European Equities: German Consumer Confidence and U.S Stats in Focus

The Majors

It was a bullish day for the European majors on Thursday.

The CAC40 rallied by 1.12% to lead the way, with the DAX30 and the EuroStoxx600 gaining 0.86% and 0.89% respectively.

Economic data from Germany and a market friendly ECB Economic Bulletin delivered support to the majors.

June’s Economic Bulletin talked of a likely pickup in economic activity in the 2^nd half of the year, while also highlighting the need for policy support.

The optimism was also reflected in Germany’s business sentiment figures for June.

The Stats

Economic data from the Eurozone was on the quieter side on Thursday with German business sentiment in focus.

From the ECB, the June Economic Bulletin also drew attention, however, following Lagarde’s optimistic outlook on the economic recovery.

Spanish GDP numbers for the 1^st quarter were also out but had a muted impact on the majors.

German Business Sentiment

In June, the Ifo Business Climate Index rose from 99.2 to 101.8 in June. Economists had forecast an increase to 100.6.

The Business Expectations sub-index increased from 102.9 to 104.0, with the Current Assessment sub-index climbing from 95.7 to 99.6. Economists had forecasted increases to 103.9 and to 97.8 respectively.

ECB Economic Bulletin

June’s Bulletin talked of a speedier economic recovery, aligned with comments from ECB President Lagarde. Downside risks were mentioned, however, as was the need for continued policy support.

Salient points from the Bulletin included:

• The latest data signal a bounce-back in services activity and ongoing dynamism in manufacturing production.
• Economic activity is expected to accelerate in the 2^nd half of this year, as further containment measures are lifted.
• A pickup in consumer spending, strong global demand, and accommodative fiscal and monetary policies will lend crucial support to the recovery.
• Uncertainties remain, however, as the near-term economic outlook continues to depend on the course of the pandemic and on how the economy responds after reopening.
• Inflation has picked up as a result of transitory factor and an increase in energy prices. It is expected to rise further through the 2^nd half of the year before declining as temporary factors fade out.
• Headline inflation is expected to remain below the Governing Council’s aim over the projection horizon.

From the U.S

It was another busy day on the economic calendar.

Core durable goods and weekly jobless claims figures were the key stats of the day.

Core durable goods orders disappointed, rising by just 0.3% in May. Economists had forecast a 0.8% rise off the back of a 1.7% jump in April.

More significantly, however, initial jobless claims fell from 418k to 411k in the week ending 18^th June. Economists had forecast a more significant decline to 380k.

Following last week’s FOMC press conference and FED Chair Powell testimony this week, labor market conditions will also need to tighten to support a near-term move by the FED.

Thursday’s weaker than expected figures were yet to reflect the FED’s optimistic outlook on the labor market recovery.

Other stats included finalized 1^st quarter GDP numbers, trade data, and durable goods orders. These stats had a muted impact on the majors, however.

The Market Movers

For the DAX: It was a bullish day for the auto sector on Thursday. Continental led the way, rising by 1.12%, with BMW and Daimler gaining 0.70% and 0.81% respectively. Volkswagen ended the day up by a more modest 0.11%.

It was also a bullish day for the banks. Deutsche Bank and Commerzbank ended the day with gains of 1.88% and 0.68% respectively.

From the CAC, it was a bullish day for the banks. BNP Paribas and Credit Agricole rose by 1.16% and by 1.18% respectively. Soc Gen led the way, however, rallying by 3.14%.

It was also a bullish day for the French auto sector. Stellantis NV and Renault ended the day up by 0.91% and by 0.47% respectively.

Air France-KLM fell by 1.22%, while Airbus SE rose by 0.56%.

On the VIX Index

It was a 4^th consecutive day in the red for the VIX on Thursday.

Following a 2.14% fall on Wednesday, the VIX declined by 1.90% to end the day at 15.97.

The Dow rose by 0.95%, with the NASDAQ and the S&P500 ending the day up by 0.69% and by 0.58% respectively.

The Day Ahead

It’s a quieter day ahead on the European economic calendar. German consumer confidence figures for June are due out later this morning.

With the ECB looking to a pickup in consumer spending to fuel economic growth, a pickup in sentiment will likely support the majors.

From the U.S, inflation and personal spending figures will also influence later in the day.

On the monetary policy front, we can also expect central bank chatter to also influence.

Away from the economic calendar, news from the U.S of an infrastructure deal should support the majors going into the open.

The Futures

In the futures markets, at the time of writing, the Dow Mini was up by 107 points.

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