European Equities: Manufacturing PMIs and German Retail Sales in Focus

The Majors

It was a bearish end to a bullish month of July for the European majors on Friday,

The CAC40 fell by 0.32%, with the DAX30 and the EuroStoxx600 ending the day down by 0.61% and by 0.45% respectively.

Disappointing GDP numbers from Germany followed weaker than expected 2^nd quarter GDP numbers from the U.S on Thursday.

Adding to the market angst at the end of the week was further concern over the continued spread of the Delta variant.

From China, the CSI300 and the Hang Seng resumed their downward trajectories amid regulatory uncertainty placing further pressure on riskier assets at the end of the month. Beijing’s attempts to calm the markets failed late in the week, with the Hang Seng and CSI300 ending the week down by 4.98% and by 5.46% respectively.

Limiting the damage, however, was better than expected 2^nd quarter GDP numbers for France and the Eurozone.

The Stats

Following interest in the German economy through much of the week, it was the Eurozone and member state economies in focus on Friday.

The numbers were skewed to the positive, supporting market optimism.

Member States

In the 2^nd quarter, the French economy expanded by 0.9%, quarter-on-quarter, reversing a 0.1% contraction in the previous quarter.

The German economy expanded by 1.5%, partially reversing a 2.1% contraction from the 1^st quarter.

Italy and Spain also saw growth in the quarter.

In the 2^nd quarter, the Spanish economy grew by 2.8%, reversing a 0.4% contraction from the 1^st quarter. Stats from Italy were also positive, with the economy growing by 2.7%. In the 1^st quarter, the economy had grown by just 0.2%, quarter-on-quarter.

The Eurozone

In the 2^nd quarter, the Eurozone economy grew by 2.0%, quarter-on-quarter, reversing a 0.3% contraction from the previous quarter.

Year-on-year, the economy grew by 13.7% after having contracted by 1.3% in the previous quarter. Economists had forecast a 12.6% increase.

Inflation figures were also in focus, with the annual rate of inflation ticking up from 1.9% to 2.2%. Economists had forecast an annual rate of inflation of 2.0%.

The pickup in inflationary pressures muted unemployment figures for the Eurozone, however. In June, the Eurozone’s unemployment rate slipped from 8.0% to 7.7%. Economists had forecast a fall to 7.8%.

From the U.S

Personal spending and inflation were in focus later in the European session.

The stats were skewed to the positive for riskier assets but failed to give the European majors a boost.

Personal spending rose by 1.0% in June, coming in well ahead of a forecasted 0.5% increase.

Inflationary pressures picked up less than expected, with the annual rate of inflation picking up from 3.4 to 3.5%. Economists had forecast 3.6% for June.

The Market Movers

For the DAX: It was a bearish day for the auto sector on Friday. Daimler and BMW both saw losses of 1.17% respectively to lead the way down. Continental and Volkswagen ended the day down by 0.99% and by 0.46% respectively.

It was also a bearish day for the banks. Deutsche Bank and Commerzbank fell by 1.57% and by 0.18% respectively.

From the CAC, it was a bearish day for the banks. BNP Paribas fell by 1.19%, with Soc Gen and Credit Agricole declining by 1.01% and by 0.86% respectively.

It wasn’t much better for the French auto sector. Stellantis NV fell by 1.00%, with Renault ending the day down by 3.35%.

Air France-KLM slid by 4.58%, with Airbus SE falling by 0.26%

On the VIX Index

It was back into the green for the VIX on Friday, marking the 3^rd gain of the week.

Reversing a 3.33% fall from Thursday, the VIX rose by 3.05% to end the day at 18.24.

The NASDAQ fell by 0.71%, with the Dow and the S&P500 ending the day down by 0.42% and by 0.54% respectively.