The futures say red for the DAX30 following yesterday’s rally. Geopolitics and COVID-19 will be key drivers today.
Eurozone Consumer Confidence Flash
Friday, 24th July
French Manufacturing PMI (Jul) Prelim
French Services PMI (Jul) Prelim
German Manufacturing PMI (Jul) Prelim
German Services PMI (Jul) Prelim
Eurozone Manufacturing PMI (Jul) Prelim
Eurozone Markit Composite PMI (Jul) Prelim
Eurozone Services PMI (Jul) Prelim
It was another bullish start to the week for the European majors on Tuesday, with the DAX30 rising by 0.96% to lead the way. The CAC40 and EuroStoxx600 ended the day with gains of 0.22% and 0.32% respectively.
There were no major stats out of the Eurozone or the U.S to distract the majors from EU Recovery Fund talks.
After extended talks that went through from last Friday to Monday, EU member states finally reached an agreement on the structure of the EU Recovery Fund.
News of progress towards a COVID-19 vaccine was also a market positive through the 1st half of the week.
It was a quiet day on the Eurozone economic calendar. There were no material stats for the markets to consider.
From the U.S
There were also no material stats to influence the majors on the day.
The Market Movers
For the DAX: It was a bullish day for the auto sector on Tuesday. BMW and Continental rallied by 2.13% and 1.85% to lead the way.
Daimler and Volkswagen saw more modest gains of 1.28% and 0.18% respectively.
It was a mixed day for the banks. While Deutsche Bank slid by 4.94%, Commerzbank ended the day up by 0.86%.
From the CAC, it was also a mixed day for the banks. BNP Paribas and Credit Agricole rose by 1.39% and by 0.90% respectively. Soc Gen reversed gains from early in the day to end the day down by 0.19%.
The French auto sector found support, however, with Peugeot and Renault rising by 1.54% and by 0.89% respectively.
Air France-KLM struggled, falling by 1.48%, while Airbus SE rallied by 3.56% on the day.
On the VIX Index
It was back into the green for the VIX on Tuesday. Following two consecutive days in the red, the VIX rose by 1.55% to end the day at 24.84. On Monday, the VIX had fallen by 4.75.
The market focus shifted away from progress towards a COVID-19 pandemic to U.S fiscal stimulus. Talks in the U.S resume this week ahead of the expiration of the current stimulus programs at the end of the month.
Failure to secure additional stimulus would be considered a particularly dire outcome for the U.S economy that remains dependent upon consumption.
The S&P500 and Dow rose by 0.17% and 0.60% respectively, while the NASDAQ slipped by 0.81%.
The Day Ahead
It’s yet another quiet day ahead on the Eurozone economic calendar. There are no material stats due out of the Eurozone to provide the majors with direction.
A lack of stats will leave the majors in the hands of updates on the EU Recovery Fund and COVID-19. The numbers for Tuesday were on the rise once more.
U.S domestic issues are also likely of concern for the markets as the administration sends in officers to quash protests.
From the U.S
It’s a relatively quiet day ahead. June’s existing-home sales figures are due out later today. We don’t expect the numbers to have an impact on the majors, however.
Chatter from Capitol Hill on fiscal stimulus and more from the U.S President will continue to drive the majors.
The Latest Coronavirus Figures
On Tuesday, the number of new coronavirus cases rose by 240,565 to 15,091,452. On Monday, the number of new cases had risen by 182,589. The daily increase was higher than Monday’s rise and 218,739 new cases from the previous Tuesday.
Germany, Italy, and Spain reported 1,889 new cases on Tuesday, which was down from 5,413 new cases on Monday. On the previous Tuesday, 1,110 new cases had been reported.
From the U.S, the total number of cases rose by 67,140 to 4,028,569 on Tuesday. On Monday, the total number of cases had increased by 62,790. On Tuesday, 21st July, a total of 65,594 new cases had been reported.
In the futures markets, at the time of writing, the DAX was down by 44.5 points, while the Dow was up by 69 points. A pullback across the Asian majors weighed on the DAX early on.