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Economic Calendar:

Tuesday, 24th September

  • German Ifo Business Climate Index (Sep)

Thursday, 26th September

  • GfK German Consumer Climate (Oct)
  • ECB Economic Bulletin

Friday, 27th September

  • French Consumer Spending (MoM) (Aug)

The Majors

The European majors hit reverse on Monday, with the CAC40 leading the way down with a 1.05% loss. Close behind were the DAX30 and EuroStoxx600, which fell by 1.01% and 0.80% respectively.

Futures had pointed to a testy start through the Asian session as the markets responded to Trump’s comments from Friday. The U.S President had stated that he was not in any hurry to end the trade war ahead of next year’s presidential election.

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It was ultimately the stats that did the damage on the day, however.

Late in the European session, ECB President Draghi also spoke, though had a muted impact on the majors. Draghi reiterated the ECB’s commitment to delivering support, whilst also highlighting continued uncertainties.

The Stats

It was a busy day on the Eurozone economic calendar on Monday. Economic data included prelim September private sector PMIs out of France, Germany, and the Eurozone.

  • French Manufacturing PMI (Sep) Prelim fell from 51.1 to 50.3, which was worse than a forecast of 51.2.
  • French Services PMI (Sep) Prelim slid from 53.4 to 51.6, which was also worse than a forecast of 53.2.
  • German Manufacturing PMI (Sep) Prelim declined from 43.5 to 41.4. Economist had forecast a rise to 44.0.
  • German Services PMI (Sep) Prelim slid from 54.8 to 52.5, which was worse than a forecast of 54.3.
  • Eurozone Manufacturing PMI (Sep) Prelim slipped from 47.0 to 45.6. Economists had forecast a rise to 47.3.
  • Eurozone Markit Composite PMI (Sep) Prelim fell from 51.9 to 50.4, which was worse than a forecast of 50.4.
  • Eurozone Services PMI (Sep) Prelim declined from 53.5 to 52.0, falling beyond a forecasted 53.3.

According to the Eurozone Composite PMI Survey,

  • The Composite Output Index slid to a 75-month low in September.
  • Things were not much better for the Eurozone’s Manufacturing Output Index, which slid to an 81-month low.
  • Also of concern was a fall in the Services PMI Activity Index to an 8-month low.
  • At composite level,
    • A slowdown in new order growth for both goods and services weighed. New orders slid at the sharpest rate since June 2013.
    • Expectations for the year ahead remained at one of the lowest levels since 2012.
    • The doom and gloom led to the slowest pace of hiring of new staff since January 2015. It was also the 3rd consecutive monthly slowdown in the pace of job creation.
  • By member state,
    • Germany saw output fall for the first time since April 2013, with the rate of decline the steepest since October 2012.
    • New orders fell at the sharpest rate for 7-years, with job growth slowing to the smallest gain in 6-years.
    • In France, growth of both output and new orders hit 4-month lows, with exports on the slide once more.

From the U.S

Economic data was mixed on the day. Whilst manufacturing sector activity picked up in September, the service sector held steady. The Composite PMI rose from 50.7 to 51.0.

The Service PMI rose from 50.7 to 50.9, with the manufacturing PMI rising from 50.7 to 51.0.

Economists had forecasted the service PMI to rise to 51.3, and for the Manufacturing PMI to fall to 49.6.

The Market Movers

From the DAX, it was a bearish day for the auto sector on Monday. Daimler and BMW led the way down, with losses of 2.05% and 1.46% respectively. Volkswagen and Continental weren’t far behind with losses of 1.37% and 0.66% respectively.

Things were no better for the banks. Deutsche Bank slid by 2.34%, while Commerzbank tumbled by 7.46%.

From the CAC, it was also bearish for the banks. Soc Gen and BNP Paribas slid by 3.01% and by 2.84% respectively. Credit Agricole saw a more modest 1.33% loss on the day. The auto sector also closed out the day in the red. Renault fell by 1.83%, whilst Peugeot slid by 4.08%.

On the VIX Index

The VIX Index resumed its downward trend, with a 2.61% fall to 14.9. For the current month, the VIX has now seen red on 13 of the last 15 sessions.

On the day, the minor loss came as the U.S majors closed out the day flat. Relatively steady private sector PMI numbers for the U.S provided support on the day.

The Day Ahead

It’s a relatively quiet day ahead on the Eurozone economic calendar. Germany’s September Ifo Business Climate Index and sub-index figures are due out.

Following some quite disappointing private sector PMIs from the Eurozone, there’s unlikely to be too much optimism in today’s numbers.

From the U.S, consumer confidence figures due out late in the European session will also influence the European majors on the day.

Outside of the numbers, geopolitical risk will continue to be a driving force. Both Brexit and any further chatter from Beijing and Washington on trade will influence.

In the futures markets, at the time of writing, the DAX was up by 47 points, while the Dow Mini was up by 108 points.

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