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European Equities: A Light Economic Calendar Puts the FED Front and Center

The futures are pointing to another day in the red as the markets look ahead to the FOMC monetary policy decision due out after the European close.
Bob Mason
Light Board

Economic Calendar:

Wednesday, 18th September

  • Eurozone Core CPI (YoY) (Aug) Final
  • Eurozone CPI (YoY) (Aug) Final
  • Eurozone CPI (MoM) (Aug)

Friday, 20th September

  • German PPI (MoM) (Aug)
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The Majors

It was a mixed day for the European majors on Tuesday. The DAX30 saw its 2nd consecutive day in the red, slipping by 0.06%, with the EuroStoxx600 down by 0.05%. The CAC40, bucked the trend on the day, gaining a modest 0.24%.

The mixed day came in spite of news hitting the wires on Monday of U.S – China trade talks set to resume tomorrow.

While a resumption of trade talks is positive, uncertainty over whether the U.S will respond to the Saudi oil field attacks pegged the majors back.

The Stats

It was a relatively busy day on the Eurozone economic calendar on Tuesday. Key stats included economic sentiment figures out of Germany and the Eurozone.

In September, the German ZEW Economic Sentiment Index rose from -44.1 to -22.5, while the current conditions index fell from -13.5 to -19.9.

For the Eurozone, the Economic Sentiment Index rose from -43.6 to -22.4 in September.

From the U.S, August industrial production was also positive, with production rising by 0.6% month-on-month, reversing a 0.4% fall in July.

The stats ultimately had a muted impact on the majors on the day, as the markets also looked ahead to today’s FOMC monetary policy decision.

The Market Movers

From the DAX, the auto sector was amongst the worst performing on the day. Continental and Daimler led the way down, sliding by 1.51% and 1.49% respectively. Volkswagen and BMW weren’t far behind with losses of 1.14% and 0.83% respectively.

It was also a bearish day for the banks. Deutsche Bank slid by 1.11%, while Commerzbank tumbled by 3.70%.

From the CAC, it was also a bad day for the banks. Credit Agricole and Soc Gen led the way, with losses of 2.55% and 1.81% respectively. BNP Paribas saw a more modest 1.60% loss on the day. The auto sector also lost ground, with Renault and Peugeot falling 0.44% and 1.59% respectively.

On the VIX Index

The VIX Index saw red for a 9th day in 11 on Tuesday, falling by 2.04% to end the day at 14.4.  There was a lack of any major moves on the day, with the market focused on Saudi, Brexit and the FED that left the VIX with a relatively minor loss.

The Day Ahead

It’s a relatively quiet day ahead on the Eurozone economic calendar. Economic data is limited to the Eurozone’s August finalized inflation figures.

We would expect the figures to have a limited impact on the EUR, with the market focus being on the FOMC policy decision later in the day.

On the geopolitical front, the markets will likely continue to keep a close eye on Washington for any suggestions of military action against Iran. There’s also Brexit chatter to also consider throughout the day.

In the futures markets, at the time of writing, the DAX was down by 1.5 points, with the Dow Mini was down by 17 points.

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