European Equities: German Industrial Production in the Spotlight ahead of the Open…

The German Economy

In August, factory orders slumped by 7.7% versus a forecasted 2.1% decline. Orders had risen by 4.9% in July.

According to Destatis,

• The sharp decline was preceded by strong increases in the previous two months.
• Excluding major orders, a 5.1% decline in new orders in manufacturing was recorded in August 2021.
• New orders in manufacture of motor vehicles, trailers, & semi-trailers were down 12.0%.
• Issues with delivery bottlenecks of intermediate products also contributed to a 9.6% slide in the manufacture of basic metals.
• Domestic orders were down 5.2%, while foreign orders tumbled by 9.5%.
• New orders from the euro area increased by 1.6%, while orders from other countries slid by 15.2%.

The Eurozone

In August, retail sales rose by 0.3%, month-on-month, partially reversing a 2.6% slide from July. Economists had forecast a 0.8% increase.

According to Eurostat,

• Non-food product retail trade increased by 1.8%, while automotive fuel (-0.1%) and food, drinks, & tobacco (-1.7%) weighed.
• Malta (+2.7%) and Ireland (+2.5%) recorded the largest increases, while Estonia and France both saw retail sales fall by 1.2%.
• Year-on-year, retail trade remained stable.

From the U.S

ADP Nonfarm Employment Change figures for September were in focus later in the session.

In September, nonfarm employment increased by 568k according to the ADP versus a forecasted 428k rise. Employment had risen by 340k in August.

The Market Movers

For the DAX: It was a bearish day for the auto sector on Wednesday. Volkswagen and BMW slid by 2.74% and by 2.77% respectively, with Daimler down by 2.15%. Continental saw a more modest loss of 0.83% on the day.

It was a mixed day for the banks, however. Deutsche Bank fell by 1.27%, while Commerzbank ended the day up by 1.91%.

From the CAC, it was a bearish day for the banks. BNP Paribas and Soc Gen fell by 1.20% and by 0.82% respectively, with Credit Agricole declining by 0.42%.

It was also a bearish day for the French auto sector. Stellantis NV and Renault slid by 3.56% and 3.88% respectively.

Air France-KLM ended the day down by 3.45%, with Airbus SE falling by 1.44%.

On the VIX Index

It was a 2^nd consecutive day in the red for the VIX on Wednesday.

Following a 7.23% decline on Tuesday, the VIX fell by 1.41% to end the day at 21.00.

The Dow rose by 0.30 %, with the NASDAQ and S&P500 ending the day up by 0.47% and by 0.41% respectively.

The Day Ahead

It’s a relatively quiet day ahead on the Eurozone’s economic calendar. German industrial production will be the key stat of the day.

Following weak factory order numbers from Germany on Wednesday, expect increased market sensitivity to today’s figures.

From the U.S, jobless claims for the week ending 1^st October will also influence later in the European session, however.

Away from the economic calendar, central bank chatter will also need monitoring as the markets look for views on inflation. A fall in crude oil prices would ease some of the market angst.

The Futures

In the futures markets, at the time of writing, the Dow Mini was up by 54 points.

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