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European Equities: Eurozone Inflation and U.S Monetary Policy in Focus

By:
Bob Mason
Published: Aug 17, 2021, 22:33 UTC

It's a relatively quiet day ahead on the economic calendar. Following losses from the U.S on Tuesday, the market focus will be on FED monetary policy, with the minutes out after the close.

Depositphotos_212162666_s-2019

In this article:

Economic Calendar

Wednesday, 18th August

Eurozone Core Inflation Rate YoY Final JUL

Eurozone Inflation Rate YoY Final JUL

Friday, 20th August

German PPI MoM JUL

The Majors

It was mixed day for the European majors on Tuesday, with the EuroStoxx600 resuming its upward trajectory, albeit modestly.

The CAC40 and the DAX30 fell by 0.28 and by 0.02% respectively, while EuroStoxx600 eked out a 0.07% gain on the day.

Economic data from the Eurozone delivered support, while stats from the U.S were market negative on the day.

Anticipation of FED Chair Powell announcing tapering plans late in the day also pegged the majors back.

Away from the economic calendar, the Delta variant continued to add to market woes on the day following news of New Zealand going into full lockdown.

The Stats

2nd estimate GDP numbers for the Eurozone were in focus late in the European session.

In the 2nd quarter, the economy grew by 2.0%, which was in line with 1st estimate numbers. The economy had contracted by 0.3% in the previous quarter. Year-on-year, the economy grew by 13.6%, down from a 1st estimate 13.7%. The economy had contracted by 1.3% in the quarter prior.

From the U.S

Retail sales and industrial production figures were the key stats of the day.

In July, industrial production rose by 0.9%, month-on-month, following a 0.2% increase in June. Economists had forecast a 0.5% rise.

More significantly, U.S retail sales fell by 1.1% in July versus a forecasted 0.3% decline. In June, retail sales had risen by 0.7%.

Core retail sales declined by 0.4%, month-on-month, following a 1.6% jump in June. Economists had forecast a 0.1% rise in sales.

The Market Movers

For the DAX: It was a bearish day for the auto sector on Tuesday. Continental slid by 2.58%, with Daimler falling by 1.90%. BMW and Volkswagen ended the day down by 1.52% and by 1.31 respectively.

It was also a bearish day for the banks. Deutsche Bank and Commerzbank ended the day with losses of 1.20% and 2.59% respectively.

From the CAC, it was a bearish day for the banks. Soc Gen slid by 2.17%, with BNP Paribas and Credit Agricole ending the day down by 1.84% and by 1.94% respectively.

Things were not much better for the French auto sector. Stellantis NV slid by 2.72%, with Renault falling by 1.38%.

Air France-KLM and Airbus SE saw relatively modest losses of 0.61% and 0.94% respectively.

On the VIX Index

It was a 2nd consecutive day in the green for the VIX on Tuesday.

Following a 4.34% rise on Monday, the VIX jumped by 11.10% to end the day at 17.91.

The Dow and the S&P500 fell by 0.79% and by 0.71% respectively, with the NASDAQ ending the day down by 0.93%.

VIX 180821 Daily Chart

The Day Ahead

It’s a relatively quiet day ahead on the Eurozone’s economic calendar. Finalized July inflation figures for the Eurozone are due out later today.

Barring any marked revision to prelim figures, however, the stats should have a muted impact on the majors.

Housing sector data from the U.S should also have limited impact, as the markets look ahead to the FOMC meeting minutes. The minutes are due out after the European close…

The Futures

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

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

About the Author

Bob Masonauthor

With over 20 years of experience in the finance industry, Bob has been managing regional teams across Europe and Asia and focusing on analytics across both corporate and financial institutions. Currently he is covering developments relating to the financial markets, including currencies, commodities, alternative asset classes, and global equities.

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