European Equities: U.S Nonfarms, the COVID-19 Relief Bill, and Brexit in Focus

The PMIs

In September, Spain’s Manufacturing PMI rose from 49.9 to 50.8. Economists had forecast a rise to 50.7.

Italy’s Manufacturing PMI rose from 53.1 to 53.2, which fell short of a forecasted 53.5.

The finalized French PMI came in at 51.2, which was up from a prelim 50.9 and August 49.8, while Germany’s came in at 56.4. This was down from a prelim 56.6. In August, the PMI had stood at 52.2.

For the Eurozone, the September PMI came in at 53.7. This was in line with prelim 53.7 and up from August’s 51.7.

According to the Eurozone’s September Markit Survey,

• September marked the strongest growth in more than 2-years, with operating conditions improving for a 3^rd consecutive month.
• Consumer and intermediate goods categories saw solid gains. Investment goods saw the strongest growth in over 2-years, however.
• Germany topped the table, with the PMI hitting a 26-month high. Italy came in 2^nd, with a 27-month high PMI.
• The Netherlands also saw solid improvement, while France and Austria reported modest growth.
• Spain saw only a slight expansion, with Greece seeing no change and Ireland’s recovery stalling.
• Overall, manufacturing output and new orders increased at accelerated rates.
• Supported by strong new orders, the sector’s confidence hit its highest level since April 2018, with Italian manufacturers being the most confident.

On the unemployment front, there was nothing to alarm the markets. The Eurozone’s unemployment rate ticked up by 8.0% to 8.1%, which was in line with forecasts.

From the U.S

It was a busy day on the economic calendar. Key stats included the weekly jobless claims figures and the market’s preferred ISM Manufacturing PMI.

In the week ending 25^th September, initial jobless claims came in at 837k, which was down from the previous week’s 873k. Economists had forecast initial claims of 850k.

For the month of September, the ISM Manufacturing PMI slipped from 56.0 to 55.4, which came up short of a forecasted 56.4.

Personal spending and inflation figures for August had a muted impact on the European majors on the day.

The Market Movers

For the DAX: It was a bullish day for the auto sector on Thursday. Continental and Daimler rose by 2.91% and by 1.68% respectively to lead the way. BMW and Volkswagen saw more modest gains 0.40% and 0.39% respectively.

It was a mixed day for the banks, however. Deutsche Bank fell by 0.59%, while Commerzbank rose by 1.62% on the day.

From the CAC, bank stocks were in the red once more. Soc Gen slid by 2.39%, with BNP Paribas and Credit Agricole ending the day down by 1.06% and by 1.79% respectively.

It was also another bearish day for the French auto sector. Peugeot fell by 1.16%, with Renault sliding by 4.60%.

Air France-KLM followed a 2.79% decline from Wednesday, with a 1.25% fall, while Airbus SE rallied by 4.56%.

On the VIX Index

It was a 3^rd consecutive day in the green for the VIX on Thursday. Following a 0.38 gain from Wednesday, the VIX rose by 1.25% to end the day at 26.70.

Continued progress towards a relief Bill on Capitol Hill provided support to the U.S majors on the day.

The Dow and S&P500 rose by 0.13% and by 0.53% respectively, with the NASDAQ ending the day up by 1.42%.

The Day Ahead

It’s a quieter day ahead on the Eurozone economic calendar.

Key stats include prelim Eurozone inflation figures for the Eurozone. We will expect some market sensitivity to the numbers.

With labor market figures due out of the U.S later in the day, any major moves will likely be on hold until the NFP numbers.

Away from the economic calendar, expect Brexit and chatter from Capitol Hill to also influence on the day.

The Futures

In the futures markets, at the time of writing, the Dow was down by 78 points, with the DAX down by 31.5 points.

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