.91% to end the day at 17.61.

The Dow and the S&P500 rose by 0.71% and by 0.68% respectively, with the NASDAQ ending the day up by 0.22%.

VIX 300421 Daily Chart

The Day Ahead

It’s a busy day ahead on the European economic calendar. 1st quarter GDP numbers for France, Germany, and the Eurozone will be in focus early in the session.

With the markets expecting restrictions in the quarter to have weighed on growth, we can expect plenty of interest in the numbers.

Other stats include prelim inflation figures for France, Italy, and the Eurozone and the March unemployment rate for the Eurozone.

From the U.S, personal spending and inflation figures will also influence later in the day. Following the FED’s assurances of unwavering support, however, a pickup in inflationary pressure should have limited impact on riskier assets.

On the corporate earnings front, Chevron Corp is scheduled to release earnings today…

The Futures

In the futures markets, at the time of writing, the Dow Mini was down by 28 points.

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

European Equities: It’s a Busy Day Ahead with President Biden, Stats, and Earnings in Focus

Economic Calendar:

Thursday, 29th April 2021

Spanish HICP (YoY) (Apr) Prelim

German Unemployment Change and Rate (Apr)

German CPI (MoM) (Apr) Prelim

Friday, 30th April 2021

French GDP (QoQ) (Q1)

German GDP (QoQ) (Q1)

German GDP (YoY) (Q1)

Spanish GDP (QoQ) (Q1)

Italian CPI (MoM) (Apr) Prelim

Eurozone CPI (YoY) (Apr) Prelim

Eurozone Unemployment Rate (Mar)

Eurozone GDP (QoQ) (Q1)

Eurozone GDP (YoY) (Q1)

The Majors

It was a relatively bullish day for the European majors on Wednesday. The CAC40 and the DAX30 rose by 0.53% and by 0.28% respectively, with the EuroStoxx600 eking out a 0.02% gain.

Market caution ahead of the FOMC monetary policy decision and all-important press conference limited the upside on the day.

Impressive corporate earnings from Deutsche Bank supported the banking sector amidst continued hope of a strong economic rebound in the 2nd half of the year.

The Stats

It was a relatively quiet day on the economic calendar on Wednesday. German consumer confidence was in focus ahead of the European open.

German GfK Consumer Climate

While the propensity to buy increased once more, albeit modestly, there were marked declines in economic and income expectations.

According to the GfK,

The income indicator slid by 13 points to 9.3 points, with the economic expectation indicator tumbling by 10.4 points to 7.3 points.

As a result, GfK is forecasting a decrease of 8.8 points in consumer confidence in May 2021. This was down by 2.7 points from a revised -6.1 points from April.

Hopes for further easing of restrictions and a revival of consumption have been noticeably dampened.

Leading economic research institutes significantly scaled back their consumption forecasts for this year. According to forecasts, real private consumption spending will hardly increase at all, rising by just 0.2% compared with 2020.

Researchers had previously forecasted consumption growth of as much as 4.9% for this year. The ECB had also relied on consumer spending to fuel the economic recovery before the third wave of the pandemic hit the EU.

Economic research institutes have also downgraded the economic growth outlook for 2021 from 4.7% to 3.7% as a result of weaker consumption forecasts.

From the U.S

Trade data was in focus later in the European session.

In March, the U.S goods trade deficit widened from $87.07bn to $90.59bn.

The stats had a muted impact on the European majors, however, with the markets focused on the FED policy decision and press conference.

The Market Movers

For the DAX: It was another mixed day for the auto sector on Wednesday. Volkswagen and BMW fell by 1.15% and by 0.75% respectively, with Continental ending the day down by 0.02%. Daimler bucked the trend once more, rising by 0.80%.

It was another bullish day for the banks. Deutsche Bank surged by 11.17%, supported by better than expected earnings, with Commerzbank rallying by 3.11%.

From the CAC, it was a bullish day for the banks. Credit Agricole rose by 1.30%, with BNP Paribas and Soc Gen rallying by 3.12% and by 3.60% respectively.

It was also a bullish day for the French auto sector. Stellantis NV rose by 0.59%, with Renault ending the day up by 1.81%.

Air France-KLM rose by 0.38%, while Airbus SE slipped by 0.49%.

On the VIX Index

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

Following a 0.45% decline from Tuesday, the VIX fell by 1.59% to end the day at 17.28.

The Dow and the NASDAQ fell by 0.48% and by 0.28% respectively, with the S&P500 ending the day down by 0.08%.

VIX 290421 Daily Chart

The Day Ahead

It’s a relatively busy day ahead on the European economic data front. German unemployment and prelim inflation figures are in focus later today.

Prelim April inflation figures from Spain are also due out but should have a muted impact on the majors.

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

Going into the European open, market reaction to the FOMC press conference and Joe Biden’s speech this morning will also influence.

On the corporate earnings front, Amazon.com Inc and Total SE are scheduled to release earnings today…

The Futures

In the futures markets, at the time of writing, the Dow Mini was up by 11 points.

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

Market Leverage Reaches New All-Time Highs As The Excess Phase Rally Continues

A recent Forbes article highlights the incredible increase in market leverage since the start of the COVID-19 crisis.  There has never been a time in recent history where market leverage has reached these extreme levels.  Additionally, highly leveraged market peaks are typically associated with asset bubbles.

The easy money policies and global central bank actions have prompted one of the longest easy money market rallies in history.  Historically low interest rates, US Federal Reserve and global central bank asset-buying programs, and extended overnight credit support have prompted some traders and investors to move into a more highly leveraged position expecting the rally to stay endless.  Although, the reality of the global market trends may be starting to cause traders and investors to become a bit unsettled.  Precious Metals, Utilities, and Bonds have all started reacting to perceived fear related to this extended bullish rally trend recently.

https://www.forbes.com/sites/greatspeculations/2021/04/24/uh-oh-market-leverage-at-all-time-high/?sh=29eadac1e8a9

My research team and I believe the current market rally will likely continue as capital shifts away from extended market sectors.  We believe the transition away from the new US President and the new policies associated with this change of leadership has already started taking place – which is why Precious Metals, Utilities, and Bonds are starting to trend.  Yet, we believe the momentum behind this current rally is likely to extend through the end of April and into early May 2021.

Custom Volatility Index Shows Bullish Trending & Price Volatility Risks

Our Custom Volatility Index chart, below, shows the US markets have just recently rallied back to previous bullish market trending levels (above 13 on this chart).  Once this Custom Volatility Index reaches these levels, we normally expect two market traits to continue.  First, we expect bullish trending because the Volatility Index above 10~11 strongly suggests an extended bullish trend is in place.  Secondly, we expect moderate price rotation to take place after the Volatility Index reaches levels above 13~14.

It is very common for the Volatility Index to move above the 13~14 level in extended rally trends.  Yet, it is also common for the markets to rotate or retrace after reaching these levels.  Therefore, this Custom Volatility Index chart shows the US markets have moved into extreme bullish price trending and has already reached a peak level near 15 – which suggests we can expect some moderate price rotation within the next 3 to 5+ weeks.

Whenever the US major indexes trend higher in longer-term extended trends, the Custom Volatility Index typically stays above 10~11 and continually attempts to rally above 12~13.  The “Peak Volatility Channel” on this chart highlights areas of extreme peaks in the markets.  When the Custom Volatility Index reaches this level, price becomes more likely to rotate or retrace a bit before attempting to move higher.

Smart Cash Index Shows Global Markets Need To Break Above 210 TO Begin A New Rally Phase

Our following Custom Smart Cash Index shows the global markets have been struggling to move higher over the past few months.  Even though the US markets have attempted to rally to new highs, the Smart Cash Index chart shows this recent rally has not been seen in the global markets.

My team and I believe the next rally phase in the markets must initiate with the Smart Cash Index chart rallying above 210 and representing a moderately strong global market push higher throughout the May/June 2021 time span.  If the Smart Cash Index fails to move above the 210 price level, the we believe a moderate price correction may be setting up for May or June 2021 where the US markets may move moderately lower, attempting to retest recent support, then begin another rally attempt.

Currently, the global stock market and financial system leverage may be an unknown catalyst for some type of future market movements.  The Forbes article suggests these new all-time high leverage levels are likely the result of global central bank policies where traders and investors believe the central banks will continue to support the markets indefinitely.  As much as we would like to think this may be the case, the reality is that, at some point, normalization will take place in the global markets and that presents an ominous deleveraging event in the future.

We are watching how the market’s sectors are shifting trends and how some of the strongest sectors are shifting and weakening over the past 60+ days.  For example, the Russell 2000 had been one of the strongest market sectors up until about 2 months ago.  Now it appears to be trading in a sideways trend – attempting to move back into a bullish price trend.

Our research team believes traders and investors need to be prepared for quickly shifting sector trends over the next 6+ months as this highly leveraged global market event plays out.  Our research suggests a price rotation event is near and the global markets are still trending in a moderately strongly bullish trend. The strongest sectors are going to continue to be the best performers over time.  Being able to identify and trade these sectors is key to being able to efficiently target profits.  You can learn more about how I identify and trade these sectors by registering for my FREE course here.

For those who believe in the power of trading on relative strength, market cycles, and momentum but don’t have the time to do the research every day then my BAN Trader Pro newsletter service does all the work for you with daily market reports, research, and trade alerts. More frequent or experienced traders have been killing it trading options, ETFs, and stocks using my BAN Hotlist ranking the hottest ETFs, which is updated daily for my premium subscribers.

Enjoy the rest of your Sunday!

Chris Vermeulen
Founder & Chief Market Strategist
www.TheTechnicalTraders.com

European Equities: Economic Data and Corporate Earnings in Focus Ahead of the FED

Economic Calendar:

Wednesday, 28th April 2021

GfK German Consumer Climate (May)

Thursday, 29th April 2021

Spanish HICP (YoY) (Apr) Prelim

German Unemployment Change and Rate (Apr)

German CPI (MoM) (Apr) Prelim

Friday, 30th April 2021

French GDP (QoQ) (Q1)

German GDP (QoQ) (Q1)

German GDP (YoY) (Q1)

Spanish GDP (QoQ) (Q1)

Italian CPI (MoM) (Apr) Prelim

Eurozone CPI (YoY) (Apr) Prelim

Eurozone Unemployment Rate (Mar)

Eurozone GDP (QoQ) (Q1)

Eurozone GDP (YoY) (Q1)

The Majors

It was a relatively bearish day for the European majors on Tuesday. The DAX30 fell by 0.31%, with the CAC40 and the EuroStoxx600 seeing losses of 0.03% and 0.08% respectively.

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

Economic data from the U.S failed to provide support late in the session, with the markets taking a more cautious stance ahead of today’s FOMC monetary policy decision.

While the markets are expecting the FED to stand pat on policy, uncertainty remains over when the FED will begin to change its position.

Labor market conditions have yet to recovery to pre-pandemic levels, which is expected the support the FED’s current stance and outlook.

The Stats

It was a particularly quiet day on the economic calendar on Tuesday. There were no material stats from the Eurozone for the markets to consider.

From the U.S

Consumer confidence was in focus late in the session.

In April, the CB Consumer Confidence Index rose from 109.0 to 121.7, coming in well ahead of a forecasted 113.0.

The Market Movers

For the DAX: It was another mixed day for the auto sector on Tuesday. BMW fell by 0.33%, with Continental and Volkswagen seeing modest losses of 0.05% and 0.13% respectively. Daimler bucked the trend, rising by 0.23%.

It was another bullish day for the banks. Deutsche Bank and Commerzbank ended the day with gains of 1.01% and 2.01% respectively.

From the CAC, it was a mixed day for the banks. BNP Paribas slipped by 0.10%, while Credit Agricole and Soc Gen rose by 1.35% and by 2.15% respectively.

It was also a mixed day for the French auto sector. Stellantis NV fell by 0.36%, while Renault ended the day up by 0.48%.

Air France-KLM and Airbus SE saw losses of 0.34% and 1.43% respectively on the day.

On the VIX Index

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

Partially reversing a 1.79% gain from Monday, the VIX slipped by 0.45% to end the day at 17.56.

The Dow rose by 0.01%, while the NASDAQ and the S&P500 fell by 0.34% and by 0.02% respectively.

VIX 280421 Daily Chart

The Day Ahead

It’s a relatively quiet day ahead on the European economic calendar. German consumer confidence figures for May are due out ahead of the European open.

Later in the day, trade data and inventory numbers from the U.S will also draw interest.

While we can expect the numbers to influence, the FOMC monetary policy decision and rate statement are due after the European close. The markets will, therefore, likely be on a more cautious footing on the day.

On the corporate earnings front, Deutsche Bank, Apple, and Boeing are due to release quarterly earnings which will garner plenty of interest, however.

The Futures

In the futures markets, at the time of writing, the Dow Mini was down by 63 points.

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

European Equities: Corporate Earnings and U.S Stats in Focus

Economic Calendar:

Wednesday, 28th April 2021

GfK German Consumer Climate (May)

Thursday, 29th April 2021

Spanish HICP (YoY) (Apr) Prelim

German Unemployment Change and Rate (Apr)

German CPI (MoM) (Apr) Prelim

Friday, 30th April 2021

French GDP (QoQ) (Q1)

German GDP (QoQ) (Q1)

German GDP (YoY) (Q1)

Spanish GDP (QoQ) (Q1)

Italian CPI (MoM) (Apr) Prelim

Eurozone CPI (YoY) (Apr) Prelim

Eurozone Unemployment Rate (Mar)

Eurozone GDP (QoQ) (Q1)

Eurozone GDP (YoY) (Q1)

The Majors

The European majors started the week on a better footing following last week’s pullback.

On Monday, the DAX30 rose by 0.11%, with the CAC40 and the EuroStoxx600 gaining 0.28% and 0.29% respectively.

Economic data from the Eurozone and the U.S provided support, with market optimism towards the economic outlook also providing support.

There was some positive news for the markets to consider from the weekend, however. News of EU plans to allow vaccinated tourists from the U.S to enter the EU in the summer supported travel stocks.

For the majors, the upside was limited, however, as new COVID-19 cases continued to spike across some geographies

The Stats

It was a relatively quiet day on the economic calendar on Monday, with German business sentiment in focus.

In April, Germany’s IFO Business Climate Index rose from 96.6 to 96.8.  For March, the index had risen from 92.7 to 96.6.

According to the April survey,

  • Companies raised their assessments of the current business situation, with the current assessment sub-index rising from 93.1 to 94.1.
  • Firms were marginally less optimistic, however, with the business expectations sub-index falling from 100.3 to 99.5.

By Sector:

  • In Manufacturing, the business climate index rose from 24.0 to 25.3, its highest level since May-2018. Optimism across the sector declined, however.
  • For the services sector, the business climate index fell from 6.6 to 3.5. Firms were less satisfied with their current situation, with optimism also waning.

In trade, the business climate index rose from -1.4 to -0.5. A marked improvement in assessments of the current situation drove the index higher. There was increased pessimism regarding the coming months ahead, however.

From the U.S

Durable goods and core durable goods orders were in focus late in the European session.

In March, durable goods orders rose by 0.5%, partially reversing a 0.9% decline from February. Core durable goods orders increased by 1.6%, reversing a 0.3% fall from February.

Economists had forecast increases of 2.5% and 1.6% respectively.

The Market Movers

For the DAX: It was a mixed start to the week for the auto sector on Monday. Volkswagen slid by 1.02%, with Continental falling by 0.15%. BMW and Daimler found support, however, rising by 0.51% and by 0.83% respectively.

It was a bullish day for the banks. Deutsche Bank and Commerzbank rallied by 2.35% and by 2.67% respectively.

From the CAC, it was a bullish day for the banks. BNP Paribas and Credit Agricole rose by 2.77% and by 2.05% respectively. Soc Gen led the way, however, rallying by 4.03%.

It was a mixed day for the French auto sector. Stellantis NV fell by 0.24%, while Renault ended the day up by 1.75%.

Air France-KLM and Airbus SE saw gains of 1.59% and 2.82% respectively on the day.

On the VIX Index

It was back into the green for the VIX on Monday.

Partially reversing a 7.38% slide from Friday, the VIX rose by 1.79% to end the day at 17.64.

The Dow slipped by 0.18%, while the NASDAQ and the S&P500 rose by 0.87% and by 0.18% respectively.

VIX 270421 Daily Chart

The Day Ahead

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

The lack of stats will leave corporate earnings and stats from the U.S in focus.

From the U.S, consumer confidence figures for April will be in focus late in the session. On the corporate earnings front, Alphabet Inc and Microsoft Corp are scheduled to release earnings from the U.S.

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

The Futures

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

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

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

Economic Calendar:

Monday, 26th April 2021

German Ifo Business Climate Index (Apr)

Wednesday, 28th April 2021

GfK German Consumer Climate (May)

Thursday, 29th April 2021

Spanish HICP (YoY) (Apr) Prelim

German Unemployment Change and Rate (Apr)

German CPI (MoM) (Apr) Prelim

Friday, 30th April 2021

French GDP (QoQ) (Q1)

German GDP (QoQ) (Q1)

German GDP (YoY) (Q1)

Spanish GDP (QoQ) (Q1)

Italian CPI (MoM) (Apr) Prelim

Eurozone CPI (YoY) (Apr) Prelim

Eurozone Unemployment Rate (Mar)

Eurozone GDP (QoQ) (Q1)

Eurozone GDP (YoY) (Q1)

The Majors

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

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

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

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

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

The Stats

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

France and Germany

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

Economists had forecast PMIs of 59.0 and 46.5.

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

Economists had forecast PMIs of 65.8 and 50.8 respectively.

The Eurozone

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

Economists had forecast PMIs of 62.0 and 49.1 respectively.

According to the prelim April Survey,

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

From the U.S

Private sector PMIs were in focus late in the session.

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

Economists had forecast PMIs of 60.5 and 61.9 respectively.

The Market Movers

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

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

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

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

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

On the VIX Index

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

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

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

VIX 260421 Daily Chart

The Day Ahead

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

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

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

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

The Futures

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

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

European Equities: A Week in Review – 23/04/21

The Majors

It was a bearish week for the European majors in the week ending 23rd April, with a Tuesday sell-off doing the damage.

The DAX30 slid by 1.17%, with the CAC40 and the EuroStoxx600 seeing losses of 0.46% and 0.78% respectively.

A continued spike in new COVID-19 cases across the world weighed on the majors in the week.

Positive economic data and corporate earnings provided support to limit the damage, however.

Late in the week, U.S President Biden’s tax plans added downward pressure on the global equity markets.

News hit the wires late in the week that President Biden plans to raise long-term capital gains tax for the wealthiest Americans to 43.4%. The current top tax rate sits at 23.8% on long-term capital gains.

The Stats

It was a relatively busy week on the economic data front.

Key stats included German wholesale inflation and Eurozone consumer confidence figures.

At the end of the week, prelim private sector PMI numbers for April were also in focus.

The stats were skewed to the positive. Wholesale inflationary pressures picked up further, with consumer confidence across the Eurozone improving.

Key in the week, however, were the private sector PMIs.

While private sector activity in Germany expanded at a marginally slower rate, the services sector returned to growth across the Eurozone for the 1st time since Aug-2020.

At the turn of the quarter, the Eurozone’s manufacturing PMI hit a new all-time high, supporting a rise in the composite PMI to a 9-month high 53.7.

On the monetary policy front, the ECB was also in action in the week. In line with market expectations, the ECB stood pat on monetary policy, assuring continued support.

The decision to stand pat was positive for the European majors. From the press conference, ECB President Lagarde talked of an economic contraction in the 1st quarter, which supported the market view of unwavering policy support.

From the U.S

It was a quieter week on the economic data front.

Key stats included weekly jobless claims and prelim private sector PMI numbers for April.

In the week ending 16th April, initial jobless claims decreased from a revised 586k to 547k. Economists had forecast an increase to 617k.

Private sector PMIs were also positive for riskier assets.

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

Economists had forecast PMIs of 60.5 and 61.9 respectively.

The Market Movers

From the DAX, it was a mixed week for the auto sector. Daimler and Volkswagen slid by 5.09% and by 6.02% respectively, with BMW falling by 2.44%. Continental bucked the trend, however, with a 0.60% gain.

It was a bearish week for the banking sector. Deutsche Bank slid by 5.94%, with Commerzbank falling by 0.66%.

From the CAC, it was a bearish week for the banks. BNP Paribas and Soc Gen slid by 4.52% and by 4.20% respectively. Credit Agricole ended the week down by a more modest 2.33%.

It was also a bearish week for the French auto sector. Renault and Stellantis NV saw losses of 6.67% and 5.71% respectively.

Air France-KLM followed a 7.78% slide with a 6.65% fall, with Airbus declining by 5.03%.

On the VIX Index

A run of 4 consecutive weeks in the red came to an end for the VIX in the week ending 23rd April. Reversing a 2.64% decline from the previous week, the VIX rose by 6.65% to end the week at 17.33.

3-days in the green from 5 delivered the upside in the week for the VIX.

 

In the week, the Dow ended the week down by 0.46%, with the NASDAQ and the S&P500 falling by 0.25% and by 0.13% respectively.

VIX 240421 Weekly Chart

The Week Ahead

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

German business, consumer confidence, and unemployment figures are in focus Monday through Thursday.

At the end of the week 1st quarter GDP numbers from France, Germany, Spain, and the Eurozone will also be key drivers.

Other stats in the week include prelim inflation figures from member states and the Eurozone.

The markets are expecting a continued pickup in inflationary pressures near-term, which should limit the impact on the majors.

From the U.S, core durable goods and consumer sentiment figures will influence early in the week.

On Thursday, weekly jobless claims and 1st quarter GDP numbers will also provide direction.

For the global financial markets, the FED’s monetary policy decision overnight on Wednesday will be key. With the markets expecting the FED to stand pat, the focus will be on the rate statement. Expect any hawkish chatter to weigh on the majors.

From China, private sector PMI figures on Friday will also influence.

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

European Equities: Prelim Private Sector PMIs for April and Corporate Earnings in Focus

Economic Calendar:

Friday, 23rd April

French Manufacturing PMI (Apr) Prelim

French Services PMI (Apr) Prelim

German Manufacturing PMI (Apr) Prelim

German Services PMI (Apr) Prelim

Eurozone Manufacturing PMI (Apr) Prelim

Eurozone Markit Composite PMI (Apr) Prelim

Eurozone Services PMI (Apr) Prelim

ECB President Lagarde Speaks

The Majors

The European majors continued to find support following the sharp sell-off on Tuesday.

Leading the way was the CAC40, which rose by 0.91%. The DAX30 and the EuroStoxx600 saw more modest gains of 0.82% and 0.68% respectively.

Economic data, corporate earnings, and the ECB delivered support for the European majors on Thursday.

The Stats

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

On the economic data front, French business confidence and Eurozone consumer confidence figures were in focus.

In April, the French Business Survey Index rose from 98 to 104. Economists had forecast an increase to 99.

From the Eurozone, the consumer confidence index rose from -10.8 to -8.1 in April, according to prelim figures. Economists had forecast for the indicator to hold steady at -10.8.

The ECB

On the monetary policy front, the ECB left monetary policy unchanged, which was in line with market expectations.

One key area of focus was how the ECB responded to rising government bond yields after vowing to ramp up bond purchases.

According to the monetary policy statement,

  • The Governing Council expects the key ECB interest rates to remain at their present or lower levels until it has seen the inflation outlook robustly converge to a level sufficiently close to, but below, 2%.
  • Until at least March 2022, the Governing Council will continue to conduct net asset purchases under the PEPP. The total envelope of €1,850 will remain until the end of the 1st quarter of next year.
  • Vis-à-vis purchases under the PEPP, the ECB expects purchases to continue to be conducted at a significantly higher pace than during the first months of the year.
  • The envelope can be recalibrated if required to maintain favorable financing conditions.
  • Net purchases under the APP will continue at a monthly pace of €20bn. This is likely to run for as long as necessary to reinforce the accommodative impact of its policy rates and to end shortly before it starts to raise key ECB interest rates.
  • The Governing Council will also continue to provide ample liquidity through its refinancing operations. Funding obtained through TLTRO III plays a crucial role in supporting bank lending to firms and households.

With the statement assuring continued support, ECB President Lagarde talked of another possible contraction in the 1st quarter during the press conference.

It was not enough to sink the EUR or the European majors, however. Optimism towards a 2nd half of the year economic rebound provided support.

From the U.S

While it was a relatively quiet day, with jobless claims figures were in focus.

In the week ending 16th April, initial jobless claims fell from 586k to 547k. Economists had forecast an increase to 617k.

Existing home sales figures for March 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 Thursday. Daimler and Volkswagen fell by 0.99% and by 0.56% respectively. BMW and Continental found support, however, rising by 0.30% and by 1.54% respectively.

It was also a mixed day for the banks. Deutsche Bank slid by 2.18%, while Commerzbank rose by 0.64%.

From the CAC, it was a relatively bullish day for the banks. BNP Paribas gained 0.64%, with Credit Agricole and Soc Gen rising by 0.20% and by 0.38% respectively.

It was a mixed day for the French auto sector, however. Stellantis NV rose by 0.25%, while Renault ended the day down by 1.33%.

Air France-KLM found much-needed support, rising by 0.88%, with Airbus SE rallying by 2.03%.

On the VIX Index

It was back into the green for the VIX on Thursday, marking a 3rd rise of the week.

Reversing a 6.32% fall from Wednesday, the VIX increased by 6.91% to end the day at 18.71.

The Dow and the NASDAQ both fell by 0.94%, with the S&P500 declining by 0.92%.

VIX 230421 Daily Chart

The Day Ahead

It’s a particularly busy day ahead on the European economic calendar. Key stats include prelim private sector PMI figures from France, Germany, and the Eurozone.

Expect market sensitivity to today’s stats. While the markets will be looking for manufacturing sector activity to continue to impress, the services sector will need to return to expansion.

With a fresh wave of new COVID-19 cases hitting major economies, slower growth in the manufacturing sector would test market resilience.

From the U.S, prelim private sector PMI figures will also be focus, with the services PMI the key driver.

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

On the corporate earnings front, Daimler and Software deliver along with Amex later in the day.

The Futures

In the futures markets, at the time of writing, the Dow Mini was up by 37 points, while the DAX was down by 67 points. Ahead of the European open, market reaction to U.S President Biden’s tax plans weighed on the DAX.

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

European Equities: Economic Data, the ECB, and Corporate Earnings in Focus

Economic Calendar:

Thursday, 22nd April

Deposit Facility Rate (Apr)

ECB Interest Rate Decision (Apr)

Eurozone Consumer Confidence Flash

Friday, 23rd April

French Manufacturing PMI (Apr) Prelim

French Services PMI (Apr) Prelim

German Manufacturing PMI (Apr) Prelim

German Services PMI (Apr) Prelim

Eurozone Manufacturing PMI (Apr) Prelim

Eurozone Markit Composite PMI (Apr) Prelim

Eurozone Services PMI (Apr) Prelim

ECB President Lagarde Speaks

The Majors

The European majors were in recovery mode following the sharp sell-off on Wednesday.

Leading the way was the CAC40, which rose by 0.74%. The DAX30 and EuroStoxx600 saw more modest gains of 0.44% and 0.65% respectively.

There were no major stats from the Eurozone or the U.S to provide support, leaving corporate earnings and dip buying to deliver support.

Concerns over the latest spike in new COVID-19 cases pegged the majors back from a more significant recovery, however.

The Stats

It was a particularly quiet day on the economic calendar on Wednesday.

There were no material stats from the Eurozone to provide the European majors with direction mid-week.

From the U.S

It was another particularly quiet day, with no major stats to provide the majors with direction late in the day.

The Market Movers

For the DAX: It was a mixed day for the auto sector on Wednesday. Volkswagen slid by 2.44% with Daimler and BMW falling by 0.46% and by 1.18% respectively. Continental bucked the trend, however, rising by 0.61%.

It was another bearish day for the banks. Deutsche Bank fell by 0.43%, with Commerzbank declining by 0.85%.

From the CAC, it was a bearish day for the banks. BNP Paribas and Soc Gen declined by 0.92% and by 0.91% respectively, with Credit Agricole falling by 0.87%.

The French found support, however. Stellantis NV rallied by 2.25%, with Renault ending the day up by 0.10%.

Air France-KLM partially recovered from Tuesday’s 6.10% slump with a 1.00% gain, while Airbus SE slipped by 0.21%.

On the VIX Index

It was back into the red for the VIX on Wednesday, marking a 4th daily loss in 8-sessions.

Partially reversing an 8.04% fall from Tuesday, the VIX fell by 6.32% to end the day at 17.50.

The Dow and the S&P500 both rose by 0.93% respectively, with the NASDAQ gaining 1.19%.

VIX 220421 Daily Chart

The Day Ahead

It’s a relatively quiet day ahead on the European economic data front. Key stats from the Eurozone include French business confidence and flash Eurozone consumer confidence figures.

Expect the Eurozone’s consumer confidence numbers to have a greater impact on the day.

The main event of the day, however, will be the ECB monetary policy press conference.

With the markets expecting the ECB to have ramped up bond purchases, updates on purchases will be key. A failure to impress will test support for the majors.

The markets will also be looking for any shifts in view towards the economic outlook following the fresh spike in new COVID-19 cases.

From the U.S, the weekly jobless claims figures will also influence. Any reaction to the numbers may be delayed, however, as the release coincides with the ECB press conference.

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

On the corporate earnings front, Renault and Nestle are due to release results later today.

The Futures

In the futures markets, at the time of writing, the Dow Mini was down by 52 points.

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

European Equities: Another Quiet Day on the Calendar Leaves COVID-19 and Earnings in Focus

Economic Calendar:

Thursday, 22nd April

Deposit Facility Rate (Apr)

ECB Interest Rate Decision (Apr)

Eurozone Consumer Confidence Flash

Friday, 23rd April

French Manufacturing PMI (Apr) Prelim

French Services PMI (Apr) Prelim

German Manufacturing PMI (Apr) Prelim

German Services PMI (Apr) Prelim

Eurozone Manufacturing PMI (Apr) Prelim

Eurozone Markit Composite PMI (Apr) Prelim

Eurozone Services PMI (Apr) Prelim

ECB President Lagarde Speaks

The Majors

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

Following a mixed session on Monday, the CAC40 and the EuroStoxx600 slid by 2.09% and by 1.90% respectively. The DAX30 ended the day with a 1.55% loss.

A continued rise in new COVID-19 cases, in spite of ongoing vaccination programs, tested market optimism on the day.  A pullback in the U.S markets added to the downside for the European majors.

A lack of stats from the U.S late in the session gave the markets little else to consider as governments continue to struggle with the pandemic.

The Stats

It was a quiet day on the economic calendar on Tuesday.

German wholesale inflation figures were in focus early in the European session.

In March, Germany’s producer price index rose by 0.9% month-on-month, following a 0.7% rise in February. Economists had forecast a 0.6% increase.

Compared with the same month a year earlier, producer prices of industrial products were up by 3.7%. This was the highest increase when compared with the corresponding month of the preceding year since Nov-2011.

According to Destatis,

  • Prices of energy and prices of intermediate products drive the index northwards year-on-year.
  • Energy prices jumped by 8.0% compared with Mar-2020, with prices of intermediate goods up 5.7%.
  • Prices of durable consumer goods increased by a more modest 1.4% and capital goods by 0.9% compared with Mar-2020.
  • As a result of a 20.8% slide in prices for pork, food prices fell by 2.5% that dragged prices of non-durable consumer goods down by 1.4% year-on-year.

From the U.S

It was another particularly quiet day, with no major stats to provide the majors with direction late in the day.

The Market Movers

For the DAX: It was a bearish day for the auto sector on Tuesday. Daimler and BMW slid by 2.68% and by 2.01% respectively. Continental and Volkswagen weren’t far behind, with losses of 1.77% and 1.91% respectively.

It was also a bearish day for the banks. Deutsche Bank slid by 3.94%, with Commerzbank tumbling by 4.78%.

From the CAC, it was a bearish day for the banks. BNP Paribas and Soc Gen slid by 4.69% and by 4.57% respectively, with Credit Agricole falling by 2.97%.

The French auto sector also struggled. Stellantis NV and Renault ended the day down by 4.04% and by 4.51% respectively.

Air France-KLM slumped by 6.10%, with Airbus SE sliding by 4.63%.

On the VIX Index

It was a 2nd consecutive day in the green for the VIX on Tuesday, marking a 4th daily gain in 10-sessions.

Following on from a 6.40% rise on Monday, the VIX increased by 8.04% to end the day at 18.68.

The Dow and the S&P500 fell by 0.75% and by 0.68% respectively, with the NASDAQ declining by 0.98%.

VIX 210421 Daily Chart

The Day Ahead

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

From the U.S, there are also no major stats due out to provide the majors with direction late in the session.

A lack of stats will continue to leave the majors in the hands of geopolitics and COVID-19 news updates.

On the corporate earnings front, Renault and Nestle are due to release results tomorrow…

The Futures

In the futures markets, at the time of writing, the Dow Mini was up by 3 points.

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