European Equities: German Economic Data in Focus

It’s going to be a choppy day ahead, with economic data out of the Eurozone and further reaction to U.S NFP numbers to influence.
Bob Mason
Light Board

Economic Calendar:

Monday, 8th July

  • German Industrial Production (MoM) (May)
  • German Trade Balance (May)

Thursday, 11th July

  • German CPI (MoM) (Jun) Final
  • French CPI (MoM) (Jun) Final
  • French HICP (MoM) (Jun) Final
  • ECB Monetary Policy Meeting Minutes

Friday, 12th July

  • Spanish CPI (YoY) (Jun) Final
  • Spanish HICP (YoY) (Jun) Final
  • Eurozone Industrial Production (MoM) (May)

The Majors

The majors saw red on Friday, with the DAX falling by 0.49%. The CAC40 and EuroStoxx600 fell by 0.38% and by 0.72% respectively.

In spite of the Friday losses, the European majors made solid gains at the start of the 3rd quarter. The DAX30 and EuroStoxx600 ended the week up by 1.37% and by 1.36% respectively. The CAC40 trailed, with a gain of 0.99%.

For the DAX30, Friday’s loss brought to an end a run of 7 consecutive days in the green.

The Stats

Economic data out of the Eurozone was on the lighter side on the day.

German factory orders provided direction in the early part of the day. While the service sector PMI numbers provided support mid-week, a 2.2% slide in factory orders in May weighed going into the European session.

According to Destatis,

  • Domestic orders increased by 0.7%, while foreign orders slid by 4.3% in May, month-on-month.
  • New orders from the Euro area were down by 1.7%, with new orders from other countries down by 5.7% compared with April 2019.
  • Factory orders fell by 8.6% year-on-year.

While the factory order numbers weighed, focus through the day was on the U.S nonfarm payrolls due out later in the session.

An unexpected jump in nonfarm payrolls in June added to the downward bias on the day. Nonfarm payrolls increased by 224k, coming in well ahead of a forecasted 160k increase.

The markets had priced in a 100% probability of a July rate hike. The latest NFP numbers tempered market expectations adding to the downside on the day.

The Market Movers

From the DAX, Deutsche Bank continued to find support, leading the way on the DAX with a 2.21% rally on the day. Commerzbank also found support, rising by 1.53%. The better than expected NFP numbers provided support to the financial sector on the day.

From the auto sector, Volkswagen remained unchanged on the day to lead the way. BWM slipped by just 0.04%, with Daimler and Continental down by 0.07% and 0.22% respectively.

From the CAC, BNP Paribas and Credit Agricole rose by 0.84% and 0.09% respectively, while Renault gained 0.37% on the day.

From the EuroStoxx600, UniCredit SpA saw red, in spite of the general uptrend across the global financial stocks, with a loss of 1.2% on the day. The loss came off the back of a 4.96% rally on Thursday, fuelled by news of Italy’s plans to curb debt.

The Day Ahead

It’s a relatively busy day ahead. German industrial production and trade figures for May are due out ahead of the European open.

We can expect the numbers to influence the majors in the early part of the day. While there are no material stats due out of the U.S this afternoon, we can expect any chatter from the Oval Office to also be of influence.

At the time of writing, the DAX was down by 21 points, with the Dow Mini was down by 28 points.

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