European Equities: Eurozone Industrial Production in Focus

Central bank commentary provided the majors with support, while U.S inflation figures weighed on riskier assets on the day.

ECB President Lagarde continued to reassure the markets that there would be no jumping the gun on tightening monetary policy.

A sharp pickup in U.S inflationary pressure pegged the European majors back, however.

The Stats

Inflation was in focus on Tuesday, with finalized German and French inflation figures released early in the European session.

German Consumer Prices

In June, the annual rate of inflation softened from 2.5% to 2.3%, which was in line with prelim figures. Month-on-month, consumer prices rose by increased by 0.4%, following a 0.5% increase in May.

According to Destatis,

• The prices of goods (total) increased by 3.1% between June 2020 and June 2021.
• Energy prices were up by 9.4%, which was attributed temporary special effects, in particular the CO2 charge introduced at the start of the year.
• Food prices were up a below-average 1.2% in June, however, compared with June 2020.
• The prices for services (total) increased by 1.6% in June compared with the same month a year earlier.

French Consumer Prices

The annual rate of inflation picked up from 1.4% to 1.5% in June, which was in line with prelim figures. Month-on-month, French consumer prices increased by 0.2% following a 0.3% rise in May.

According to Insee.Fr,

• The prices for services rose by just 0.1%, after a 0.3% increase in May.
• Food prices hit reverse, falling by 0.7% following a 0.5% increase in May.
• Tobacco prices were stable in the month.
• Year-on-year, the uptick in consumer prices came from a pickup in prices for manufactured goods and prices for energy.
• Manufactured goods prices increased by 0.5%, with energy prices up 1.1%. Prices for manufactured goods and energy had risen by 0.1% and by 0.5% respectively in May.

From the U.S

Inflation figures were also in focus late in the European session.

The annual rate of inflation accelerated from 5% to 5.4%, with the core annual rate of inflation picking up from 3.8% to 4.5%.

Month-on-month, consumer prices increased by 0.9%, with core consumer prices also up 0.9%. In May, consumer prices and core consumer prices had risen by 0.6% and by 0.7% respectively.

The Market Movers

For the DAX: It was a bearish day for the auto sector on Tuesday. Volkswagen slid by 1.60%, with BMW falling by 0.84%. Daimler and Continental ended the day with more modest losses of 0.38% and 0.54% respectively.

It was also a bearish day for the banks. Deutsche Bank and Commerzbank fell by 1.53% and by 2.05% respectively.

From the CAC, it was a bearish day for the banks. BNP Paribas and Soc Gen declined by 0.41% and by 0.97% respectively, with Credit Agricole falling 1.56%.

It was also a bearish day for the French auto sector. Stellantis NV and Renault ended the day down by 1.44% and 1.76% respectively.

Air France-KLM slid by 2.06%, with Airbus SE falling by 0.86%.

On the VIX Index

It was back into the green for the VIX on Tuesday.

Reversing a 0.06% loss from Monday, the VIX rose by 5.88% to end the day at 17.12.

The Dow slipped by 0.31%, with the NASDAQ and the S&P500 ending the day down 0.38% and by 0.35% respectively.

The Day Ahead

It’s a relatively quiet day ahead on the economic calendar. Finalized June inflation figures for Spain and Industrial production figures for the Eurozone will be in focus later today.

Expect the Eurozone’s industrial production figures to be key. Weak numbers will test market optimism towards the economic recovery.

From the U.S, there are no material stats due out to provide the majors with direction. The lack of stats will leave corporate earnings in focus.

The Futures

In the futures markets, at the time of writing, the Dow Mini was up by 10 points.

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