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Economic Calendar:

Friday, 20th September

  • German PPI (MoM) (Aug)

The Majors

It was another day in the green for the European majors on Thursday. The CAC40 led the way, rising by 0.68%, with the EuroStoxx600 and DAX30, gaining 0.61% and 0.55% respectively.

With no material stats out of the Eurozone, the European majors responded to the FED rate cut and forward guidance from Wednesday.

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On the geopolitical front, there was no chatter on Iran to rock the markets, while there was some positive chatter on Brexit.

EU Commission President Juncker spoke on Thursday, stating that the EU was prepared to remove the backstop should Britain deliver a viable alternative. Juncker also added that he believed a deal could be reached by 31st October.

It was reported that the British government has submitted draft proposals to the EU Commission, the details of which will likely hit the news wires later today.

The Stats

It was a quiet day on the Eurozone economic calendar on Thursday. There were no material stats from the Eurozone to provide the majors with direction.

From the U.S, the Philly FED Manufacturing Index fell from 16.8 to 11.0 in September. According to the September survey,

  • 28% of firms reported an increase in activity, while 16% reported a decrease.
  • The index for current new orders fell from 25.8 to 24.8, while the employment index rose from 3.6 to 15.8.
  • Price increases were more widespread, with nearly 38% of firms reporting increases in the price paid for inputs. In August, 25% of firms had reported increases in input prices.
  • Factory gate prices were also reportedly on the rise, with 26% of firms reporting higher prices, up from 16% in August.
  • On the optimism front, over 37% of firms expect an increase in activity over the next 6-months, with 16% expecting a decline.
  • The future new orders index fell by 9 points.

The weaker headline figure and the downward trend in new orders weighed on the majors at the time of release. Support ultimately came from the FED’s rate cut and commitment to deliver more should the need arise, however.

The Market Movers

From the DAX, it was a mixed day for the auto sector on Thursday. Volkswagen led the way, rallying by 1.36%, with BMW rising by 0.14%. Continental and Daimler saw red, however, with losses of 0.83% and 0.51% respectively.

It was a relatively bullish day for the banks. Deutsche Bank rose by 0.55%, with Commerzbank gaining 3.07%.

From the CAC, it was a solid day for the banks. Soc Gen led the way, rallying by 2.71%. Credit Agricole and BNP Paribas weren’t far behind with gains of 2.16% and 1.95% respectively. It was also mixed for the auto sector, however. Renault fell by 0.67%, whilst Peugeot gained 1.39%.

On the VIX Index

The VIX Index saw green for just the 3rd day in 13 on Thursday, rising by 0.71% to end the day at 14.7.

With economic data on the lighter side and no major news on the geopolitical front, there was very little to spook the markets on the day.

The Day Ahead

It’s another quiet day ahead on the Eurozone economic calendar. September consumer confidence figures for the Eurozone are due out later this afternoon.

We have seen some market sensitivity to consumer sentiment, which is due to the Eurozone economy’s increased reliance on consumer spending.

In the early part of the day, we can expect Germany’s August wholesale inflation figures to have a muted impact.

With no stats due out of the U.S, Trump’s Twitter account will need monitoring, as will FOMC member chatter. FOMC members Williams and Rosengren are due to speak later this afternoon.

On the geopolitical front, Brexit will also be in focus. The British government delivered alternative options to the Irish backstop on Wednesday night. Expect the majors to respond should any of the options be considered viable by the EU.

In the early part of the day, the PBoC was in action. The loan prime rates are due out and would be risk positive should rates be lowered.

In the futures markets, at the time of writing, the DAX was down by 12 points, while the Dow Mini was up by 20.

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