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Economic Calendar:

Thursday, 8th August

  • ECB Economic Bulletin  

Friday, 9th August

  • German Trade Balance (Jun)
  • Italian CPI (MoM) (Jul) Final

The Majors

The European majors managed to find support on Wednesday. The DAX30 led the way on the day, rising by 0.71% to reduce the weekly deficit to 1.87%. Close behind was the CAC40, which rose by 0.61%, while the EuroStoxx600 gained a more modest 0.26%.

Support came in spite of continued concerns over the ongoing U.S – China trade war, with PBoC support for the Yuan contributing to the upside.

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With economic data on the lighter side, the RBNZ set the mood early, cutting rates by 50 basis points, which was 25 basis points more than expected.

Concerns over the global economic outlook weighed on government bonds yields. Crude oil prices also tumbled, while gold spot hit $1,500 levels for the first time since Nov-2013.

On the earnings front, Commerzbank released earnings results that came in ahead of forecast. While ahead of forecast, a less optimistic outlook and pickup in loan provisions weighed. For Wirecard, a positive outlook was not enough to prevent a slide on the day.

The Stats

It was a relatively quiet day on the Eurozone economic calendar. Stats out of the Eurozone included Germany’s industrial production figures for June.

According to Destatis,

  • Industrial production fell by 1.5% in June, following a downwardly revised 0.1% rise in May. Economists had forecast a 0.5% decline.
  • Production in industry excluding energy and construction fell by 1.8%.
  • By industry, the production of intermediate goods decreased by 2%, with production of capital goods falling by 1.8%.
  • The production of consumer goods fell by 1.4%.
  • Outside industry, energy production was down by 1.6%, with production in construction down by 0.3%.
  • Year-on-year, production fell by 5.2% in June.

There were no material stats out of the U.S to provide the majors with direction late in the European session.

The Market Movers

From the DAX, Adidas was amongst the top performers, gaining 1.23% ahead of today’s earnings. Wirecard was the worst performer on the day, sliding by 2.95%. From the banking sector, falling yields and sentiment towards the economic outlook weighed. Deutsche Bank and Commerzbank ended the day down by 2.13% and by 6.43% respectively.

From the auto sector, it was a mixed bag, with Continental leading the way up, rising by 1.16%. While BMW also saw green with a 0.13% gain, Daimler (-0.13%) and Volkswagen (-0.25%) saw red, however.

From the CAC, there was more red for the banking sector. Credit Agricole and Soc Gen fell by 1.03% and by 0.92% respectively. BNP Paribas saw a more modest loss of 0.78% on the day. On the upside, stability in the Chinese Yuan supported LVMH and Hermes, which gained 2.05% and 1.73% respectively.

The Day Ahead

It’s a relatively quiet day ahead on the Eurozone economic calendar. There are no material stats due out of the Eurozone today to provide direction. A lack of stats will leave the markets to slice and dice the ECB economic bulletin due out later this morning.

From the U.S, the economic calendar is also on the lighter side, with stats limited to the weekly initial jobless claims figures. Barring an unexpected jump in claims, we would expect the markets to brush aside the numbers.

On the corporate earnings front, Adidas and ThyssenKrupp release their earnings results on the day. While the earnings results will be important, expect the majors to react to any negative outlook reports…

While we can expect the majors to respond to today’s Bulletin and earnings, sentiment towards the U.S – China trade war will remain the key driver.

July trade figures due out of China later this morning will certainly set the tone early.

In the futures markets, at the time of writing, the DAX was up by 40.5 points, while the Dow Mini was down by just 53 points.

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