European Equities: Futures Point to another Jump Ahead of the European Open

The Majors

It was a particularly bullish day for the European majors on Wednesday, following a mixed day on Tuesday.

The DAX30 rallied by 2.07% to lead the way, with the CAC40 and EuroStoxx600 gaining 1.90% and 1.66% respectively.

Economic data from the Eurozone and the U.S took a backseat on the day. A 0.48% slide in the EUR back to sub-$1.19 levels provided support on the day, as the U.S majors struck fresh record highs.

ECB Central banker Phillip Lane had sent the EUR back-peddling from $1.20 levels late on Tuesday. Lane stated that the EUR/USD rate does matter, suggesting that the ECB would need to consider EUR strength.

The Stats

It was a relatively quiet day on the Eurozone economic calendar. Key stats included July retail sales figures from Germany and unemployment numbers from Spain.

In July retail sales fell by 0.9% in Germany, following a revised 1.9% decline in June. Economists had forecast a 0.50% increase in sales.

According to Destatis,

• Year-on-year, retail sales rose by 4.2% following an upwardly revised 6.7% jump.
• Retail sales of food, beverages, and tobacco were up 4.2%.
• In the non-food retail sector, sales were up by 4.4% compared with the same month in 2019.

From Spain, unemployment increased by 29.8k, following an 89.8k slide from the previous month. The numbers had a muted impact on the European majors, however. Economists had forecast a 10.1k rise.

From the U.S

ADP non-farm employment change rose by a disappointing 428k in August, following on from a 212k rise in July. Economists had forecast a 950k rise.

The Market Movers

For the DAX: It was a particularly bullish day for the auto sector on Wednesday. Continental and Daimler rallied by 3.57% and by 2.33% to lead the way. BMW and Volkswagen saw more modest gains of 1.90% and 1.27% respectively.

It was a bearish day for the banks, however. Deutsche Bank fell by 0.23%, while Commerzbank slid by 2.43%.

From the CAC, it was another bearish day for the banks. BNP Paribas and Credit Agricole fell by 0.57% and by 0.92% respectively, with Soc Gen sliding by 2.34%.

It was a mixed day for the French auto sector. Peugeot rose by 1.00%, while Renault ended the day down by 0.44%.

Air France-KLM saw red for a 3^rd consecutive day, falling by 2.18%, while Airbus SE found further support, rallying by 3.61%

On the VIX Index

The pendulum swung back in favor of the VIX on Wednesday. Reversing a 1.10% fall from Tuesday, the VIX rose by 1.72% to end the day at 26.57.

The upside on the day came in spite of the U.S majors hitting fresh record highs on the day.

The S&P500 and the Dow rallied by 1.54% and by 1.59% respectively, with the NASDAQ gaining 0.98%.

The Day Ahead

It’s a busy day ahead on the Eurozone economic calendar. Key stats include August service and composite PMIs from Italy and Spain and the Eurozone’s retail sales figures for July.

Finalized August services and composite PMIs are also due out of France, Germany, and the Eurozone.

Barring deviation from prelim numbers, the focus will likely be on Spain, Italy, and the Eurozone’s PMIs.

From the U.S, the weekly jobless claims and August ISM Non-manufacturing PMI numbers will also influence later in the day.

Ahead of the European open, China’s services PMI and the U.S equity market rally from Wednesday will set the tone.

The Futures

In the futures markets, at the time of writing, the DAX was up by 101 points, while the Dow was down by 40 points.

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