European Equities: Service Sector PMIs and Geopolitics in Focus

The Majors

It was a mixed day for the European majors on Tuesday. The CAC40 rose by 0.28% while the DAX30 and EuroStoxx600 fell by 0.36% and by 0.07% respectively.

A lack of stats left the markets to monitor the progress of the U.S stimulus package and corporate earnings results.

Adding to the market angst was continued concerns over COVID-19, with the WHO reportedly having said that a silver bullet may be elusive.

The Stats

It was a quiet day on the Eurozone economic calendar. There were no material stats from the Eurozone to provide the majors with direction.

From the U.S

Economic data included June factory orders that had a limited impact on the day.

In June, factory orders rose by 6.2%, following a 7.7% jump in May. Economists had forecast a 5.0% rise.

The Market Movers

For the DAX: It was another bullish day for the auto sector on Tuesday, following Monday’s manufacturing PMIs. Volkswagen and Continental rose by 2.19% and by 1.38% respectively. Daimler and BMW rallied by 2.88% and by 3.19% respectively, however, to lead the way.

It was also a bullish day for the banks. Deutsche Bank rose by 0.06%, with Commerzbank ending the day up by 1.93%.

From the CAC, it was a bullish day for the banks. Soc Gen rallied by 5.27%, with BNP Paribas and Credit Agricole rising by 2.04% and by 1.96 respectively.

It was also a positive day for the French auto sector. Peugeot rose by 3.41%, with Renault rallying by 6.79%

Air France-KLM and Airbus SE saw gains of 5.19% and 3.06% respectively.

On the VIX Index

It was a 3^rd consecutive day in the red for the VIX on Tuesday. Following on from a 0.74% loss on Monday, the VIX fell by 2.14% to end the day at 23.76.

Progress towards the COVID-19 stimulus package and positive factory orders provided the U.S majors with support on the day.

The S&P500 and NASDAQ rose by 0.36% and by 0.35% respectively, with the Dow gaining 0.62%.

The Day Ahead

It’s a busy day ahead on the Eurozone economic calendar. July’s service sector PMIs are due out of Italy and Spain.

Finalized PMIs and are also due out of France, Germany, and the Eurozone.

With the service sector activity key to the Eurozone economic recovery, the numbers will have a material impact on the majors.

Barring any revision to prelim figures, the focus will be on Italy, Spain, and the Eurozone’s numbers.

Later in the day, the Eurozone’s June retail sales figures are also due out, which should provide EUR support.

From the U.S

It’s a busy day ahead. Key stats include the ISM Non-Manufacturing PMI and ADP non-farm employment figures for July.

Both sets of numbers will influence Dollar demand and market risk sentiment.

The Markit survey’s services PMI and trade data, also due out, should have a muted impact on the day, however.

Away from the economic calendar, corporate earnings, and updates from Capitol Hill on the passage of the COVID-19 stimulus package will also continue to influence.

The Futures

In the futures markets, at the time of writing, the DAX was down by 4.5 points, while the Dow was up by 14 points.

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