European Equities: A Quiet Economic Calendar and Low Volumes May Test Support

The Majors

It was a relatively bullish end to the week for the European majors on Friday.

The CAC40 and EuroStoxx600 rose by 0.68% and by 0.57% respectively, with the DAX30 ending the day up by 0.44%.

Economic data from the Eurozone and the U.S provided further support to the majors following Thursday’s rebound.

Adding to the upside on the day was further assurances from ECB President Lagarde of no shift to policy near-term. In spite of Lagarde’s assurances, the upside at the end of the week was modest. FOMC member talk of a review of the asset purchasing program, in spite of Powell’s assurances of no near-term tapering, left the markets on a cautious footing.

The Stats

Economic data from the Eurozone was on the busier side on Friday with prelim private sector PMIs for May in focus.

France

According to prelim figures, the manufacturing PMI rose from 58.9 to 59.2, with the services PMI rising from 50.3 to 56.6.

Economists had forecast a manufacturing PMI of 58.5 and a services PMI of 53.0.

Germany

The manufacturing PMI fell from 66.2 to 64.0 while the services PMI increased from 49.9 to 52.8.

Economists had forecast a manufacturing PMI of 65.9 and a services PMI of 52.0.

The Eurozone

In May, the manufacturing PMI slipped from 62.9 to 62.8, while the services PMI increased from 50.5 to a 35-month high 55.1. Economists had forecast PMIs of 62.5 and 52.3 respectively.

Supported by the pickup in service sector activity, the composite PMI increased from 53.8 to a 39-month high 56.9. Economists had forecast an increase to 55.1.

According to the Markit survey,

• The rate of expansion across the private sector hit the highest for over 3-years.
• New order inflows surged at a pace not seen for almost 15-years.
• Business optimism continued to hit new highs.
• Price gauges rose further, however, as demand continued to outstrip supply for many goods and services.

From the U.S

It was a relatively busy day on the economic calendar on Friday, with private sector PMIs for May also in focus.

The services PMI jumped from 64.7 to 70.1, with the manufacturing PMI rising from 60.5 to 61.5. Economists had forecast PMIs of 64.5 and 60.2 respectively.

The marked pickup in private sector activity mid-way through the 2^nd quarter delivered support to the majors.

The Market Movers

For the DAX: It was a bullish day for the auto sector on Friday. Continental rallied by 2.31% to lead the way, with Daimler rising by 0.75%. BMW and Volkswagen ended the day with modest gains of 0.11% and 0.28% respectively.

It was also a bullish day for the banks. Deutsche Bank and Commerzbank rose by 2.79% and by 0.40% respectively.

From the CAC, it was a bullish day for the banks. Credit Agricole and Soc Gen ended the day up by 0.71%S and by 0.48% respectively. BNP Paribas eked out a 0.05% gain.

It was also a bullish day for the French auto sector. Stellantis NV rose by 2.07%, with Renault gaining 0.59%.

Air France-KLM avoided further losses, rising by 0.02%, with Airbus SE ended the day up by 1.45%.

On the VIX Index

It was a 2^nd consecutive day in the red for the VIX on Friday.

Following a 6.81% fall from Thursday, the VIX declined by 2.52% to end the day at 20.15.

The Dow rose by 0.36%, while the NASDAQ and the S&P500 ended the day down by 0.48% and by 0.08% respectively.