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Bob Mason
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Economic Calendar:

Monday, 19th August

  • Eurozone Core CPI (YoY) (Jul)
  • Eurozone CPI (MoM) (Jul)
  • Eurozone CPI (YoY) (Jul)

Tuesday, 20th August

  • German PPI (MoM) (Jul)

Thursday, 22nd August

  • French Manufacturing PMI (Aug) Prelim
  • French Services PMI (Aug) Prelim
  • German Manufacturing PMI (Aug) Prelim
  • German Services PMI (Aug) Prelim
  • Eurozone Manufacturing PMI (Aug) Prelim
  • Eurozone Markit Composite PMI (Aug) Prelim
  • Eurozone Services PMI (Aug) Prelim
  • ECB Publishes Account of Monetary Policy Meeting

The Majors

The European majors bounced back on Friday. Leading the way was the DAX30, which rallied by 1.31%. The CAC40 and EuroStoxx600 were closed behind with gains of 1.22% and 1.24% respectively.

For the week, Friday’s gains were not enough to reverse losses from earlier in the week, however. The DAX30 led the way down, falling by 1.12%. For the EuroStoxx600 and CAC40, the pair saw more modest losses of 0.52% and 0.51% respectively.

The bounce back on Friday came in spite of China threatening retaliatory measures in spite of a delay in tariffs on certain Chinese goods. Market sentiment towards the extended trade war and the global economic outlook remained negatives.

Hopes of central bank support contributed to the upside at the end of the week, as did a string of better than expected stats.

The Stats

On the data front, the Eurozone’s June trade data provided direction in the early part of the European session.

The Eurozone’s trade surplus narrowed from €22.6bn to €20.6bn in June, which was far better than a forecasted narrowing to €16.3bn.

According to Eurostat,

  • Exports of goods to the rest of the world stood at €189.9bn in June, down by 4.7% year-on-year.
  • Imports from the rest of the world stood at €169.3bn, falling by 4.1%.
  • Intra-euro area trade fell by 6.6% to €160.5bn.
  • Year-to-date, euro area exports to the rest of the world increased by 3.2% to €1,163.3bn compared to the same period in 2018.
  • Euro area imports rose by 3.7% to €1,061.2bn, leading to a narrowing of the trade surplus from €103.6bn to €102.2bn.
  • Intra-euro area trade rose by 1.8% to €1,001.4bn.

From the U.S, housing sector data and softer consumer sentiment figures had a muted impact on the majors late in the day.

The Market Movers

From the DAX, Deutsche Bank led the market rebound on the day, rallying by 7.08%. Commerzbank came in a distant second, with a 5.95% gain.

For the auto sector, Daimler and BMW were the best performers. The pair rose by 2.12% and by 1.91% respectively. Continental and Volkswagen weren’t far behind with gains of 1.82% and1.74% respectively.

From the CAC, the banking sector also found support, though trailed the likes of Deutsche Bank. Soc Gen and Credit Agricole were the best performers on the CAC40 on the day. The pair rallied by 3.25% and 3.23% respectively. BNP Paribas trailed with a 2.55% rise.

Renault and Peugeot also trailed their German counterparts, with gains of 1.13% and 0.64% respectively on the day.

The Day Ahead

It’s a relatively quiet day ahead on the Eurozone economic calendar. Key stats on the day are limited to the Eurozone’s June inflation figures.

Barring any deviation from prelim numbers, the focus will be on the headline month-on-month number.

Following some bearish ECB chatter late last week, however, inflation will need to accelerate to pressure the majors.

With no material stats due out of the U.S, any chatter on trade will continue to be the key driver.

In the futures markets, at the time of writing, the DAX was up by 38 points, with the Dow Mini up by just 112 points.

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