European indices end the session higher

Major European indices rise to start the trading week

The major European indices are ending the session higher as the new trading week begins. The provisional closes are showing:

  • German DAX, +0.09%
  • Francis CAC, +0.22%
  • UK’s FTSE 100, +0.55%
  • Spain’s Ibex, +0.77%
  • Italy’s FTSE MIB, +0.65%
Looking at the German Dax daily chart, the price over the last two months has seen the price move below the 50 day moving average on three separate occasions. Each break quickly reversed with the price closing above the moving average on each day. Since June 21, the price has been able to stay above that moving average level. The moving average currently comes in at 15455.576. The current price is trading at 15664.55.
Stay above keeps the buyers in control even though price action remains sideways near the all-time high price of 15802.67.
German DAX

Eurozone July Sentix investor confidence 29.8 vs 28.1 prior

Latest data released by Sentix – 5 July 2021

Latest data released by Sentix - 5 July 2021
  • Prior 28.1
Investor morale is seen improving to start 2H 2021 as economic conditions in the region pick up ahead of the summer, with the services sector in particular showing a marked improvement as virus restrictions are loosened. Sentix notes that:

“The massive investments by member states, supported by a continuously expansive monetary policy b the ECB, stabilised the euro area economy during lockdowns. As restrictions are removed, services and trade are now seeing an upward trend.”

Eurozone June final services PMI 58.3 vs 58.0 prelim

Latest data released by Markit – 5 July 2021

  • Composite PMI 59.5 vs 59.2 prelim

A slight revision higher on the balance of things and that marks the quickest growth in Eurozone activity in 15 years, with both the manufacturing and services sectors showing marked improvement as virus restrictions are loosened.

That said, supply disruptions are leading to higher cost inflation and that remains a threat to the recovery momentum if it continues persistently in the months ahead.
Markit notes that:

“Europe’s economic recovery stepped up a gear in June, but inflationary pressures have also ratcheted higher.

“Business is booming in the eurozone’s service sector, with output growing at a rate unsurpassed over the past 15 years. Added to the impressive growth seen in the manufacturing sector, the PMI surveys suggest the region’s economy is firing on all cylinders as it heads into the summer.

“Service sector growth has picked up across the board among the countries surveyed, with hard-hit sectors such as hospitality and tourism now coming back to life to join the recovery as economies and travel are opened up from virus-related restrictions.

“A wave of optimism that the worst of the pandemic is behind us has meanwhile propelled firms’ expectations of growth to the highest for 21 years, boding well for the upturn to gain further strength in coming months.

“Firms are increasingly struggling to meet surging demand, however, in part due to labour supply shortages, meaning greater pricing power and underscoring how the recent rise in inflationary pressures is by no means confined to the manufacturing sector. Service sector companies are hiking their prices at the steepest pace for over 20 years as costs spike higher, accompanying a similar jump in manufacturing prices to signal a broad-based increase in inflationary pressures.”

European equities little changed to start the day

Not a whole lot going on to start the session

  • Eurostoxx flat
  • Germany DAX -0.1%
  • France CAC 40 flat
  • UK FTSE +0.2%
  • Spain IBEX -0.2%
With US on holiday today, there might be little appetite for risk trades to really go chasing. European equities are trading near the highs for the year but keep in mind that the mood in the weeks ahead may be a bit less enthused due to the summer time.
That said, as mentioned before, there is still a good argument for European indices to outperform given the improving macroeconomic backdrop as well as from a valuation standpoint – as opposed to the already frothy levels seen in US stocks.

OPEC+ meeting said to still be scheduled to start at 1300 GMT later today

No OPEC+ resolution since last week

The UAE remains the sticking point as they want a revision to the baseline output. In other words, they want to be among the ones pumping more i.e. have a greater share of the pie and who wouldn’t when prices are soaring at the moment.
The proposal for the 400k bpd increase in output per month starting from August isn’t likely to be threatened but unless the UAE gets what they want, there won’t be any compromise on that front and that is where we are at now.


The meeting later today is said to proceed as per scheduled at 1300 GMT.
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