European Equities: German Business Sentiment and U.S Stats in FocusFollowing Wednesday’s pullback, German business sentiment figures and the ECB’s Economic Bulletin will be in focus today ahead of key stats from the U.S.
Thursday, 24th June
Spanish GDP (QoQ) (Q1)
German Ifo Business Climate Index (Jun)
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ECB Economic Bulletin
Friday, 25th June
GfK German Consumer Climate (Jul)
It was a bearish day for the European majors on Wednesday.
The DAX30 slid by 1.15%, with the CAC40 and the EuroStoxx600 falling by 0.91% and by 0.58% respectively.
A pickup in Eurozone private sector activity failed to deliver the majors with support. The devil was in the details, with a continued surge in prices charged reigniting inflation fears.
While ECB President Lagarde continued to provide the markets with assurances early in the week, at some point the ECB will need to act. Hopes are that the inflation surge is temporary…
Economic data from the Eurozone was on the busier side on Wednesday with prelim private sector PMIs for June in focus.
According to prelim figures, the manufacturing PMI fell from 59.4 to 58.6, while the services PMI rose from 56.6 to 57.4.
Economists had forecast a manufacturing PMI of 59.0 and a services PMI of 59.4 respectively.
The manufacturing PMI rose from 64.4 to 64.9 with the services PMI increasing from 52.8 to 58.1.
Economists had forecast a manufacturing PMI of 63.0 and a services PMI of 55.5.
In May, the manufacturing PMI held steady at 63.1, while the services PMI increased from 55.2 to a 41-month high 58.0. Economists had forecast PMIs of 62.1 and 57.8 respectively.
A pickup in service sector activity across the Eurozone led to an increase in the composite from 57.1 to a 180-month high 59.2. Economists had forecast a rise to 58.8.
According to the Markit survey,
- Prices charged for goods and services rose at an unprecedented rate, with demand continuing to outstrip supply.
- While firms took on extra staff at the sharpest rate in almost 3-years, backlogs saw a record increase,
- New order growth accelerated to the fastest since June 2006.
- Business confidence rose to the highest level since data was first available in 2012.
From the U.S
Economic data was also on the busier side.
Prelim private sector PMIs for June were also in focus late in the European session.
In June, the manufacturing PMI rose from 62.1 to 62.6, while the services PMI declined from 70.4 to 64.8.
Economists had forecast PMIs of 61.5 and 70.0 respectively.
As a result, the composite PMI declined from 68.7 to 63.9, which was worse than a forecasted decline to 67.0.
Other stats including housing sector numbers for May, which had a muted impact on the majors.
The Market Movers
For the DAX: It was a bearish day for the auto sector on Wednesday. Volkswagen slid by 2.25%, with BMW and Daimler ending the day down by 1.01% and by 1.16% respectively. Continental fell by a more modest 0.16% on the day.
It was also a bearish day for the banks. Deutsche Bank and Commerzbank ended the day with losses of 0.37% and 0.31% respectively.
From the CAC, it was a mixed day for the banks. BNP Paribas and Credit Agricole fell by 0.93% and by 1.08% respectively. Soc Gen bucked the trend, however, rising by 0.37%.
It was also a mixed day for the French auto sector. Stellantis NV fell by 0.47%, while Renault ended the day up by 0.41%.
Air France-KLM and Airbus SE both fell by 1.19% respectively.
On the VIX Index
It was a 3rd consecutive day in the red for the VIX on Wednesday.
Following a 6.88% fall on Tuesday, the VIX slipped by 2.04% to end the day at 16.32.
The NASDAQ rose by 0.13%, while the Dow and the S&P500 ended the day down by 0.21% and by 0.11% respectively.
The Day Ahead
It’s a relatively busy day ahead on the European economic data front. German business sentiment figures for June are due out later this morning.
The markets will be looking for a pickup in business sentiment at the end of the 2nd quarter to support the majors.
Expect any weak numbers to test support for the DAX.
From the ECB, the Economic Bulletin is also due out and will provide the broader markets with direction.
Following Lagarde’s optimistic outlook on the economy at the start of the week, the Economic Bulletin will need to be aligned.
From the U.S, initial jobless claims and core durable goods orders will also provide the majors with direction later in the day.
On the monetary policy front, central bank chatter will also need monitoring.
In the futures markets, at the time of writing, the Dow Mini was up by 47 points.
For a look at all of today’s economic events, check out our economic calendar.