European Equities: Stats, Earnings and the Yuan to Drive the Majors

The Majors

In the European markets, there was more red on Tuesday. The DAX led the way down with a 0.78% fall to make it a 2.56% loss for the current week. For the EuroStoxx600 and CAC40, the losses were more modest, with the pair falling by 0.48% and by 0.13% respectively.

Losses across the European majors came in spite of the PBoC stepping in to support the Yuan on Tuesday. While the PBoC stepped in, an official statement by the PBoC was in made in response to Washington’s labeling of China as a currency manipulator. The statement certainly suggested that there’s more angst to come in the ongoing trade war. The PBoC stated that being labeled as a currency manipulator, not only undermines international rules but will have a major impact on global finance and the global economy.

The Stats

It was a relatively quiet day on the Eurozone economic calendar. Stats out of the Eurozone were limited to Germany’s factory orders for June.

According to Destatis,

• Factory orders jumped by 2.5% in June, month-on-month, coming in ahead of a forecasted 0.5% rise. In May, factory orders had fallen by 2%.
• Domestic orders fell by 1%, whilst foreign orders increased by 5.0%.
• New orders from the euro area were down 0.6%, while new orders from other countries surged by 8.6%.
• Orders for intermediate goods rose by 1.3%, with orders for capital goods rising by 3.7%.
• Bucking the trend in June was a 0.4% fall in new orders for consumer goods.
• Year-on-year, factory orders were down by 3.6%, however.

Out of the U.S

It was also a relatively quiet day on the economic calendar. From the U.S, June’s JOLTs job openings had a muted impact on the European majors later in the day. Job openings stood at 7.348m in June, which came in below a forecasted 7.450m. In May, job openings had stood at 7.384m.

The Market Movers

From the DAX, Wirecard led the way on the day, rallying by 5.32% ahead of today’s earnings release. Deutsche Bank Post was not far behind, rising by 4.20% supported by a better than expected earnings release on the day.

For the auto sector, it was mixed on the day. BMW and Daimler fell by 0.36% and 0.27% respectively. Meanwhile Volkswagen and Continental rose by 1.26% and 1.18%.

For the banking sector, it was also mixed on the day. Deutsche Bank ended the day with a 0.37% loss, while Commerzbank rose by 0.21% ahead of today’s earnings release.

From the CAC, a 2.1% bounce back in LVMH provided much-needed support on the day, though it wasn’t plain sailing for luxury brands, with Hermes falling by 0.4%.

For the banking sector, it was red across the board. BNP Paribas fell by 0.36%, with Credit Agricole and Soc Gen falling by 0.44% and 0.42% respectively.

The Day Ahead

It’s a relatively quiet day ahead on the Eurozone economic calendar. Germany’s industrial production figures for June are due out later this morning.

With no material stats due out of the U.S, we will expect some market sensitivity to the numbers.

Outside of the numbers, geopolitical risk will continue to provide direction. With a currency war now afoot, the markets will closely watch the direction of the Yuan early on.

On the corporate earnings front, Commerzbank and Wirecard release their earnings results today. While the earnings results will be important, expect the majors to react to any negative outlook reports…

In the futures markets, at the time of writing, the DAX was up by 1.5 points, while the Dow Mini was down by 82 points.