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Bob Mason
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Economic Calendar:

Friday, 19th July

  • German PPI (MoM) (Jun)

The Majors

It was a day in the red for the European majors on Wednesday. The CAC40 led the way, falling by 0.76% with the DAX30 ending the day down by 0.72%. The EuroStoxx600 saw a more modest loss of 0.37% on the day.

It wasn’t much better in the U.S, with the U.S majors also seeing red on the day as demand for U.S Treasuries rose through the session.

The Stats

It was a quieter day on the economic calendar on Wednesday. Key stats were limited to the Eurozone’s finalized June inflation figures.

According to figures released by Eurostat,

  • The annual rate of inflation picked up from 1.2% to 1.3% in June, coming in ahead of a prelim and forecasted 1.2%.
  • In June 2018, the annual rate of inflation stood at 2.0%.
  • Greece (0.2%) and Cyprus (0.3%) reported the lowest annual rate of inflation, while Latvia recorded the highest, at 3.1%.
  • The highest contribution came from services (+0.73 percentage points), food, alcohol & tobacco (+0.30 pp) and non-energy industrial goods (+0.07 pp).
  • Month-on-month, consumer prices rose by 0.2%, which was better than a forecasted and prelim 0.1%.
  • The annual rate of core inflation came in at 1.1%, which was in line with forecasts and prelim, whilst up from 0.8% in May.

From the U.S session, stats were limited to housing sector figures that had a muted impact on the European majors.

Outside of the stats, sentiment towards corporate earnings and Trump’s latest comments on the U.S – China trade talks weighed.

Trump stated that trade talks have a long way to go, which was of no surprise but weighed on risk sentiment on the day. The U.S President also said that the U.S could roll out additional tariffs if they wanted…

The Market Movers

From the DAX, bank and auto stocks saw deep red on the day. Continental was amongst the worst performing, sliding by 1.69%, closely followed by Volkswagen, which fell by 1.64%. Daimler and BMW ended the day down by 1.17% and 1.18% respectively. Things were not much better for the banks. Deutsche Bank fell by 1.38%, with Commerzbank sliding by 1.91%.

From the CAC, bank stocks also suffered. BNP Paribas fell by 1.59%, with Credit Agricole and Soc Gen ending the day down by 1.39% and by 1.19% respectively. Renault also saw red, falling by a more modest 0.78%.

The Day Ahead

There are no material stats due out of the Eurozone to provide direction on the day. The lack of stats will leave the majors exposed to corporate earnings and the U.S economic calendar and trade chatter.

On the U.S data front, July’s Philly FED manufacturing numbers are due out later in the day, which will influence risk sentiment.

On the U.S corporate earnings front, Microsoft and American Express are amongst the major earnings releases later in the day.

Ahead of the European open, the Asian markets were in the red at the time of writing. The Nikkei saw the heaviest losses, falling by 1.77%, while the ASX200 was down by 0.54%. The Hang Seng and CSI300 were down by 0.49% and by 0.60% respectively.

At the time of writing, the DAX futures was down by 100.5 points, while the Dow Mini was down by 75 points.

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