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European Equities: 2nd Quarter GDP and July Inflation in Focus
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Following 2 consecutive days in the green, member states and Eurozone GDP numbers will in focus today. While corporate earnings will influence, today's stats will be key.
In this article:
Economic Calendar
Thursday, 29th July
German Unemployment Change/Rate JUL
German Inflation Rate MoM Prel JUL
Friday, 30th July
French GDP Growth Rate QoQ Prel Q2
French Household Consumption MoM JUN
German GDP Growth Rate Flash Q2
French Inflation Rate YoY Prel JUL
Spanish GDP Growth Rate Flash Q2
Italian GDP Growth Rate Adv Q2
Eurozone Core Inflation Rate Flash JUL
Eurozone GDP Growth Rate Flash Q2
Italian Inflation Rate MoM Prel JUL
Eurozone Inflation Rate Flash JUL
The Majors
It was another bullish day for the European majors on Thursday.
The CAC40 rose by 0.37%, with the DAX30 and the EuroStoxx600 ending the day up by 0.45% and by 0.46% respectively.
Market reaction to Wednesday’s dovish FED and economic data from the Eurozone and the U.S provided the majors with support.
From the Eurozone, German unemployment figures impressed, while stats from the U.S looked to have put a near-term lid on any need for the FED to make a move. U.S GDP and jobless claims figures were good enough, however, to support riskier assets and not spook the markets.
Support also came from corporate earnings releases on the day.
The Stats
The German economy was in focus once more on Thursday, with unemployment and inflation the key stats of the day.
In July, unemployment slid by 91k, following a 39k decline in June. As a result of the decline, the unemployment rate fell from 5.9% to 5.7%. Economists had forecast a 22k decline and for the unemployment rate to fall to 5.8%.
On the inflation front, Germany’s annual rate of inflation accelerated from 2.3% to 3.8% in July, according to prelim figures. Economists had forecast a pickup to 3.2%.
Month-on-month, consumer prices rose by 0.9%, following a 0.4% increase in June. Economists had forecast a 0.4% rise.
From the U.S
1st estimate GDP numbers for the 2nd quarter were out along with the weekly jobless claim figures.
In the 2nd quarter, the U.S economy grew by 6.5% in the 2nd quarter, ticking up from a 1st quarter 6.4%. Economists had forecast 8.5% growth in the quarter, however.
On the employment front, U.S jobless claims fell from 424k to 400k in the week ending 23rd July. Economists had forecast a decline to 370k.
The Market Movers
For the DAX: It was a bullish day for the auto sector on Thursday. Daimler rallied by 2.80%, with BMW and Volkswagen ending the day up by 1.40% and by 1.28% respectively. Continental saw a more modest 0.80% gain on the day.
It was also a bullish day for the banks. Deutsche Bank and Commerzbank ended the day up by 3.23% and by 1.74% respectively.
From the CAC, it was a bullish day for the banks. BNP Paribas gained 1.78%, with Soc Gen and Credit Agricole rising by 1.55% and by 1.38% respectively.
It was also a bullish day for the French auto sector. Stellantis NV rallied by 3.36%, with Renault ending the day up by 0.62%.
Air France-KLM and Airbus SE also found further support, rising by 1.06% and by 0.61% respectively.
On the VIX Index
It was a 2nd consecutive day in the red for the VIX on Thursday, marking the 2nd decline of the week.
Following a 5.42% fall on Wednesday, the VIX declined by 3.33% to end the day at 17.70.
The NASDAQ rose by 0.11%, with the Dow and the S&P500 ending the day up by 0.44% and by 0.42% respectively.
The Day Ahead
It’s a particularly busy day ahead on the economic calendar. Eurozone and member state 1st estimate GDP numbers for the 2nd quarter are due out later today.
Expect plenty of interest in the numbers. We have seen concerns over the resilience of the economic recovery test support for the majors of late. Weaker than expected numbers would weigh.
Prelim inflation and consumer spending figures are also due out but will likely play 2nd fiddle to the GDP numbers.
From the U.S, inflation and personal spending figures will also influence late in the session.
Away from the economic calendar, corporate earnings and 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 21 points.
For a look at all of today’s economic events, check out our economic calendar.
About the Author
Bob Masonauthor
With over 20 years of experience in the finance industry, Bob has been managing regional teams across Europe and Asia and focusing on analytics across both corporate and financial institutions. Currently he is covering developments relating to the financial markets, including currencies, commodities, alternative asset classes, and global equities.
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