European Equities: Will Service Sector PMIs Provide Comfort?It’s another key day for the majors, with services sector PMI and Eurozone retail sales figures in focus. There’s also Brexit to test the majors.
Thursday, 3rd October
- Spanish Services PMI (Sep)
- Italian Services PMI (Sep)
- French Services PMI (Sep) Final
- German Services PMI (Sep) Final
- Eurozone Markit Composite PMI (Sep) Final
- Eurozone Services PMI (Sep) Final
- Eurozone Retail Sales (MoM) (Aug)
It was a dark day for the majors on Wednesday, with the CAC40 sliding by 3.12% following Tuesday’s pullback. The DAX30 and EuroStoxx600 weren’t far behind, with losses of 2.76% and 2.70% respectively.
While economic data from the Eurozone was on the lighter side on the day, market jitters over the global economic outlook weighed heavily.
Particularly weak manufacturing sector data from the Eurozone and the U.S continued to influence on the day, with U.S stats on Wednesday also weighing.
Downward revisions to economic growth forecasts for Germany didn’t help, with growth forecasts for 2020 revised down from 1.8% to 1.1%. For 2019, GDP growth was revised down from 0.8% to 0.5%.
It was a relatively quiet day on the Eurozone economic calendar on Wednesday. Economic data was limited to Spanish unemployment figures that had a muted impact on the majors.
From the U.S, September’s ADP nonfarm employment change figures failed to provide support. Nonfarm employment rose by just 135k, falling short of a forecasted 140k. Of greater significance was a downward revision from 195k to 157k for August.
The Market Movers
From the DAX, it was red across the board. From the auto sector, Volkswagen led the way down with a 2.64% slide. Continental and Daimler fell by 2.54% and 2.21% respectively. BMW was the best of the 4, falling by 1.78%.
It was no better the banks, with Deutsche Bank and Commerzbank falling by 1.20% and 2.02% respectively.
From the CAC, it was also a bearish day for the banks. Soc Gen led the way, sliding by 4.06%. BNP Paribas and Credit Agricole declined by 3.50% and 3.32% respectively. For the autos, Renault fell by 2.32%, whilst Peugeot slid by 3.47%.
On the VIX Index
The VIX Index rose by 10.78% to end the day at 20.60.
Weak manufacturing data from the Eurozone and the U.S from Tuesday and soft ADP nonfarm figures weighed on market risk sentiment throughout the day.
The Day Ahead
It’s a busy day ahead on the Eurozone economic calendar. Spain and Italy’s service sector PMI numbers for September are due out, along with the Eurozone’s retail sales figures.
The finalized service sector and composite PMI numbers are also due out of France, Germany, and the Eurozone.
We can expect the Eurozone’s numbers to have the greatest impact on the day. Following disappointing manufacturing numbers, any downward trend in service sector activity and consumer spending will weigh.
From the U.S, the market’s preferred ISM non-manufacturing PMI and factory orders will also have an impact on the European majors.
On the geopolitical front, the EU reaction to Boris Johnson’s Brexit plans will also be in focus.
In the futures markets, at the time of writing, the DAX was down by 16 points, while the Dow Mini was up by 83 points.