European Equities: Futures Point to the Red Ahead of Key Stats from the U.S

The Majors

It was a relatively bullish day for the European majors on Wednesday. The CAC40 and DAX30 rose by 0.79% and by 0.74% respectively, with the EuroStoxx600 rising by 0.65%.

The upside came ahead of the FOMC meeting minutes scheduled for release after the European close.

With economic data on the lighter side, there was little to stop the European majors from tracking the U.S equity markets.

Negative sentiment towards the rising tensions between the U.S and China and the failure by lawmakers to deliver the COVID-19 stimulus package lingered, however.

The Stats

It was a quiet day on the Eurozone economic calendar. Key stats included the Eurozone’s finalized inflation figures for July.

In July, the core annual rate of inflation picked up from 0.8% to 1.2%, which was in line with prelim figures.

While consumer prices fell by 0.4% in July, reversing a 0.3% rise in June, the annual rate of inflation picked up from 0.3% to 0.4%. This was also in line with prelim figures and forecasts.

According to Eurostat,

• The lowest annual rates were registered in Greece (-2.1%), Cyprus (-2.0%), and Estonia (-1.3%).
• In July, the highest contribution to the annual rate of inflation came from non-energy industrial goods and services. Both increased by 0.42 percentage points.
• Food, alcohol & tobacco prices (+0.38 pp) also provided support, while energy prices (-0.83 pp) weighed.

From the U.S

It was a quiet day on the economic calendar, with no material stats from the U.S to influence through the European session.

While there were no stats, the markets were looking ahead to the FOMC meeting minutes due out after the European close.

The Market Movers

For the DAX: It was another mixed day for the auto sector on Wednesday. Continental fell by 1.10% to buck the trend on the day. BMW and Daimler saw gains of 0.62% and 0.84% respectively, with Volkswagen ending the day up by 0.22%.

It was a bullish day for the banks. Deutsche Bank reversed Tuesday’s 1.40% loss, rallying by 2.59%, with Commerzbank gaining 2.05%.

From the CAC, it was a bullish day for the banks. BNP Paribas rallied by 2.63%, with Credit Agricole and Soc Gen rising by 1.52% and by 1.27% respectively.

It was also a bullish day for the French auto sector. Peugeot and Renault ended the day with gains of 0.80% and 1.50% respectively.

Air France-KLM found much-needed support, rising by 2.74%, with Airbus SE gaining 1.47% on the day.

On the VIX Index

It was a 2^nd consecutive day in the green for the VIX on Wednesday. Following on from a 0.75% gain on Tuesday, the VIX rose by 4.79% to end the day at 22.54.

The S&P500 and NASDAQ fell by 0.44% and by 0.57% respectively, with the Dow declining by 0.31%.

On Wednesday, the FOMC meeting minutes led to a reversal of gains from earlier in the day.

Ahead of the minutes, the S&P500 had hit another high before the minutes, which delivered yet another gloomy outlook.

The FED cut growth forecasts and put the onus on lawmakers to deliver further fiscal aid to support an economic recovery.

The Day Ahead

It’s another relatively quiet day ahead on the Eurozone economic calendar. Key stats include August wholesale inflation figures from Germany.

A pickup in wholesale inflationary pressures would be positive for the European majors on the day.

We would expect, however, market reaction to the FOMC meeting minutes and to U.S stats later in the day to be key drivers.

From the U.S, August’s Philly FED Manufacturing Index and weekly jobless claims figures are due out later in the day.

Away from the economic calendar, COVID-19, U.S – China tensions, and any updates on the U.S COVID-19 stimulus package will also influence.

The Futures

In the futures markets, at the time of writing, the DAX was down by 98.5 points, with the Dow down by 62 points.

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