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European Equities: Private Sector PMIs for June to Provide Direction
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Private sector PMIs will be in focus today. With market optimism continuing to support the majors, the PMIs will need to see a pickup to deliver upside on the day.
In this article:
Economic Calendar
Wednesday, 23rd June
French Manufacturing PMI (Jun) Prelim
French Services PMI (Jun) Prelim
German Manufacturing PMI (Jun) Prelim
German Services PMI (Jun) Prelim
Eurozone Manufacturing PMI (Jun) Prelim
Eurozone Markit Composite PMI (Jun) Prelim
Eurozone Services PMI (Jun) Prelim
Thursday, 24th June
Spanish GDP (QoQ) (Q1)
German Ifo Business Climate Index (Jun)
ECB Economic Bulletin
Friday, 25th June
GfK German Consumer Climate (Jul)
The Majors
It was a relatively bullish day for the European majors on Tuesday.
The CAC40 rose by 0.14%, with the DAX30 and the EuroStoxx600 ending the day with gains of 0.21% and 0.26% respectively.
Economic data was on the lighter side once more on Tuesday, leaving the majors in the hands of market sentiment towards central bank policy.
Late in the European session, consumer confidence figures for the Eurozone drew some interest, however.
A pickup in consumer confidence across the Eurozone was aligned with ECB President’s comments at the start of the week. Lagarde had spoken of a speedier than expected economic recovery, supported by a pickup in consumer spending.
The Stats
According to the EU Commission, the consumer confidence indicator rose from -5.1 to -3.3. Economists had forecast an increase to -3.0. At -3.3 points, the euro area indicator was well above its pre-pandemic level.
From the U.S
Economic data was limited to housing sector data, which had a muted impact on the majors.
The Market Movers
For the DAX: It was a mixed day for the auto sector on Tuesday. Volkswagen fell by 1.64%, with BMW and Continental ending the day with losses of 0.53% and 0.61% respectively. Daimler avoided the red, rising by 0.01%.
It was also a mixed day for the banks. Deutsche Bank fell by 1.41%, while Commerzbank ended the day up by 0.49%.
From the CAC, it was a mixed day for the banks. BNP Paribas and Credit Agricole rose by 0.22% and by 0.34% respectively, while Soc Gen fell by 1.07%.
It was a bearish day for the French auto sector. Stellantis NV and Renault ended the day with losses of 0.42% and 2.38% respectively.
Air France-KLM and Airbus SE fell by 0.80% and by 0.25% respectively.
On the VIX Index
It was a 2nd consecutive day in the red for the VIX on Tuesday.
Following a 13.57% tumble on Monday, the VIX fell by 6.88% to end the day at 16.66.
The Dow rose by 0.20%, with the NASDAQ and the S&P500 ending the day up by 0.79% and by 0.51% respectively.
The Day Ahead
It’s a busy day ahead on the European economic data front. Prelim private sector PMI numbers for France, Germany, and the Eurozone are due out later today.
While Germany’s manufacturing PMI remains key, the markets will be looking for a further pickup in service sector activity.
Expect weak numbers to test support for the majors.
From the U.S, prelim private sector PMI numbers are also due out. The services PMI will likely have the greatest impact on the day.
Ahead of the European open, market reaction to FED Chair Powell testimony from overnight will set the tone.
Late on Tuesday, the FED Chair Powell delivered testimony on the impact of COVID-19 to lawmakers.
FED Chair Powell spoke of labor market conditions, stating that job creation should pick up as the year progresses. Powell also saw inflationary pressures falling back towards the FED’s objective and longer-run target.
From a market perspective, FED Chair Powell’s assurances that the FED would not raise interest rates solely on inflation was good enough. The optimistic outlook on labor market conditions, however, could create a shift in policy outlook.
The Futures
In the futures markets, at the time of writing, the Dow Mini was up by 15 points.
For a look at all of today’s economic events, check out our economic calendar.
About the Author
Bob Masonauthor
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.
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