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European Equities: U.S Stats, Stimulus, and COVID-19 in Focus

Bob Mason
·5-min read

Economic Calendar:

Thursday, 30th July

German GDP (QoQ) (Q2)

German GDP (YoY) (Q2)

German Unemployment Change (Jul)

German Unemployment Rate (Jul)

Eurozone Unemployment Rate (Jun)

German CPI (MoM) (Jul) Prelim

Friday, 31st July

French GDP (QoQ) (Q2)

German Retail Sales (MoM) (Jun)

French Consumer Spending (MoM) (Jun)

French CPI m/m (Jul) Prelim

French HICP m/m (Jul) Prelim

Spanish GDP (QoQ) (Q2)

Italian CPI (MoM) (Jul) Prelim

Eurozone CPI (YoY) (Jul) Prelim

Eurozone Core CPI y/y (Jul) Prelim

Eurozone GDP q/q (Q2) 1st Estimate

Eurozone GDP y/y (Q2) 1st Estimate

The Majors

It was a mixed start the week for the European majors on Monday. While the DAX30 ended the day up by 60 points, the CAC40 and EuroStoxx600 fell by 0.34% and by 0.31% respectively.

U.S – China tensions continued to pin back the European majors on the day. The upward trend in new COVID-19 cases also weighed as the UK announced quarantine measures for travelers returning from Spain.

The news weighed on the travel sector. It also highlighted the realities of the 2nd wave that has hit a rising number of countries.

With economic data on the lighter side, there was little to distract attention on the day.

The Stats

It was a relatively quiet day on the Eurozone economic calendar. Key stats included Germany’s Ifo Business climate index numbers for July.

In July, the Business Climate Index rose from 86.3 to 90.5, marking a 3rd consecutive monthly increase. Economists had forecast a rise to 89.3.

According to the July report,

  • By sector, the improvement in the business climate was broad-based.

  • Sentiment towards the economy improved, with the Current Assessment sub-Index rising from 81.3 to 84.5. Economists had forecast a rise to 85.0, however.

  • For the markets, there was also a marked improvement in business expectations. The sub-index jumped from 91.4 to 97.0, coming in well above a forecasted 93.7.

From the U.S

June’s durable goods and core durable goods orders delivered mixed results.

Month-on-month, core durable goods orders rose by 3.30% in June, falling short of a forecasted 3.5% rise. In May, core orders had risen by 3.6%.

Durable goods orders were more aligned with expectations, however. In June durable goods orders rose by 7.3%, following a 15.1% jump in May. Economists had forecast a 7.2% rise.

The Market Movers

For the DAX: It was another mixed day for the auto sector on Monday. BMW, Continental, and Volkswagen fell by 0.27%, 0.66%, and by 0.62% respectively. Daimler bucked the trend, with a 0.62% gain.

It was a bearish day for the banks. Deutsche Bank slid by 1.84%, with Commerzbank ending the day with a 0.72% loss.

From the CAC, it was another bearish day for the banks. Soc Gen slid by 3.78% to lead the way down. BNP Paribas and Credit Agricole ended the day down by 2.22% and by 2.07% respectively.

It was a mixed day for the French auto sector. Peugeot rose by 0.47%, while Renault slipped by 0.18%.

Air France-KLM and Airbus SE slid by 4.97% and by 3.14% respectively.

On the VIX Index

It was a 2nd consecutive day in the red for the VIX on Monday. Following a 0.92% decline on Friday, the VIX fell by 4.26% to end the day at 24.74.

The downside came as the markets continued to consider the rising tensions between the U.S and China and COVID-19.

Supporting the U.S equity markets was the hope of further fiscal stimulus support amidst the latest spike in new COVID-19 cases.

There was talk of some progress towards an agreement between Republicans on the next COVID-19 stimulus package.

The S&P500 and Dow rose by 0.74% and 0.43% respectively, with the NASDAQ rallying by 1.67%.

The Day Ahead

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

Some concern over the spike in new COVID-19 cases in Spain and what it could mean for the EU will likely influence.

The lack of stats will also leave the majors in the hands of geopolitics and sentiment towards U.S monetary and fiscal policy.

From the U.S

July consumer confidence figures are due out later in the day. We can expect the numbers to influence, as the markets hope for a friendly FED on Wednesday.

There will also need to be further progress towards the next COVID-19 stimulus package on Capitol Hill…

The Latest Coronavirus Figures

According to figures at the time of writing, the number of new coronavirus cases rose by 202,298 to 16,615,092 on Monday. On Sunday, the number of new cases had risen by 213,347. The daily increase was lower than Sunday’s rise, while up from 182,589 new cases from the previous Monday.

Germany, Italy, and Spain reported 7,167 new cases on Monday, which was up from 663 new cases on Sunday. On the previous Monday, 5,413 new cases had been reported. The spike came from Spain that had not reported any new cases for 2 consecutive days before a 6,361 jump on Monday.

From the U.S, the total number of cases rose by 54,564 to 4,426,403 on Monday. On Sunday, the total number of cases had increased by 56,130. On Monday, 20th July, a total of 62,790 new cases had been reported.

The Futures

In the futures markets, at the time of writing, the Dow was up by 24 points.

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

This article was originally posted on FX Empire

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