Yahoo Finance

Economic Calendar:

Friday, 21^st August

French Manufacturing PMI (Aug) Prelim

French Services PMI (Aug) Prelim

German Manufacturing PMI (Aug) Prelim

German Services PMI (Aug) Prelim

Eurozone Manufacturing PMI (Aug) Prelim

Eurozone Markit Composite PMI (Aug) Prelim

Eurozone Services PMI (Aug) Prelim

The Majors

It was a bearish day for the European majors on Thursday. The CAC40 fell by 1.33% to lead the way down. It wasn’t much better for the DAX30 and EuroStoxx600, which saw losses of 1.14% and 1.07% respectively.

A combination of disappointing U.S data and market reaction to Wednesday’s FOMC meeting minutes did the damage.

The FOMC meeting minutes had been released after the European close on Wednesday, with the FED delivering a gloomy outlook on the economy.

Following the FOMC meeting minutes, the ECB’s monetary policy meeting minutes provided little comfort.

The Stats

It was a relatively quiet day on the Eurozone economic calendar. Key stats included July wholesale inflation figures for Germany.

According to Destatis,

• The Producer Price Index increased by 0.2% in July, after having stalled in June. Economists had forecast a 0.1% rise.

• Year-on-year, the index of producer prices fell by 1.7%.

• On an annual basis, prices of petroleum products were down 16.7%, prices of natural gas (distribution) decreased by 14.1%.

• The overall index, disregarding energy was down 0.5% from July 2019.

• Prices of intermediate goods decreased by 2.3%, while prices of non-durable consumer goods increased by 0.5%.

• Compared to July 2019, prices of capital goods increased by 1.1% and durable consumer goods by 1.6%.

ECB Minutes

On the monetary policy front, the ECB’s monetary policy meeting minutes also drew attention. According to the latest minutes,

• Financial market conditions had continued to normalize since the June meeting. They remained tighter and more fragile than before the pandemic, however.

• There was some caution over the recent positive market developments that were not fully backed by economic data. This might be based on overly optimistic expectations about the European Council’s recovery package. Hopes of progress in developing a vaccine had also supported the equity markets.

• Members agreed that a highly accommodative monetary policy stance continued to be appropriate. A subdued medium-term outlook for price stability and significant economic slack supported this.

• Uncertainty about the economic outlook remained elevated.

• The risk of a persistent increase in the unemployment rate and uncertainty about the extent to which the corporate sector could face solvency issues were highlighted.

• It was noted that a number of temporary fiscal measures were likely to expire in the autumn. This would leave businesses more directly exposed to the impact of the pandemic shock. The ECB would consider these factors and additional information available in the autumn to adjust monetary policy if required.