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List of stock market indices

Economic Calendar:

Friday, 16th August

  • Eurozone Trade Balance (Jun)

The Majors

The European majors saw red on Wednesday, with Tuesday’s respite all too brief for the market bulls.

Leading the way down mid-week was the DAX30, which slid by 2.19%, with the CAC40 close behind, falling by 2.08%. For the EuroStoxx600, it was a more modest 1.68% decline on the day.

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Disappointing economic data weighed Government Bond yields, leading to a slide across the European and U.S equity markets on the day.

Bond yield curves inverted in response to GDP numbers out of Germany. Germany joined the UK, contracting in the 2nd quarter.

For the broader market, reality hit home on Wednesday. The U.S President’s trade war with China has ultimately had its effect, not only on China but on the broader global economy.

The Stats

It was another busy day on the Eurozone economic calendar on Thursday. Key stats on the day included German and Eurozone 2nd quarter GDP numbers. The Eurozone’s June industrial production figures also provided direction. Finalized July inflation figures out of France had a muted impact on the majors, however.

Out of Germany

According to Destatis,

  • Quarter-on-quarter, the economy shrank by 0.1%, which was in line with forecast.
  • Contribution to GDP came from household final consumption expenditure and government final consumption expenditure.
  • Gross fixed capital formation in construction fell, with trade also weighing on exports, which fell by a greater extent than imports.
  • Year-on-year, the economy stagnated, which was better than a forecasted 0.3% contraction.

The Eurozone

For the Eurozone, the economy grew by 0.2% in the 2nd quarter, according to 2nd estimate numbers. This was in line with forecast and 1st estimate figures, whilst down from the 1st quarter of 0.4%. Year-on-year, the economy grew by 1.1%, which was also in line with forecast and 1st estimate figures. The Eurozone economy had grown by 1.2% in the 1st quarter, according to figures released by Eurostat.

While the Eurozone GDP numbers avoided a downward revision, Industrial production took a hit in June, sliding by 1.6%, which was worse than a forecasted 1.3% fall.

According to Eurostat,

  • Production of capital goods tumbled by 4.0%, with non-durable goods and durable consumer goods production falling by 2.8% and 1.2% respectively.
  • The production of intermediate goods and energy fell by 0.8% and 0.2% respectively.
  • Among the member states, Ireland (-8.8%) and Portugal (-4.5%) recorded the largest monthly declines.
  • Bucking the trend in June, both Lithuania and Malta recorded a 1.8% rise in production, with Latvia registering a 1.5% increase.
  • Year-on-year, industrial production was down by 2.6%, with Germany leading the way down. In Germany, industrial production tumbled by 6.2%.

Out of China

Ahead of the European open, July industrial production and fixed asset investments out of China set the tone.

Fixed asset investments rose by 5.7% in July, year-on-year, falling short of a forecast and June 5.8% rise. Of greater significance, however, were industrial production figures. Year-on-year, industrial production increased by 4.8%, down from 6.3% in June. Economists had forecast a 6.0% rise. Year-to-date, production was up by 5.8% to July, year-on-year, also falling short of a forecasted and June 6% rise.

With economic data out of the U.S limited to import and export price figures, the bond markets provided direction late on.

The Market Movers

From the DAX, Deutsche Bank was the worst performer on the day, sliding by 6.16%, with Commerzbank not far behind, falling by 5.14%.

The auto sector, tech, and resource stocks also saw deep red on a day where no component of the index saw green.

Continental and Daimler slid by 4.98% and by 3.78% respectively. BMW and Volkswagen also saw heavy losses. The pair ended the day down by 3.43% and by 3.28% respectively.

From the CAC, the banking sector also saw red on the day. Soc Gen led the way down once more, sliding by 4.09%. BNP Paribas and Credit Agricole fell by 2.6% and by 1.95% respectively. Renault also joined its German peers in the red with a 3.64% decline.

The Day Ahead

It’s a quiet day ahead on the Eurozone economic calendar. There are no material stats due out of the Eurozone today to provide the majors with direction.

A lack of stats will leave the European majors in the hands of geopolitical risk and sentiment towards the global economy ahead of the U.S open.

Out of the U.S, manufacturing sector and retail sales figures will have an influence on the European majors late in the down, however. Any weak retail sales figures and expect more pain across the majors.

In the Futures Markets, at the time of writing, the DAX was up by 6 points, while the Dow Mini was up by 90 points.

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