European Equities: Corporate Earnings, Stats and the ECB in Focus

It’s all eyes on the ECB as the markets look for ECB monetary policy easing later today. Corporate earnings and stats out of Germany will also influence.
Bob Mason
Light Board

Economic Calendar:

Thursday, 25th July

  • German IFO Business Expectations, Current Assessment, and Climate Indexes
  • French Jobseekers Total
  • ECB Monetary Policy Statement (Jul)
  • ECB Press Conference

The Majors

The European majors ended the day mixed on Wednesday. The DAX and EuroStoxx600 ended the day in the green, with gains of 0.26% and 0.05%, while the CAC40 fell by 0.22%.

Gains for the DAX and EuroStoxx600 came in spite of weak economic data released on the day. Corporate earnings out of Germany also failed to impress, with Deutsche Bank releasing a worse than forecast set of numbers.

Monetary policy ruled the day as the markets continued to price in further easing by the ECB later today and by the FED next week.

The Stats

Key stats out of the Eurozone on Wednesday included July prelim private sector PMI numbers for France, Germany, and the Eurozone.

According to the latest Markit Surveys, Germany’s manufacturing PMI fell from 45.0 to 43.1, the lowest level in 84-months. According to the latest composite survey,

  • Manufacturing output saw one of its most marked contractions since 2009. New orders, employment and stocks of purchases slid at a faster pace.
  • Manufacturing sector employment saw the most marked fall in payrolls in 7-years.
  • Factory export orders saw the sharpest fall in over 10-years, attributed to weaker demand from China and for autos.
  • Confidence amongst manufacturers towards future output sank to its lowest level since late 2012.
  • The service sector PMI fell from 55.8 to 55.4, with services companies seeing their weakest optimist since Dec-14.

Things were not much better for France. The manufacturing sector stalled in July, with the PMI falling from 51.9 to 50.0. The service sector PMI also disappointed, falling from 52.9 to 52.2, according to prelim figures.

For the Eurozone, the July composite PMI came in at 51.5, down from 52.2. The manufacturing PMI slid from 47.6 to 46.4, with the services sector PMI falling from 53.6 to 53.3.

According to the latest Eurozone Composite PMI,

  • The Eurozone’s manufacturing PMI Output Index fell from 47.5 to 47.0, a 75-month low, with the manufacturing PMI sitting at a 79-month low.
  • Overall inflows of new work almost stagnated and business sentiment fell to its lowest level since late 2014.
  • The manufacturing sector reported the largest drop in productivity since April 2013. Manufacturers also reported the 2nd largest drop in new orders since 2012. Goods exports fell at the steepest rate since November 2011.

From the U.S, the July Composite PMI increased from 51.5 to 51.6. The upside came off the back of a pickup in service sector activity that more than offset stagnation in the manufacturing sector. According to the latest Markit PMI survey,

  • The U.S Composite Output Index rose from 51.5 to a 3-month high 51.6, supported by an increase in the services business activity index. The index rose from 51.5 to a 3-month high 52.2.
  • In the manufacturing sector, the PMI fell from 50.6 to a 118-month low 50.0. The Manufacturing Output Index fell from 51.2 to a 119-month low 48.9.

The Market Movers

From the DAX, the auto sector was amongst the best performers on the day. Volkswagen led the way with a 0.83% gain, closely followed by Continental, which rose by 0.46%. BMW and Daimler also saw green, rising by 0.37% and 0.33% respectively.

Disappointing earnings results weighed on Deutsche Bank, which fell by 0.62% on the day. Commerzbank managed a 0.39% rise.

From the CAC, BNP Paribas eked out a 0.01% gain, while Soc Gen and Credit Agricole rose by 0.59% and by 0.18% respectively. Renault also found support on the day, rising by 1.1% on Friday.

The Day Ahead

It’s a relatively busy day on the economic calendar. July IFO Business Climate Index numbers are due out of Germany early on. In the early afternoon, France’s jobseeker figures are also due out, though will unlikely have a material impact.

Germany’s IFO numbers will provide the majors with direction ahead of the ECB monetary policy decision and press conference.

The markets will be looking for further easing ahead of the ECB press conference. It may ultimately boil down to Draghi on the day. A cut in rates and assurances of further action if needed would be a positive for the majors.

There will also be corporate earnings to consider on the day, with earnings from both Germany and the U.S in the spotlight.

At the time of writing, the DAX was up by 57.5 points, while the Dow Mini was up by 51 points.

Don't miss a thing!

Discover what's moving the markets. Sign up for a daily update delivered to your inbox

Latest Articles

See All

Expand Your Knowledge

See All

Top Promotions

Top Brokers

IMPORTANT DISCLAIMERS
The content provided on the website includes general news and publications, our personal analysis and opinions, and contents provided by third parties, which are intended for educational and research purposes only. It does not constitute, and should not be read as, any recommendation or advice to take any action whatsoever, including to make any investment or buy any product. When making any financial decision, you should perform your own due diligence checks, apply your own discretion and consult your competent advisors. The content of the website is not personally directed to you, and we does not take into account your financial situation or needs.The information contained in this website is not necessarily provided in real-time nor is it necessarily accurate. Prices provided herein may be provided by market makers and not by exchanges.Any trading or other financial decision you make shall be at your full responsibility, and you must not rely on any information provided through the website. FX Empire does not provide any warranty regarding any of the information contained in the website, and shall bear no responsibility for any trading losses you might incur as a result of using any information contained in the website.The website may include advertisements and other promotional contents, and FX Empire may receive compensation from third parties in connection with the content. FX Empire does not endorse any third party or recommends using any third party's services, and does not assume responsibility for your use of any such third party's website or services.FX Empire and its employees, officers, subsidiaries and associates, are not liable nor shall they be held liable for any loss or damage resulting from your use of the website or reliance on the information provided on this website.
RISK DISCLAIMER
This website includes information about cryptocurrencies, contracts for difference (CFDs) and other financial instruments, and about brokers, exchanges and other entities trading in such instruments. Both cryptocurrencies and CFDs are complex instruments and come with a high risk of losing money. You should carefully consider whether you understand how these instruments work and whether you can afford to take the high risk of losing your money.FX Empire encourages you to perform your own research before making any investment decision, and to avoid investing in any financial instrument which you do not fully understand how it works and what are the risks involved.
FOLLOW US