A calm economic calendar and low volumes may test the support
It was a relatively bullish weekend for the European majors on Friday.
The CAC40 and EuroStoxx600 rose 0.68% and 0.57% respectively, with the DAX30 ending the day up 0.44%.
Economic data from the Eurozone and the United States provided additional support to the majors after Thursday’s rebound.
ECB President Lagarde added to the increase in additional assurances not to switch to short-term policy. Despite Lagarde’s assurances, the increase over the weekend was modest. An FOMC member speaks of a review of the asset purchase program, despite Powell’s assurances not to decline in the near term, has left markets on cautious footing.
Eurozone economic data was busier on Friday with preliminary private sector PMIs for May.
According to preliminary figures, the manufacturing PMI fell from 58.9 to 59.2, with the services PMI rising from 50.3 to 56.6.
Economists had forecast a manufacturing PMI of 58.5 and a services PMI of 53.0.
The manufacturing PMI fell from 66.2 to 64.0 while the services PMI fell from 49.9 to 52.8.
Economists had forecast a manufacturing PMI of 65.9 and a services PMI of 52.0.
The euro zone
In May, the manufacturing PMI fell from 62.9 to 62.8, while the services PMI rose from 50.5 to a 35-month high at 55.1. Economists had forecast PMIs of 62.5 and 52.3 respectively.
Supported by the recovery in activity in the services sector, the composite PMI rose from 53.8 to 56.9, a high of 39 months. Economists had forecast an increase to 55.1.
According to Markit survey,
- The rate of expansion in the private sector has reached the highest for more than 3 years.
- New order intake has jumped at a rate unmatched for nearly 15 years.
- Business optimism continued to reach new heights.
- Price indicators continued to rise, however, as demand continued to exceed supply for many goods and services.
The United States
Friday was a relatively busy day on the economic calendar, with private sector PMIs for May also taking center stage.
The services PMI fell from 64.7 to 70.1, with the manufacturing PMI rising from 60.5 to 61.5. Economists had forecast PMIs of 64.5 and 60.2 respectively.
The marked recovery in private sector activity midway through the 2nd quarter provided support to the majors.
For the DAX: It was a bullish day for the auto industry on Friday. Continental rallied by 2.31% to lead the way, with Daimler up 0.75%. Bmw and Volkswagen ended the day with modest gains of 0.11% and 0.28% respectively.
It was also a bullish day for the banks. German Bank and Commerzbank increased by 2.79% and 0.40% respectively.
From CAC, it was a bullish day for the banks. Agricultural credit and Soc Gen ended the day up 0.71% S and 0.48% respectively. BNP Paribas eked a gain of 0.05%.
It was also a bullish day for the French automotive sector. Stellantis NV increased by 2.07%, with Renault gaining 0.59%.
Air France-KLM avoided further losses, up 0.02%, with Airbus SE ended the day up 1.45%.
On the VIX index
It was a 2nd consecutive day in the red for the VIX Friday.
After falling 6.81% from Thursday, the VIX was down 2.52% to end the day at 20.15.
The Dow Jones rose 0.36%, while the NASDAQ and the S & P500 ended the day down 0.48% and 0.08% respectively.