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Economic Calendar:

Thursday, 6th May 2021

German Factory Orders (MoM) (Mar)

IHS Markit Construction PMI (Apr)

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Eurozone Retail Sales (MoM) (Mar)

Friday, 7th May 2021

German Industrial Production (MoM) (Mar)

German Trade Balance (Mar)

ECB President Lagarde Speech


The Majors

It was a bullish day for the European majors on Wednesday, which were on the rebound from Tuesday’s pullback. The DAX30 rallied by 2.12%, with the CAC40 and the EuroStoxx600 ending the day up by 1.40% and by 1.82% respectively.

Corporate earnings, economic data, and a pickup in vaccination rates across the EU supported the more optimistic economic outlook.

With the EU making progress on the vaccination front, plans across the EU to reopen borders this summer also delivered a boost.

The Stats

It was a particularly busy day on the economic calendar. Service sector PMI figures for Italy and Spain were in focus early in the session.

Finalized services and composite PMIs from France, Germany, and the Eurozone also drew attention.

In April, Spain’s services PMI rose from 48.1 to 54.6, while Italy’s services PMI slipped from 48.6 to 47.3.

Economists had forecast PMIs of 50.0 and 49.8 respectively.

From France, the services PMI rose from 47.9 to 50.3, which was down from a prelim 50.4.

Germany’s services PMI fell from 50.8 to 49.9, which was down from a prelim 50.1.

The Eurozone

For the Eurozone, the Services PMI rose from 49.6 to 50.5, which was up from a prelim 50.3. As a result, the composite PMI increased from 53.2 to 53.8, which was up from a prelim 53.7.

According to the finalized Markit Composite Survey,

  • The latest data from the private sector indicated the fastest expansion since July and the second best in over two-and-a-half years.
  • Goods producers continued to lead the way, with output rising at a rate little changed from March’s record.
  • Service sector output returned to growth following 7-months of continuous contraction.
  • Germany led the way again in terms of overall growth, supported by strong manufacturing sector growth.
  • A jump in service sector activity in Spain saw private sector growth at its strongest in over 2-years.
  • Growth in both France and Italy was modest in April, while growth in France was the best in the past 8-months.

The Details

  • New orders across the private sector rose at the most marked pace in over two-and-a-half years.
  • Firms reported higher sales in both domestic and international markets.
  • The rate of backlog growth was the sharpest for 39-months and supported a pickup in hiring.
  • Firms increased staffing levels to the strongest degree for 2-years.
  • Optimism across the private sector reached its highest since composite data were first available in mid-2012.

From the U.S

It was a busy day, with ADP nonfarm employment change and service sector PMIs in focus late in the European session.

In April, nonfarm payrolls increased by 742k according to the ADP, which was up from 517k in March. Economists had forecast a rise of 800k.

From the services sector, the ISM Non-Manufacturing PMI slipped from 63.7 to 62.7, coming up short of a forecasted 64.3.

Finalized Markit survey services and composite PMIs for April were also out but had a muted impact on the majors.

The Market Movers

For the DAX: It was a mixed day for the auto sector on Wednesday. Daimler rallied by 2.57%, with BMW and Volkswagen gaining 1.25% and 1.55% respectively. Continental bucked the trend, however, falling by 0.20%.

It was a bullish day for the banks. Deutsche Bank rose by 1.89%, with Commerzbank ended the day up by 0.78%.

From the CAC, it was a bullish day for the banks. BNP Paribas rallied by 3.49%, with Credit Agricole and Soc Gen gaining 1.95% and 1.87% respectively.

It was also a bullish day for the French auto sector. Stellantis NV jumped by 7.25% off the back of better-than-expected earnings results. Renault ended the day up by 3.13%.

Air France-KLM fell by 1.72%, with Airbus SE slipping by 0.17%.

On the VIX Index

It was back into the red for the VIX on Wednesday, marking a 2nd daily loss in 5-sessions.

Partially reversing a 6.39% gain from Tuesday, the VIX fell by 1.69% to end the day at 19.15.

The NASDAQ fell by 0.37%, while the Dow and the S&P500 saw gains of 0.29% and 0.07% respectively.

The Day Ahead

It’s a relatively busy day ahead on the European economic data front. Key stats include German factory orders and Eurozone retail sales figures.

Expect March factory orders from Germany to have a greater impact on the European majors.

From the U.S, weekly jobless claims figures will also provide direction later in the session.

The Futures

In the futures markets, at the time of writing, the Dow Mini was down by 2 points.

For a look at all of today’s economic events, check out our economic calendar.

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