European Equities: U.S Nonfarm Payrolls in Focus

The Majors

It was a relatively bullish day for the European majors on Thursday.

The CAC49 led the way, rising by 0.71%, with the DAX30 and the EuroStoxx600 seeing gains of 0.47% and 0.62% respectively.

Market focus returned to economic data from the Eurozone and the U.S, supporting a partial recovery of Wednesday’s losses.

The upside was limited, however, in spite of a fresh record high Eurozone PMI and a weaker EUR.

Concerns over the rising number of new COVID-19 cases continued to limit the upside across the European majors.

The Stats

It was a busy economic calendar this morning. Following Tankan survey numbers from Japan and manufacturing PMI numbers from China, manufacturing PMI and unemployment figures from the Eurozone were in focus.

The Member States

Spain’s manufacturing PMI rose from 59.4 to 60.4, while Italy’s manufacturing PMI slipped from 62.3 to 62.2 in June.

Economists had forecast PMIs of 58.6 and 61.5 respectively.

For Germany, the manufacturing PMI increased from 64.4 to 65.1, which was down from a prelim 64.9.

The French manufacturing PMI fell from 59.4 to 59.0, which was up from June’s prelim 58.6.

The Eurozone

In June, the Eurozone’s manufacturing PMI increased from 63.1 to a record high 63.4, which was also up from a flash 63.1.

According to the June Survey,

• Production increased sharply, with jobs growth hitting a survey peak in June.
• Investment goods producers recorded the strongest growth, followed by intermediate goods producers.
• While consumer goods producers continued to lag, growth was the most marked since Jun-2020.

By country, the Netherlands led the way in spite of a 2-month low PMI of 68.8. By contrast, Greece sat at the bottom of the table despite a 254-month high PMI of 58.6.

Germany ranked 3^rd, with a 2-month high PMI of 65.1, with Italy’s 2-month low PMI of 62.2 leaving Italy in 5^th spot.

Eurozone Unemployment

In May, the Eurozone’s unemployment rate fell from 8.1% to 7.9%, which was in line with forecasts.

From the U.S

Jobless claims and manufacturing sector PMIs were in focus.

In the week ending 25^th June, initial jobless claims fell from 415k to 364k, which was better than a forecasted 370k.

The ISM Manufacturing PMI slipped from 61.2 to 60.6, however. Economists had forecast a more modest decline to 61.0.

The Market Movers

For the DAX: It was a relatively bullish day for the auto sector on Thursday. BMW rose by 0.74%, with Continental and Daimler ending the day up by 0.58% and by 0.52% respectively. Volkswagen saw a more modest 0.45% gain on the day.

It was also a bullish day for the banks. Deutsche Bank and Commerzbank ended the day up by 0.45% and by 0.33% respectively.

From the CAC, it was a bullish day for the banks. BNP Paribas and Credit Agricole rose by 1.15% and by 1.47% respectively. Soc Gen led the way, however, rallying by 3.38%.

It was also a bullish day for the French auto sector, however. Stellantis NV rose by 0.89%, with Renault rallying by 4.47%.

Air France-KLM and Airbus SE saw gains of 1.38% and 1.35% respectively.

On the VIX Index

It was a 2^nd consecutive day in the red for the VIX on Thursday.

Following a 1.19% loss on Wednesday, the VIX fell by 2.21% to end the day at 15.48.

The NASDAQ rose by 0.13%, with the Dow and the S&P500 ending the day up by 0.38% and by 0.52% respectively.

The Day Ahead

It’s a quieter day ahead on the economic calendar. There are no material stats from the Eurozone to provide the majors with direction.

From the U.S, the stats will be more significant, however. June’s nonfarm payroll figures and unemployment rate will provide direction late in the session.

A number of FOMC members have begun talking of a shift in policy as early as next year. A marked increase in payrolls may force further pressure on the FED as inflationary pressures linger.

Away from the economic calendar, COVID-19 news will once more need monitoring. Any further lockdown measures will test support for the majors.

The Futures

In the futures markets, at the time of writing, the Dow Mini was up by 29 points, with the DAX up by 48 points.

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