European Equities: German Business Sentiment and FED Chair Powell in Focus

The Majors

It was another bullish day for the European majors on Thursday, with the majors logging a 3^rd consecutive day in the green.

The CAC40 rose by 0.98% to lead the way once more, with the DAX30 and the EuroStoxx600 rising by 0.88% and 0.90% respectively.

Market reaction to the FOMC projections from overnight on Wednesday provided support, offsetting disappointing private sector PMI numbers.

Easing concerns over an Evergrande default added further support to the majors on the day.

The Stats

It’s a was a particularly busy day on the Eurozone economic calendar. Prelim private sector PMIs for France, Germany, and the Eurozone were in focus.

In September, the French Manufacturing PMI fell from 57.5 to 55.2, with the Services PMI down from 56.3 to 56.0.

Germany’s Manufacturing PMI declined from 62.6 to 58.5, with the Services PMI falling from 60.8 to 56.0.

As a result, the Eurozone’s Manufacturing PMI fell from 61.4 to 58.7, and the Services PMI down from 59.0 to 56.3.

According to the Eurozone’s September Composite survey,

• Business activity grew at a markedly reduced rate, reflecting the peaking of demand in Q3, supply chain bottlenecks, and lingering concerns over the pandemic.
• Increased concerns over the Delta variant hit business expectations.
• As a result, the rate of job creation moderated further from July’s 21-year peak.
• Costs rose at the fastest pace in 21-years, however, as demand continued to outstrip supply.
• New export order growth slowed to its lowest level since February, cooling sharply in the manufacturing sector.

From the U.S

Economic data included the weekly jobless claims and prelim private sector PMI numbers.

In the week ending 17^th September, initial jobless claims increased from 335k to 351k. Economists had forecast a fall to 320k.

From the private sector, a slowdown in growth was more modest than seen across the Eurozone.

The Manufacturing PMI slipped from 61.1 to 60.5, with the Services PMI declining from 55.1 to 54.4. As a result, the Composite PMI fell from 55.4 to 54.5. Economists had forecast an increase to 59.5.

The Market Movers

For the DAX: It was a mixed day for the auto sector on Thursday. BMW slipped by 0.07% to buck the trend on the day. Continental rallied by 2.66% to lead the way, however, with Daimler ending the day up by 1.55%. Volkswagen rose by a more modest 1.05%.

It was a bullish day for the banks. Deutsche Bank and Commerzbank saw gains of 1.67% and 2.33% respectively.

From the CAC, it was a bullish day for the banks. Soc Gen and Credit Agricole rallied by 2.58% and by 2.65% respectively, with BNP Paribas up by 2.26%.

It was also a bullish day for the French auto sector. Stellantis NV and Renault ended the day up by 1.93% and by 2.83% respectively.

Air France-KLM and Airbus SE saw modest gains of 0.49% and 0.73% respectively.

On the VIX Index

It was a 3^rd consecutive day in the red for the VIX on Thursday.

Following a 14.33% slide from Wednesday, the VIX fell by 10.73% to end the day at 18.63.

The NASDAQ rose by 1.04%, with the Dow and S&P500 ending the day up by 1.48% and by 1.21% respectively.

The Day Ahead

It’s a quieter day ahead on the Eurozone’s economic calendar.

From the Eurozone, Germany’s IFO Business Climate figures will be in focus. Following disappointing PMI numbers from Thursday, we can expect today’s figures to influence.

From the U.S, it’s also a quieter day ahead, with economic data limited to housing sector numbers. While the stats should have a muted impact on the majors, FED Chair Powell is scheduled to speak later in the day. Expect any chatter on the economy or monetary policy to influence.

Away from the economic calendar, Evergrande will continue to be an area of interest.

The Futures

In the futures markets, at the time of writing, the Dow Mini was up by 27 points.

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