European Equities: Service Sector PMIs and COVID-19 News to Guide the Majors

Ahead of the European open, market sentiment on progress towards a COVID-19 vaccine had provided support to riskier assets.

Better than expected unemployment figures from the Eurozone were followed by a surge in nonfarm payrolls in June.

The markets were able to brush aside disappointing wage growth and weekly jobless claims figures. Importantly, the unemployment rate fell back to 11.1% in spite of the participation rate rising to 61.5%.

The Stats

It was a relatively quiet day on the Eurozone economic calendar on Thursday. May unemployment figures for the Eurozone were in focus in the early part of the day.

According to Eurostat, the Eurozone’s unemployment rate rose from 7.3% to 7.4%. Economists had forecast a rise to 7.7%.

The figures had a muted impact on the majors, however, with June private sector PMIs pointing to a continued economic recovery.

From the U.S

It was a particularly busy day, with economic data including June’s nonfarm payrolls, unemployment rate, and weekly jobless claims.

U.S wage growth, trade, and factory order figures had a muted impact. The focus was on the pace of hiring. Improving labor market conditions is a must to support a return to economic growth.

In June, nonfarm payrolls rose by a record 4.8m, following a 2.699m increase in May. Economists had forecast a 3.0m increase.

Initial jobless claims increased by 1.427m in the week ending 26^th June, following a 1.482m rise in the week prior. Economists had forecast a 1.355m rise.

The Market Movers

For the DAX: It was a particularly bullish day for the auto sector on Thursday. BMW and Daimler led the way, with gains of 3.21% and 4.09% respectively. Continental and Volkswagen weren’t far behind, with the pair rising by 2.46% and by 2.56% respectively.

It was also a bullish day for the banks. Deutsche Bank rose by 2.22%, with Commerzbank ending the day up by 4.27%.

WIRECARD AG saw another slide on Thursday. Following a 38.95% loss Wednesday, WIRECARD AG ended the day down by 32.14%.

From the CAC, it was a big day for the banks. BNP Paribas and Soc Gen rallied by 5.43% and by 5.50% to lead the way. Credit Agricole rose by 4.46%.

The French auto sector also managed to recover from a bearish Wednesday. Peugeot and Renault rose by 3.72% and by 5.14% respectively.

Air France-KLM and Airbus SE saw gains of 2.41% and 3.46% respectively.

On the VIX Index

It was a 4^th consecutive day in the red for the VIX, which fell by 3.28% on Thursday. Following on from a 5.95% decline on Wednesday, the VIX ended the day at 27.68.

Economic data from the U.S delivered a boost to the U.S equity markets, with the June Nonfarm payroll numbers impressive.

News of progress towards a COVID-19 vaccine and hopes of more stimulus also provided support. It was enough for the markets to shift focus away from the spike in new COVID-19 cases in the U.S.

The S&P500 and NASDAQ rose by 0.45% and by 0.52%, with the Dow gaining 0.36%.

The Day Ahead

It’s a busy day ahead on the Eurozone economic calendar. June’s service sector and composite PMIs are due out of Italy and Spain.

Finalized PMIs are also due out of France, Germany, and the Eurozone.

Expect Italy and the Eurozone’s PMIs and any revision to France and Germany’s figures to have the greatest influence.

From the U.S

There are no material stats to provide the European majors with direction. The U.S markets are closed on the day.

The Latest Coronavirus Figures

On Thursday, the number of new coronavirus cases rose by 190,716 to 10,985,093. On Wednesday, the number of new cases had risen by 210,499. The daily increase was lower than Wednesday’s rise and down from 235,258 new cases from the previous Thursday.

Germany, Italy, and Spain reported 1,027 new cases on Thursday, which was down from 1,062 new cases on Wednesday. On the previous Thursday, 1,286 new cases had been reported.

From the U.S, the total number of cases rose by 48,853 to 2,828,313 on Thursday. On Wednesday, the total number of cases had risen by 51,607. On Thursday, 25^th June, a total of 45,503 new cases had been reported.

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