European Equities: Day 2 of Testimony, the ECB and Inflation to Influence…It could be a choppy day ahead. With inflation and the ECB minutes in focus, sentiment towards monetary policy could turn once more…
Thursday, 11th July
- German CPI (MoM) (Jun) Final
- French CPI (MoM) (Jun) Final
- French HICP (MoM) (Jun) Final
- ECB Monetary Policy Meeting Minutes
Friday, 12th July
- Spanish CPI (YoY) (Jun) Final
- Spanish HICP (YoY) (Jun) Final
- Eurozone Industrial Production (MoM) (May)
The majors saw red for a 4th consecutive day on Wednesday. Leading the way down once more was the DAX30, which fell by 0.51%. The EuroStoxx600 fell by 0.2%, with the CAC40 falling by 0.08% on the day.
It was a different story in the U.S, where the S&P500 and NASDAQ rose by 0.45% and by 0.75% respectively. The Dow saw a more modest 0.29% gain on the day.
Driving the majors on the day was sentiment towards monetary policy, with FED Chair Powell’s testimony to Congress and the FOMC meeting minutes in focus.
There were no material stats out of the Eurozone on Wednesday to provide the majors with direction. The lack of stats left the majors sensitive to moves through the Asian session and the U.S economic calendar.
On the U.S economic calendar, it was all eyes on FED Chair Powell’s testimony to Congress. FED Chair Powell reassured the markets that the FED would deliver should the need arise, but held back from fully committing to a rate cut. While sitting on the fence to a certain degree, the tone was on the dovish side.
It wasn’t enough to give the European majors a boost, however.
On the geopolitical front, U.S – China trade talks began on Tuesday, with the U.S administration stating that talks were constructive. The update may well have been an indicator of just how long negotiations could drag out for…
The Market Movers
From the DAX, Deutsche Bank was amongst the top performers on the day, rising by 0.81%. Commerzbank found strong support, rallying by 2.51% as the banking sector bounced back. It was doom and gloom for the auto sector, however. Continental was the worst performer on the day, sliding by 1.82%. Daimler (-1.34%), Volkswagen (-1.05%) and BMW (-0.97%) weren’t far behind…
From the CAC, BNP Paribas ended the day with a 0.28% gain, with Credit Agricole up by 0.32%. Soc Gen led the way, rallying by 1.01%. Renault joined its German peers in the red, falling by 0.94% on the day.
The Day Ahead
It’s a busy day ahead, with finalized June inflation figures due out of France and Germany. Outside of the numbers, the ECB monetary policy meeting minutes are also due out and will influence the majors.
While Draghi had held back from talking about further policy easing at the last press conference, the minutes could provide more color on what lies ahead.
From the U.S session, June inflation figures and FED Chair Powell’s 2nd day of testimony to Congress will also be of influence.
While Powell is unlikely to deliver a different outlook from Wednesday’s testimony, there may be more details to consider.
At the time of writing, the DAX was up by 30.5 points, while the Dow Mini was up by 30 points.