A week in review – 06/18/21


Major

It was a bearish week for the majors in the week ending the 18the June, with a Friday clearance sale wreaking havoc.

The DAX30 and EuroStoxx600 ended down 1.56% and 1.16% respectively, with the CAC40 falling 0.48%.

As economic data influenced the week, a more hawkish-than-expected FED weighed on the majors.

Warmongering chatter from FOMC members on Friday added to market angst.

Statistics

The focus of attention was industrial production, trade data and wage growth figures for the euro area.

It was a mixed set of numbers for the majors.

While industrial production rose more than expected in April, the euro area’s trade surplus narrowed sharply, with wage growth also slowing significantly in 1st trimester.

The statistics had a relatively moderate impact on the euro, however, with markets focusing on the FED during the week.

At the weekend, finalized euro zone inflation figures and Germany’s wholesale inflation figures provided little comfort.

Inflationary pressures continued to build and a marked acceleration in wholesale inflation in Germany added more pressure on the majors on Friday.

In May, the euro area’s annual inflation rate accelerated from 1.6% to 2.0%, which was in line with preliminary figures. Consumer prices rose 0.3% in May, which was also in line with preliminary figures. In April, consumer prices rose 0.6%.

German wholesale inflation figures indicated further acceleration in headline inflation in the coming months.

In May, Germany’s annual wholesale inflation rate accelerated from 5.2% to 7.2%.

The United States

Retail sales and wholesale inflation figures attracted a lot of attention on Tuesday.

It was a mixed set of numbers, however.

While wholesale inflationary pressures intensified in May, retail sales reversed in May.

NY Empire State’s industrial production and manufacturing figures also gave mixed results that day.

As industrial production rose again in May, the NY Empire State Manufacturing index fell from 24.3 to 17.4 in June.

In the 2sd Halfway through the week, jobless claims and the Philly Fed’s manufacturing PMI figures were the focus of attention.

In June, the Philadelphia Fed’s manufacturing PMI index fell from 31.5 to 30.7, against 31.0 expected.

While the overall index declined, the employment sub-index rose. The sub-index fell from 19.3 to 30.7.

However, the jobless claims figures were disappointing.

In the week ending 11e In June, initial jobless claims fell from 375,000 to 412,000. Economists had forecast a drop to 359k.

While the statistics attracted attention, the FOMC’s monetary policy decision, press conference and economic projections were the main drivers of the week.

More hawkish outlook on the economy and interest rates than expected tipped the European majors over the weekend.

Market movers

From DAX, it was a bearish week for the auto sector. Volkswagen fell by 6.25%, with Bmw and Continental ending the week down 4.02% and 4.47% respectively. Daimler saw a relatively modest loss of 3.05% over the week.

It was also a bearish week for the banking sector. German Bank and Commerzbank fell by 6.16% and 5.53% respectively.

From CAC, it was a bearish week for the banks. Agricultural credit and Gen Soc experienced losses of 5.07% and 5.01% respectively, with BNP Paribas down 4.31%.

It was also a bearish week for the French automotive sector. Stellantis SA and Renault ended the week down 4.00% and 3.95% respectively.

Air France-KLM experienced a modest loss of 2.57%, while Airbus ended the week up 0.39%.

On the VIX index

It was a 1st week in the green from 4 for the VIX in the week ending 18the June. Reversing a 4.69% drop from the previous week, the VIX jumped 32.27% to end the week at 20.70.

4 days in the green from 5 sessions, which included a 16.62% jump on Friday, brought the week’s rise.

For the week, the Dow Jones slipped 3.45%, with the NASDAQ and the S & P500 ending the week down 0.28% and 1.91% respectively.

The coming week

It’s a relatively busy week ahead on the economic calendar.

On Wednesday, preliminary private sector PMIs for France, Germany and the eurozone will attract a lot of attention.

While Germany’s manufacturing PMI figures remain, a further key upturn in service sector activity in the euro bloc will be needed to support market optimism.

In the latter part of the week, German corporate and consumer sentiment figures will also influence.

From the United States, private sector PMIs on Wednesday will also be the focus of attention on Wednesday. Expect the services PMI to be the main driver of riskier assets. The focus on Thursday will be on jobless claims and basic durable goods orders ahead of personal spending and inflation numbers on Friday.

We could see riskier assets come under additional pressure if jobless claims numbers drop sharply during the week.

On the monetary policy front, central bank chatter will now begin to have more influence following FOMC projections and last week’s press conference.

This item was originally posted on FX Empire

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