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German economic sentiment and COVID-19 in focus

The majors

It was a bullish end of the week for the majors on Friday.

The CAC40 rose 1.35%, the DAX30 and EuroStoxx600 ended the day by 1.00% and 1.09%, respectively.

A further pickup in private sector activity across the euro zone supported the majors at the end of the week.

With Monday’s sell-off still a long way off, optimism about the reporting season and sentiment about the ECB’s monetary policy also fueled further uptrend.

Profits came from France, the UK and the US UK despite disappointing PMI numbers

The statistics

The focus on the PMIs of the French, German and private sectors of the Eurozone was on Friday.

The French manufacturing PMI fell from 59.0 to 58.1 and the PMI for services fell from 57.8 to 57.0.

Economists had forecast PMIs of 57.9 and 58.7, respectively.

From Germany, the PMI for manufacturing rose from 65.1 to 65.6 and the PMI for services from 57.5 to 62.2.

Economists had forecast PMIs of 63.7 and 59.1, respectively.

The Eurozone

For the eurozone, the manufacturing PMI fell from 63.4 to 62.6, while the service PMI rose from 58.3 to a 181-month high of 60.4.

Economists had forecast PMIs of 62.5 and 59.6, respectively.

According to the preliminary Markit survey

  • The composite PMI rose to a 252-month high in July, according to preliminary figures.
  • Business accelerated for the fourth straight month, aided by a further relaxation of COVID-19 restrictions.
  • Demand increased, with private sector orders growing the fastest since May 2000.
  • Companies hired for the 6th consecutive month, with the hiring pace being the second fastest since January 2018.
  • Average sales prices for goods and services rose at a record short-term pace due to supply bottlenecks.

From the USA

The focus was also on the preliminary PMI figures for the private sector for July.

The services PMI decreased from 64.6 to 59.8 while the manufacturing PMI increased from 62.1 to 63.1.

As a result, the composite PMI slipped from 63.7 to 59.7, with the major services PMI weighing heavily.

The market movers

For the DAX: It was a bullish day for the auto sector on Friday. Daimler up 5.00% to lead the way, backed by a broker upgrade to buy. Volkswagen and Continental increased by 2.66% and 2.35% respectively, with BMW 2.06% win.

It was a mixed day for the banks, however. Deutsche Bank increased by 1.05% while Commerzbank ended the day down 0.04%.

From the CAC, it was a bullish day for banks. Soc Gen rose 1.83%, with BNP Paribas and Credit Agricole up 1.18% and 1.09% respectively.

It was also a bullish day for the French auto sector. Stellantis NV and Renault ended the day up 1.04% and 0.97%, respectively.

Air France-KLM slipped 0.28% while Airbus SE up 1.81%.

On the VIX index

It was the fourth straight day in the red for the VIX on Friday.

After falling 1.23 on Thursday, the VIX fell 2.77% to end the day at 17.20.

The Dow was up 0.68% with the NASDAQ and S & P500 closing the day 1.04% and 1.01%, respectively.

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