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European Equities: German Factory Orders in Focus

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Economic Calendar

Monday, 6th September

German Factory Orders (MoM) (Jul)

Germany IHS Markit Construction PMI (Aug)

Tuesday, 7th September

German Industrial Production (MoM) (Jul)

German ZEW Current Conditions (Sep)

German ZEW Economic Sentiment (Sep)

Eurozone GDP (QoQ) (Q2)

Eurozone GDP (YoY) (Q2)

Eurozone ZEW Economic Sentiment (Sep)

Wednesday, 8th September

French Non-Farm Payrolls (QoQ) (Q2)

Thursday, 9th September

German Trade Balance (Jul)

ECB Interest Rate Decision (Aug)

ECB Press Conference

Friday, 10th September

German CPI (MoM) (Aug) Final

The Majors

It was a bearish day for the European majors on Friday.

The CAC40 slid by 1.08% to lead the way down, with the the DAX30 and the EuroStoxx600 ending the day down by 0.37% and by 0.56% respectively.

Disappointing economic data from China, the Eurozone, and the U.S weighed on the European majors on Friday.

From China, the Caixin Services PMI slid from 54.9 to 46.7 in August. The numbers followed manufacturing PMI figures from Wednesday, which had shown that the manufacturing sector had contracted in August.

Concerns over the impact of the Delta variant on the economic recovery were validated following the stats in the week.

The Stats

It was a particularly busy day on the Eurozone economic calendar ahead of key stats from the U.S late today.

Service sector PMI numbers for August were in focus along with Eurozone retail sales figures this morning. While the stats were of influence, the markets were holding out for August nonfarm payroll figures from the U.S, however, muting the impact of the numbers on the European majors.

Member State Services

For Spain, the services PMI fell from 61.9 to 60.1 versus a forecasted fall to 61.5.

Italy’s services sector PMI held steady at 58.8, however, versus a forecasted 58.5.

France’s services PMI fell from 56.8 to 56.3, which was down from a prelim 56.4

Numbers from Germany also failed to impress. In August, the PMI fell from 61.8 to 60.8 versus a prelim 61.5.

The Eurozone

In August, the Eurozone’s services PMI fell from 59.8 to 59.0, which was down from a prelim 59.7.

As a result, the Eurozone’s composite PMI fell from 60.2 to 59.0, which was down from a prelim 59.5.

According to the August composite survey,

  • Economic momentum only faded marginally from July’s 15-year peak.

  • Job growth was at the fastest rate seen in over 2-decades as firms look to respond to demand.

  • In August, Italy bucked the trend, registering the fastest output growth for over 15-years.

  • The Euro area saw a strong intake in new work in spite of easing from July levels.

  • Demand was strong, with new manufacturing sector orders leading the way.

Retail Sales

In July, Eurozone retail sales slid 2.3%, month-on-month, reversing a 1.5% increase from June.

From the U.S

Key stats included non-manufacturing PMI and nonfarm payroll figures, both of which were negative for riskier assets.

In August, the ISM Non-Manufacturing PMI fell from 64.1 to 61.7 versus a forecasted decline to 61.5.

Of greater influence, however, were the nonfarm payroll figures. In August, nonfarm payrolls rose by 235k, falling well short of a forecasted 750k. Nonfarm payrolls had jumped by 1,053k in July.

With the FED debate over tapering ongoing, the numbers may have caught a number of the hawks by surprise.

In spite of the weak headline number, unemployment fell from 5.4% to 5.2%, with average hourly wages up 4.3%, year-on-year. Both beat forecasts.

The Market Movers

For the DAX: It was a bearish day for the auto sector on Friday. Volkswagen and BMW fell by 0.30% and 0.28% respectively. Continental and Daimler ended the day down by 0.39% and by 0.55% respectively.

It was a mixed day for the banks, however. Deutsche Bank fell by 0.24%, while Commerzbank rose by 0.74%.

From the CAC, it was a bearish day for the banks. BNP Paribas and Credit Agricole slid 1.70% and by 1.93% respectively, with Soc Gen falling by 1.54%.

It was a mixed day for the French auto sector. While Stellantis NV rose by 0.04%, Renault fell by 1.84%.

Air France-KLM and Airbus SE ended the day down by 1.82% and by 1.97% respectively.

On the VIX Index

It was a flat end to the week for the VIX on Friday.

After having risen by 1.86% on Thursday, the VIX gave up gains from earlier in the day to end the day unchanged at 16.41.

The NASDAQ rose by 0.21%, while the Dow and the S&P500 ended the day down by 0.21% and by 0.03% respectively.

The Day Ahead

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

The German economy is in focus, with factory orders and construction PMI numbers due out.

Expect factory orders for July to have a greater impact.

From the U.S, there are no stats due out, with the U.S markets closed for Labor Day.

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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