European Equities – Economic Data and COVID-19 News in Focus after the Holidays
Tuesday, 6th April
Eurozone Unemployment Rate (Feb)
Wednesday, 7th April
Spanish Services PMI (Mar)
Italian Services PMI (Mar)
French Services PMI (Mar) Final
German Services PMI (Mar) Final
Eurozone Markit Composite PMI (Mar) Final
Eurozone Services PMI (Mar) Final
Thursday, 8th April
German Factory Orders (MoM) (Feb)
German IHS Markit Construction PMI (Mar)
Friday, 9th April
German Industrial Production (MoM) (Feb)
German Trade Balance (Feb)
It was a bullish end to the week for the European majors last Thursday. The DAX30 and the EuroStoxx600 rose by 0.66% and by 0.61% respectively, with the CAC40 gaining 0.59%.
Economic data from the Eurozone and the U.S drove the DAX30 to a record high and the EuroStoxx600 to within range of its all-time high.
Adding further support to riskier assets was the U.S administration’s spending plans that is expected to further drive economic growth.
The market’s optimistic outlook offset negative sentiment towards COVID-19 and vaccine shortages across the EU. This was in spite of the World Health Organization putting the spotlight on the EU and its struggles to bring the pandemic under control.
It was a busy day on the economic calendar on Thursday. German retail sales and Spanish and Italian manufacturing PMIs were in focus.
Finalized manufacturing PMIs for France, Germany, and the Eurozone also drew attention, however.
German Retail Sales
In the month of February, retail sales rose by 1.2% to partially reverse a 4.5% slide in January. Economists had forecast a 2% increase.
According to Destatis,
- In comparison to February 2020, the month before the COVID-19 outbreak in German, turnover was 5.4% lower in February 2021.
- Retail sales were down 9% on the same month a year earlier.
Manufacturing Sector PMIs
Both Spain and Italy reported a pickup in manufacturing sector activity.
In March, Spain’s manufacturing PMI rose from 52.9 to 56.9, it’s highest level since Dec-2006, with Italy’s PMI increasing from 56.9 to 59.8. The March jump in Italy signaled the steepest improvement in manufacturing conditions for 21 years.
Economists had forecasted Spain’s PMI to rise to 56.0 and for Italy’s to rise to 59.8.
For France, Germany, and the Eurozone, finalized manufacturing PMI for March were also in focus.
The French Manufacturing PMI rose from 56.1 to 59.3, which was up from a prelim 58.8.
Germany’s Manufacturing PMI increased from 60.7 to an all-time high 66.6, which was in line with prelim.
In March, the Eurozone’s Manufacturing PMI increased from 57.9 to 62.5, which was up from a prelim 62.4.
According to the March survey,
- There were record increases in output, new orders, exports, and purchasing activity.
- Supply side delays drove input costs up at the sharpest pace in a decade.
By country, Germany and the Netherlands ranked 1st and 2nd with record high PMIs.
Austria ranked 3rd with a 39-month high 63.4. Italy and France saw PMIs hit 252-month and 246-month highs.
Greece sat at the bottom of the table with a 13-month high 51.8.
From the U.S
Manufacturing sector PMI numbers were also in focus along with weekly jobless claim figures.
The stats were mixed on the day, with a pickup in initial jobless claims disappointing late in the European session.
In the week ending 26th March, initial jobless claims increased from a revised 658k to 719k. Economists had forecast a more modest increase to 680k.
Manufacturing PMI numbers were positive, however.
The ISM Manufacturing PMI increased from 60.8 to 64.7 in March, with the employment sub-index climbing from 54.4 to 59.6.
Ahead of the European Open
Private sector PMI figures from China failed to peg the majors back in spite of slower growth in the manufacturing sector.
China’s Caixin Manufacturing PMI slipped from 50.9 to 50.6 in March. While down to an 11-month low, optimism across the sector was up in the month, which limited the damage.
The Market Movers
For the DAX: It was a mixed day for the auto sector on Thursday. Daimler fell by 0.55%, while Volkswagen and BMW ended the day with gains of 0.65% and 0.43% respectively. Continental rose by 1.33%, however, to lead the way.
It was a relatively bullish day for the banks, however. Deutsche Bank and Commerzbank rose by 0.41% and by 0.23% respectively.
From the CAC, it was a bullish day for the banks. BNP Paribas and Credit Agricole rose by 0.52% and by 0.75% respectively, with Soc Gen gaining 1.64%.
It was also a bullish day for the French auto sector. Stellantis NV rose by 0.34%, with Renault rallying by 2.79%.
Air France-KLM rose by 0.78%, with Airbus SE jumping by 4.02%.
On the VIX Index
It was a 3rd consecutive day in the red for the VIX on Thursday.
Following on from a 1.07% decline on Wednesday, the VIX slid by 10.67% to end the day at 17.33.
The NASDAQ and the S&P500 rose by 1.76% and by 1.18% respectively, with the Dow gaining by 0.52%.
The Day Ahead
It’s a relatively quiet day ahead on the European economic calendar. Eurozone unemployment figures for March are due out later this morning.
Barring particularly dire numbers, however, the stats should have limited impact on the European majors.
With France and a number of other member states reintroducing lockdown measures, February’s stats will be considered dated.
From the U.S, JOLTs job openings for February are due out later today. We would also expect these numbers to have a muted impact on the majors.
With the European markets having been closed on Friday and Monday, expect last week’s NFP numbers and Monday’s ISM Non-Manufacturing PMI figures from the U.S to have greater influence.
Both the ISM Non-Manufacturing PMI and nonfarm payroll figures were positive for riskier assets.
Ahead of the European open today, service sector PMI numbers from China will also draw attention.
Away from the stats, expect increased sensitivity to any negative news updates on COVID-19 and any pick up in geopolitical risk.
In the futures markets, at the time of writing, the Dow Mini was down by 41 points, while the DAX30 was up by 188 points.
For a look at all of today’s economic events, check out our economic calendar.