Economic Data and the U.S Stimulus Bill in Focus

William Arsn

Monday, 3rd August

Spanish Manufacturing PMI (Jul)

Italian Manufacturing PMI (Jul)

French Manufacturing PMI (Jul) Final

German Manufacturing PMI (Jul) Final

Eurozone Manufacturing PMI (Jul) Final

Wednesday, 5th August

Spanish Services PMI (Jul)

Italian Services PMI (Jul)

French Services PMI (Jul) Final

German Services PMI (Jul) Final

Eurozone Markit Composite PMI (Jul) Final

Eurozone Services PMI (Jul) Final

Eurozone Retail Sales (MoM) (Jun)

Thursday, 6th August

German Factory Orders (MoM) (Jun)

IHS Markit Construction PMI (Jul)

Friday, 7th August

German Industrial Production (MoM) (Jun)

German Trade Balance (Jun)

French Non-Farm Payrolls (QoQ) (Q2)

The Majors

It was another bearish day for the European majors on Friday, with the CAC40 sliding by 1.43{5667a53774e7bc9e4190cccc01624aae270829869c681dac1da167613dca7d05} to lead the way. The DAX30 and EuroStoxx600 weren’t far behind, with losses of 0.54{5667a53774e7bc9e4190cccc01624aae270829869c681dac1da167613dca7d05} and 0.89{5667a53774e7bc9e4190cccc01624aae270829869c681dac1da167613dca7d05} respectively.

Negative sentiment towards the economic outlook weighed as the markets responded further to dire 2nd quarter GDP numbers.

The disappointing figures together with the upward trend in new COVID-19 cases continued to raise doubts over a speedy economic recovery.

In the week, Spain and the UK were amongst countries having to reintroduce containment measures.

The negative sentiment ultimately overshadowed upbeat tech earnings results on the day.

The Stats

It was another busy day on the Eurozone economic calendar. Key stats included 2nd quarter GDP from France and the Eurozone. June retail sales figures from France and Germany and Eurozone and member state prelim inflation figures were also in focus.

It was the GDP numbers that weighed, however. In the 2nd quarter, the French economy contracted by 13.8{5667a53774e7bc9e4190cccc01624aae270829869c681dac1da167613dca7d05}, with the Eurozone economy contracting by 12.1{5667a53774e7bc9e4190cccc01624aae270829869c681dac1da167613dca7d05}.

German retail sales rose by 5.9{5667a53774e7bc9e4190cccc01624aae270829869c681dac1da167613dca7d05} in June, following a 12.7{5667a53774e7bc9e4190cccc01624aae270829869c681dac1da167613dca7d05} jump in May, with French consumer spending up by 9.0{5667a53774e7bc9e4190cccc01624aae270829869c681dac1da167613dca7d05}. In May, French consumer spending had surged by 37.4{5667a53774e7bc9e4190cccc01624aae270829869c681dac1da167613dca7d05}.

While both sets of numbers came in ahead of forecasts there were not good enough to shift the mood.

From the U.S

Economic data included June’s personal spending and inflation figures. While inflationary pressures eased, personal spending was on the rise at the end of the quarter.

The increase was not enough to ease concerns over the U.S economic outlook, however.

Personal spending rose by 5.6{5667a53774e7bc9e4190cccc01624aae270829869c681dac1da167613dca7d05}, while the annual rate of inflation softened from 1.0{5667a53774e7bc9e4190cccc01624aae270829869c681dac1da167613dca7d05} to 0.90{5667a53774e7bc9e4190cccc01624aae270829869c681dac1da167613dca7d05} In May, personal spending had jumped by 8.5{5667a53774e7bc9e4190cccc01624aae270829869c681dac1da167613dca7d05}.

Late in the European session, finalized consumer sentiment figures were revised down, adding to the market angst.

The Market Movers

For the DAX: It was another particularly bearish day for the auto sector on Friday. Continental and Volkswagen slid by 5.00{5667a53774e7bc9e4190cccc01624aae270829869c681dac1da167613dca7d05} and by 4.39{5667a53774e7bc9e4190cccc01624aae270829869c681dac1da167613dca7d05} to lead the way down. BMW and Daimler saw more modest losses of 3.85{5667a53774e7bc9e4190cccc01624aae270829869c681dac1da167613dca7d05} and 3.67{5667a53774e7bc9e4190cccc01624aae270829869c681dac1da167613dca7d05} respectively.

Volkswagen continued to struggle after having reported an operating loss for the 1st half and a dividend cut on Thursday.

It was a mixed day for the banks, however. While Deutsche Bank fell by 0.38{5667a53774e7bc9e4190cccc01624aae270829869c681dac1da167613dca7d05}, Commerzbank rose by 1.02{5667a53774e7bc9e4190cccc01624aae270829869c681dac1da167613dca7d05}.

From the CAC, it was another bearish day for the banks. Soc Gen and Credit Agricole both fell by 1.43{5667a53774e7bc9e4190cccc01624aae270829869c681dac1da167613dca7d05}, with BNP Paribas falling by 0.77{5667a53774e7bc9e4190cccc01624aae270829869c681dac1da167613dca7d05}.

It was a more bearish day for the French auto sector. While Peugeot slid by 3.19{5667a53774e7bc9e4190cccc01624aae270829869c681dac1da167613dca7d05}, Renault tumbled by a further 7.86{5667a53774e7bc9e4190cccc01624aae270829869c681dac1da167613dca7d05} following a 9.26{5667a53774e7bc9e4190cccc01624aae270829869c681dac1da167613dca7d05} slide on Thursday.

Air France-KLM joined the broader pack, falling by 2.35{5667a53774e7bc9e4190cccc01624aae270829869c681dac1da167613dca7d05}, with Airbus SE ending the day down by 2.10{5667a53774e7bc9e4190cccc01624aae270829869c681dac1da167613dca7d05}

On the VIX Index

It was a back into the red for the VIX on Friday. Partially reversing a 2.74{5667a53774e7bc9e4190cccc01624aae270829869c681dac1da167613dca7d05} gain from Thursday, the VIX fell by 1.21{5667a53774e7bc9e4190cccc01624aae270829869c681dac1da167613dca7d05} to end the day at 24.46.

The downside came as the U.S equity markets brushed off dire economic data in response to positive tech earnings results.

The S&P500 and NASDAQ rose by 0.77{5667a53774e7bc9e4190cccc01624aae270829869c681dac1da167613dca7d05} and by 1.49{5667a53774e7bc9e4190cccc01624aae270829869c681dac1da167613dca7d05} respectively, with the Dow gaining 0.44{5667a53774e7bc9e4190cccc01624aae270829869c681dac1da167613dca7d05}.


The Day Ahead

It’s a relatively busy day ahead on the Eurozone economic calendar. Key stats July manufacturing PMIs from Italy and Spain.

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

While the markets will focus on Germany’s numbers, expect Italy and the Eurozone’s PMIs to also influence.

From the U.S

The markets preferred ISM Manufacturing PMI and finalized Market Manufacturing PMI figures are due out.

Expect the ISM survey figures to have the greatest impact on the markets.

Away from the economic calendar, corporate earnings, and updates from Capitol Hill on the passage of the COVID-19 stimulus package will also influence.

From the weekend, COVID-19 updates were negative, however, which will test the markets early on.

The Latest Coronavirus Figures

According to figures at the time of writing, the number of new coronavirus cases rose by 249,532 to 18,231,469 on Sunday. On Saturday, the number of new cases had risen by 250,087. The daily increase was lower than Saturday’s rise while up from 213,347 new cases from the previous Sunday.

Germany, Italy, and Spain reported 623 new cases on Sunday, which was down from 707 new cases on Saturday. On the previous Saturday, 663 new cases had been reported.

From the U.S, the total number of cases rose by 50,702 to 4,813,647 on Sunday. On Saturday, the total number of cases had increased by 60,171. On Sunday, 26th July, a total of 56,130 new cases had been reported.

The Futures

In the futures markets, at the time of writing, the DAX was up by 7.5 points, while the Dow was down by 45 points. A pickup in manufacturing sector activity in China provided the DAX with support ahead of the open.

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

This article was originally posted on FX Empire


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