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Focus on PMIs for manufacturing and German retail

The majors

A bullish month of July ended bearishly for the European majors on Friday.

The CAC40 fell 0.32% while the DAX30 and EuroStoxx600 lost 0.61% and 0.45% the day, respectively.

Disappointing GDP figures from Germany followed on Thursday, weaker than expected GDP figures for the 2nd quarter from the USA.

Further concerns about the continued spread of the Delta variant added to the market fear at the end of the week.

From China, the CSI300 and Hang Seng continued their downtrend amid regulatory uncertainty that continued to put pressure on riskier assets towards the end of the month. Beijing’s attempts to calm markets failed later in the week, with the Hang Seng and CSI300 dropping 4.98% and 5.46% respectively for the week.

However, damage control was better than expected Q2 GDP numbers for France and the Eurozone.

The statistics

After the interest in the German economy for a large part of the week, the focus on Friday was on the economies of the euro zone and the member states.

The numbers were skewed for the better, which supported market optimism.

Member states

In the second quarter, the French economy grew by 0.9% compared to the previous quarter, reversing a decline of 0.1% in the previous quarter.

The German economy grew by 1.5% and thus partially reversed a decline of 2.1% compared to the first quarter.

Italy and Spain also posted gains in the quarter.

In the 2nd quarter the Spanish economy grew by 2.8%, reversing a decrease of 0.4% compared to the 1st quarter. The figures from Italy were also positive, with the economy growing by 2.7%. In the first quarter the economy grew by only 0.2% compared to the previous quarter.

The Eurozone

In the second quarter the economy of the euro zone grew by 2.0% compared to the previous quarter, reversing a decrease of 0.3% compared to the previous quarter.

The economy grew by 13.7% year-on-year, after having contracted by 1.3% in the previous quarter. Economists had forecast an increase of 12.6%.

The inflation figures were also in focus, with the annual inflation rate rising from 1.9% to 2.2%. Economists had forecast an annual inflation rate of 2.0%.

However, the rise in inflationary pressures dampened unemployment rates for the euro area. In June the unemployment rate in the euro area fell from 8.0% to 7.7%. Economists had forecast a decline to 7.8%.

From the USA

Personal expenses and inflation were the focus of the European session later.

Statistics were skewed for riskier assets but failed to give the European majors a boost.

Private spending rose by 1.0% in June, well above the forecast increase of 0.5%.

Inflationary pressure rose less than expected, with the annual inflation rate rising from 3.4 to 3.5%. For June, economists had forecast 3.6%.

The market movers

For the DAX: It was a bearish day for the auto sector on Friday. Daimler and BMW both posted losses of 1.17% each to point the way down. Continental and Volkswagen ended the day down 0.99% and 0.46%, respectively.

It was a bearish day for the banks too. Deutsche Bank and Commerzbank decreased by 1.57% and 0.18%, respectively.

From the CAC, it was a bearish day for the banks. BNP Paribas decreased 1.19%, with Soc Gen and Credit Agricole decreased by 1.01% and 0.86% respectively.

It wasn’t much better for the French auto sector. Stellantis NV fell 1.00%, with Renault ended the day down 3.35%.

Air France-KLM down 4.58%, with Airbus SE falling by 0.26%

On the VIX index

On Friday the VIX went green again and marked the 3rd win of the week.

After reversing a 3.33% decline from Thursday, the VIX rose 3.05% to end the day at 18.24.

The NASDAQ fell 0.71% while the Dow and S&P500 lost 0.42% and 0.54% respectively for the day.

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