Futures point to the red ahead of the European open. German factory orders, U.S jobless claims, and Capitol Hill are in focus.
Friday, 7th August
German Industrial Production (MoM) (Jun)
German Trade Balance (Jun)
French Non-Farm Payrolls (QoQ) (Q2)
It was a bullish day for the European majors on Wednesday. The CAC40 rose by 0.90%, with the DAX30 and EuroStoxx600 gaining 0.47% and by 0.49% respectively.
Economic data weighed on the majors, while corporate earnings delivered mixed results on the day.
It was a busy day on the Eurozone economic calendar. Key stats included service sector PMIs from Italy and Spain and Eurozone retail sales figures. Finalized July service PMIs numbers from France, Germany, and the Eurozone also influenced.
Spain’s services PMI rose from 50.2 to 51.9, with Italy’s PMI rising from 46.4 to 51.6. Economists had forecasted PMIs of 52.0 and 51.1 respectively.
Germany’s finalized PMI came in at 55.6, which was down from a prelim 56.7, while up from 47.3 in June.
From France, the services PMI came in at 57.3, which was down from a prelim 57.8, while up from 50.7 in June.
The Eurozone’s services PMI came in at 54.7, which was revised down from a prelim 55.1. In June the PMI had stood at 48.3.
Upbeat numbers from Spain and Italy resulted in an upward revision to the composite from 54.8 to 54.9. In June, the PMI had stood at 48.5.
From the Eurozone, retail sales rose by 5.7% in June, falling short of a forecasted 5.9% rise. In May, retail sales had surged by a revised 20.3%.
From the U.S
Economic data included the market’s preferred ISM Non-Manufacturing PMI and the Markit’s finalized services and composite PMIs.
In July, the ISM Non-Manufacturing PMI increased from 57.1 to 58.1, coming in ahead of a forecasted 55.0. The finalized Markit services PMI was revised upwards from 49.6 to 50.0.
The Market Movers
For the DAX: It was a mixed day for the auto sector on Wednesday. Daimler and Volkswagen found support to end the day with gains of 1.05% and 0.09% respectively. BMW and Continental ended the day with losses of 3.20% and 2.01% respectively.
BMW’s slide came in response to disappointing 2nd quarter earnings and a restatement of its profit warning for 2020.
It was a bullish day for the banks. Deutsche Bank rose by 0.70%, with Commerzbank rallying by 4.87%.
Better than expected earnings results for the 2nd quarter delivered the upside for Commerzbank on the day.
From the CAC, it was a bearish day for the banks. BNP Paribas and Soc Gen fell by 0.66% and by 0.77% respectively. Credit Agricole saw a more modest 0.02% loss on the day.
It was another positive day for the French auto sector. Peugeot rose by 1.98%, with Renault gaining 2.34%
Air France-KLM and Airbus SE saw gains of 6.83% and 3.49% respectively.
On the VIX Index
It was a 4th consecutive day in the red for the VIX on Wednesday. Following on from a 2.14% loss on Tuesday, the VIX fell by 3.24% to end the day at 22.99.
Market hopes of an imminent agreement on a 2nd stimulus package and positive corporate earnings delivered the upside.
The S&P500 and NASDAQ rose by 0.64% and by 0.52% respectively, with the Dow gaining 1.39%.
The Day Ahead
It’s a relatively quiet day ahead on the Eurozone economic calendar. Germany’s factory orders for June are due out later this morning.
While we will expect the numbers to influence, corporate earnings, U.S economic data, and updates from Capitol Hill will likely be the key drivers.
From the U.S
It’s a relatively quiet day ahead. Key stats include the weekly jobless claims figures due out later today.
After two consecutive weekly increases, the markets will be looking for a decline in the week ending 31st July.
Away from the economic calendar, corporate earnings, and updates from Capitol Hill on the passage of the COVID-19 stimulus package will continue to influence.
In the futures markets, at the time of writing, the DAX was down by 64.5 points, while the Dow was up by 36 points.