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Economic Calendar:

Monday, 21st September

ECB President Lagarde Speaks

Tuesday, 22nd September

Eurozone Flash Consumer Confidence

Wednesday, 23rd September

GfK German Consumer Climate (Oct)

Spanish GDP (QoQ) (Q2)

French Manufacturing PMI (Sep) Prelim

French Services PMI (Sep) Prelim

German Manufacturing PMI (Sep) Prelim

German Services PMI (Sep) Prelim

Eurozone Manufacturing PMI (Sep) Prelim

Eurozone Markit Composite PMI (Sep) Prelim

Eurozone Services PMI (Sep) Prelim

Thursday, 24th September

German IFO Business Climate Index (Sep)


The Majors

It was a bearish end to the week for the European majors on Friday. The CAC40 slid by 1.22%, with the DAX30 and EuroStoxx600 ending the day with losses of 0.70% and 0.66% respectively.

A fresh spike in new COVID-19 cases across EU member states weighed on the European majors on the day.

Ahead of the European session, the WHO had warned of a “very serious situation” developing in Europe. In a bid to revive consumption and tourism, governments have been active in reopening the respective economies.

With a reliance on consumption to deliver an economic recovery, the latest spikes raise the chances of fresh lockdown measures.

Adding further pressures on the majors at the end of the week were Brexit and U.S – China tensions.

The Stats

It was yet another quiet day on the Eurozone economic calendar. Key stats included August wholesale inflation figures from Germany.

Germany’s producer price index stalled in August, after having risen by 0.20% in July. Whilst beating forecasts of a 0.1% decline, market jitters over deflationary pressures tested the majors going into the European open.

With stats on the lighter side, there was little to distract the markets from the latest U.S-China spat, Brexit, and COVID-19, however.

From the U.S

Key stats included prelim September consumer sentiment and expectations figures.

While both stats were skewed to the positive, both indicators remained well below pre-pandemic levels.

In September, the Michigan Consumer Sentiment Index rose from 74.1 to 78.9, according to prelim figures. While coming in ahead of a forecasted 75.0, the indicator had stood at 101.0 for January.

The Market Movers

For the DAX: It was a bearish day for the auto sector on Friday. Continental and Volkswagen slid by 3.97% and by 3.52% respectively. BMW and Daimler saw more modest losses of 1.72% and 1.91% respectively.

It was also a bearish day for the banks. Deutsche Bank and Commerzbank fell by 1.38% and by 3.11% respectively.

From the CAC, it was a bearish day for the banks. Credit Agricole and Soc Gen fell by 3.16% and by 3.05% respectively. BNP Paribas ended the day down by 2.34%.

It was a particularly bearish day for the French auto sector, however. Peugeot and Renault ended the day with losses of 4.35% and 4.03% respectively.

Air France-KLM fell by 1.93%, with Airbus SE sliding by 3.54%.

On the VIX Index

It was back into the red for the VIX, bringing to an end a run of 2 consecutive days in the green.

On Friday, the VIX fell by 2.38%. Reversing a 1.61% gain from Thursday, the VIX ended the day at 25.83.

U.S – China tension over TikTok and WeChat, rising COVID-19 cases, and the FED’s dovish outlook weighed on the majors.

The NASDAQ and S&P500 fell by 1.07% and by 1.12% respectively, with the Dow seeing a more modest loss of 0.88%.

The Day Ahead

It’s a quiet day ahead on the Eurozone economic calendar. There are no material stats due out to provide the majors with direction.

With no material stats from the U.S, talk of retaliation from Beijing over Trump’s targeting of Chinese companies will test the majors.

There is also Brexit to factor in and the recent spike in new COVID-19 cases to consider. A continued rise in new cases could see a reintroduction of containment measures that would throw cold water over any sustainable economic recovery.

On the monetary policy front, Lagarde is due to speak late in the day. There are unlikely to be too many surprises, however, following the latest ECB press conference. That’s assuming that Lagarde holds back from talk of exchange rate risk to the Eurozone economic recovery…

The Futures

In the futures markets, at the time of writing, the Dow was up by 15 points, while the DAX was down by 32 points.

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

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