Can the DAX30 hold onto 13,000 levels? Economic data from Germany and the U.S will provide more direction on the day.
German Factory Orders (MoM) (Jul)
German IHS Markit Construction PMI (Aug)
It was a bearish day for the European majors on Thursday. Both the DAX30 and the EuroStoxx600 fell by 1.40% to lead the way down. The CAC40 saw a more modest 0.44% loss on the day.
A falling EUR was not enough to prevent a pullback in the majors that had enjoyed early gains on Thursday.
From the Eurozone, private sector PMI figures for August reflected the effect of the recent spike in new COVID-19 cases in Europe.
The latest PMIs suggested that the wind may have come out of the sails of the V-shaped economic recovery.
Both Italy and Spain saw their respective service sectors contract. The PMIs showed that all of the member states surveyed saw a marked slowdown in private sector growth in August.
It was a particularly busy day on the Eurozone economic calendar. Key stats included service and composite sector PMIs for Italy and Spain and retail sales figures for the Eurozone.
Finalized service and composite PMIs for France, Germany, and the Eurozone were also in focus.
In August, Spain’s Services PMI fell from 51.9 to 47.7. Economists had forecast a slide to 48.0.
Italy’s Services PMI declined from 51.6 to 47.1, which was worse than a forecasted 49.2.
The finalized French PMI came in at 51.5, which was down from a prelim 51.9, while Germany’s came in at 52.5. This was up from a prelim 50.8. In Jul, the PMIs had stood at 57.3 and 55.6 respectively.
For the Eurozone, the August services PMI came in at 50.5, which was up from a prelim 50.1% while down from a July 54.7.
The Eurozone’s composite PMI came in at 51.9, which was up from a prelim 51.6. In July, the PMI had stood at 54.9.
According to the Eurozone’s August Composite Markit Survey,
July retail sales fell by 1.3% in the Eurozone, partially reversing a 5.7% jump in June. Economists had forecast a 1.5% rise.
Initial jobless claims came in at 881k for the week ending 28th August. In the week prior, claims had stood at 1,011k. Economists had forecast 950k.
From the private sector, the market’s preferred ISM Non-Manufacturing PMI fell from 58.1 to 56.9. Economists had forecast a decline to 57.0.
Other stats included the finalized Markit PMIs for August, trade data, and 2nd quarter unit labor costs and productivity figures. The stats had a muted impact on the majors, however.
Ahead of the European open, China’s Caixin Services PMI came in at 54.0, which was down marginally from 54.1 in July. The number was good enough to support the European majors early in the day.
For the DAX: It was a mixed day for the auto sector on Thursday. Volkswagen rose by 0.27% to buck the trend on the day. BMW and Daimler slid by 1.83% and by 1.47% respectively, however, with Continental falling by 0.20%.
It was a bearish day for the banks. Deutsche Bank declined by 1.61%, with Commerzbank seeing a 0.48% loss on the day.
From the CAC, it was a bullish day for the banks. BNP Paribas rose by 0.75, with Credit Agricole and Soc Gen seeing more modest gains of 0.02% and 0.23% respectively.
It was also a bullish day for the French auto sector. Peugeot rose by 2.58%, with Renault rallying by 3.22%.
Air France-KLM ended a run of 3 consecutive days in the red, with a 2.98% gain, while Airbus SE slipped by 0.80%
It was a 2nd consecutive day in the green for the VIX on Thursday. Following on from a 1.72% gain on Wednesday, the VIX jumped by 26.46% to end the day at 33.6.
The upside came as the U.S majors hit reverse on Thursday, with tech stocks weighing heavily on the day.
It was deep red for the NASDAQ, which tumbled by 4.96%, with the S&P500 and the Dow sliding by 3.51% and by 2.78% respectively.
It’s a quieter day ahead on the Eurozone economic calendar. Key stats include German factory orders for July and construction PMI for August.
With stats on the lighter side, expect the factory order numbers to have an impact ahead of a busy U.S session.
From the U.S, it’s nonfarm payrolls and the unemployment rate that will influence the European majors later in the day.
Also, expect some sensitivity to the EUR throughout the European session.
In the futures markets, at the time of writing, the Dow was down by 67 points.
For a look at all of today’s economic events, check out our economic calendar.
With over 20 years of experience in the finance industry, Bob has been managing regional teams across Europe and Asia and focusing on analytics across both corporate and financial institutions. Currently he is covering developments relating to the financial markets, including currencies, commodities, alternative asset classes, and global equities.