European Equities: A Quiet Economic Calendar May Test the Majors

With the U.S government also planning to jump on the bandwagon and EU member states having delivered, there may be even more on the horizon…

The Stats

It was a relatively busy day on the Eurozone economic calendar on Tuesday. Key stats included June’s ZEW economic sentiment figures for France and Germany and Eurozone wage growth numbers.

There were also finalized inflation figures out of Germany, though there was very little interest in the numbers on the day.

Germany’s ZEW Economic Sentiment Index rose from 51.0 to 63.4, coming in ahead of a forecasted rise to 60.0. There was also a modest improvement in the current conditions index, which rose from -93.5 to -83.1. Economists had forecast a rise to -84.0.

From the Eurozone, the ZEW Economic Sentiment Index rose from 46.0 to 58.6, with wages growing by 3.4% in the 1^st quarter. In the 4^th quarter of last year, wages had risen by 2.4%.

From the U.S

Retail sales and industrial production figures for May were in focus ahead of FED Chair Powell’s testimony to lawmakers.

Month-on-month, core retail sales jumped by 12.4% in May, partially recovering from a 17.2% slump in April. Economists had forecast a 5.5% increase. Retail sales surged by 17.7%, reversing a 14.7% slide in April. Economists had forecast an 8% rise.

Industrial production stabilized as lockdown measures eased, with production rising by 1.4%. In April production had tumbled by 11.2%, month-on-month. Year-on-year, production was down by 15.27%, following a 16.25 % slump in April.

FED Chair Powell’s live testimony to lawmakers was the main event of the day, however. The FED Chair continued to advise the markets that there was a long way to go before an economic recovery in the U.S.

Powell also noted that employment remained well below pre-pandemic levels as did output.

We had expected Powell to come under some scrutiny and the decision to purchase individual corporate bonds was questioned. The key takeaway from this was that the FED would not mute out price signals…

On the subject of interest rates, Powell also continued to play down any chance of negative rates.

Ultimately, there was nothing new for the markets to get upset over.

The Market Movers

For the DAX: It was another mixed day for the auto sector on Tuesday. Volkswagen fell by 1.58% to lead the way down. BMW and Continental also struggled, with losses of 0.67% and 1.21% respectively. Daimler rose by 1.05% to buck the trend on the day.

It was a bullish day for the banks, however. Deutsche Bank and Commerzbank saw gains of 1.20% and 3.58% respectively.

Deutsche Lufthansa reversed Monday’s 2.0% loss, with a 2.0% gain on Tuesday.

From the CAC, it was back into the green for the banks. BNP Paribas rallied by 5% to lead the way. Credit Agricole and Soc Gen weren’t far behind, with gains of 3.42% and 3.33% respectively.

The French auto sector also found support following Monday’s pullback. Peugeot and Renault ended the day with gains of 3.00% and 4.11% respectively.

Air France-KLM reversed Monday’s 3.00% slide, with a 3.89% gain, while Airbus SE rose by 2.69%.

On the VIX Index

It was a 3^rd consecutive day in the red for the VIX on Tuesday, which fell by 2.12%. Following on from a 4.68% slide on Monday, the VIX ended the day at 33.67.

Momentum from Monday continued through the U.S session, with FED Chair Powell’s testimony failing to pour cold water on the rally.

Economic data from the U.S was also positive as retail sales bounced back in May.

On the day, the S&P500 rose by 1.90%, with the Dow and the NASDAQ gaining 2.04% and by 1.75% respectively.

The Day Ahead

It’s a relatively quiet day ahead on the Eurozone economic calendar. Key stats include May’s finalized inflation figures for the Eurozone.

We don’t expect the markets to respond to the numbers, however.

With economic data from the U.S limited to housing sector figures, we can expect COVID-19 news updates to come back into focus. We saw an uptick in the number of new cases in the U.S, while EU numbers improved.

Late in the European session, Powell will deliver a 2^nd day of testimony that will also need monitoring.

The Latest Coronavirus Figures

On Tuesday, the number of new coronavirus cases rose by 156,317 to 8,256,659. On Monday, the number of new cases had risen by 115,910. The daily increase was higher than Monday’s rise and up from 128,377 new cases from the previous Tuesday.

Germany, Italy, and Spain reported 767 new cases on Tuesday, which was down from 855 new cases on Monday. On the previous Tuesday, 843 new cases had been reported.

From the U.S, the total number of cases rose by 26,844 to 2,208,400 on Tuesday. On Monday, the total number of cases had risen by 19,412. On Tuesday, 9^th June, a total of 19,894 new cases had been reported.

The Futures

In the futures markets, at the time of writing, the DAX was up by 26.5 points, while the Dow was down by 1 point.

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