European Equities: China Trade Data and German Industrial Orders in Focus

The Majors

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

The DAX30 slid by 1.65%, with the EuroStoxx600 and CAC40 declining by 1.13% and 0.89% respectively.

Through the early part of the European session, the majors had found support following Thursday’s pullback.

A late sell-off, however, delivered the downside for the day and ultimately for the week.

Economic data from the U.S on the day was not enough to prop up the majors as investors took some money off the table.

It’s a shortened week ahead for the U.S and investors seemed unwilling to leave positions open going into the long weekend.

There are plenty of downside risks that linger, ready to topple the majors from their current levels.

It wasn’t all bad, however, with bank and auto stocks finding support on the day. Bank merger talks in Spain drove demand for bank stocks at the end of the week. Auto stocks also found support in spite of disappointing manufacturing PMIs from the Eurozone earlier in the week. July factory orders from Germany delivered support on the day.

The Stats

It was a quieter day on the Eurozone economic calendar. Key stats German factory orders for July and August’s construction PMI numbers.

Factory orders rose by 2.8% in July, following a 28.8% jump in June. Economists had forecast a 5.0% increase, however.

According to Destatis,

• Domestic orders tumbled by 10.2%, while foreign orders surged by 14.4% in July, month-on-month.
• New orders from the euro area were up 7.3%, while new orders from other countries jumped 19.2%.
• Manufacturers of intermediate goods saw new orders increase by 9.5%.
• It was somewhat more modest elsewhere, however.
  • Manufacturers of intermediate goods saw new orders rise by 9.5%.
  • The manufacturers of capital goods slipped by 0.4%, by contrast, whilst consumer goods new orders rose 0.2%.
  • New orders in the automotive industry were on the rebound, rising by 8.5%. Orders were still down 2.4% from February 2020, however.
• In spite of the upward trend, orders were down by 7.3% on the same month a year earlier.

From the U.S

Key stats included August nonfarm payroll figures and the August unemployment rate.

Both sets of numbers failed to deliver support, however, in spite of some positive results.

The U.S unemployment rate slid from 10.2% to 8.4%, with nonfarm payrolls rising 1.371m in the month. In July, nonfarm payrolls had risen by 1.734m.

The Market Movers

For the DAX: It was a bullish day for the auto sector on Friday. BMW and Continental rallied by 2.93% and by 3.37% respectively to lead the way. Daimler and Volkswagen trailed the front runners with gains of 2.37% and 1.62% respectively.

It was also a bullish day for the banks. Deutsche Bank rallied 5.06%, with Commerzbank jumping by 9.04%.

From the CAC, it was a bullish day for the banks. BNP Paribas and Credit Agricole rose by 2.97% and by 2.75% respectively. Soc Gen led the way, however, rallying by 5.59%.

It was another bullish day for the French auto sector. Peugeot and Renault rallied by 4.27% and by 4.46% respectively.

Air France-KLM eked out a 0.16% gain following a 2.98% bounce on Thursday, while Airbus SE slid by 2.41%.

On the VIX Index

It was back into the red for the VIX on Friday. Partially reversing a 26.46% surge from Thursday, the VIX slid by 8.48% to end the day at 30.75.

The downside came in spite of the U.S majors seeing more red on the day. Tech stocks continued to struggle ahead of the long weekend.

Following Thursday’s sell-off, the NASDAQ slid by a further 1.27% to lead the way down. The Dow and S&P500 saw more modest losses of 0.56% and 0.81% respectively.

The Day Ahead

It’s a relatively quiet day ahead on the Eurozone economic calendar. Key stats include German industrial production figures for July.

With the U.S markets closed and volumes on the lighter side, we can expect some sensitivity to the numbers.

Ahead of the European open, trade data out of China will set the tone. Following late last week’s pullback, weak numbers from China would put the pressure on…

Away from the economic calendar, the direction of the EUR will also influence, with the ECB in action on Thursday.

The Futures

In the futures markets, at the time of writing, the DAX was up by 171 points, with the Dow up by 85 points.

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