Service Sector PMIs, Brexit, and Vaccine News Updates in Focus

Earlier in the Day

It’s was a busy start to the week on the economic calendar this morning. The Kiwi Dollar, the Aussie Dollar, and the Japanese Yen were in action early on, with economic data from China also in focus.

For the Kiwi Dollar

Building consents surged by 8.8% in October to hit a 46-year high, following a 3.6% jump in September.

According to NZ Stats,

  • Compared with October 2019, the number of new homes consented increased by 2.8%.
  • Annual new homes consented reached 37,981, to sit just short of 1974’s all-time high 40,025.
  • Strong growth plans to build townhouses, flats, and units drove consents higher.

The Kiwi Dollar moved from $0.70678 to $0.70663 upon release of the figures. At the time of writing, the Kiwi Dollar was down by 0.10% to $0.7061.

For the Aussie Dollar

Trade data was in focus this morning.

In October, the trade surplus widened from A$5.630bn to A$7.456bn. Economists had forecasted a widening to A$5.800bn.

According to the ABS,

  • Exports of goods and services rose A$1,819m (5%) to A$35,720m
    • There were increases in the net exports of general merchandise (8%), rural goods (8%), and non-rural goods 8%).
    • The net exports of goods under merchanting rose by 100% but only accounted for A$18m of the total increase in exports.
  • Imports of goods and services saw a modest A$178m (1%) increase to A$28,264m.
    • Non-monetary gold imports fell A$232m (33%).
    • Imports of intermediate and other merchandise goods, capital goods, consumption goods, and general merchandise debits each rose by 2%.

The Aussie Dollar moved from $0.74076 to $0.74036 upon release of the figures that preceded service sector PMI numbers from China. At the time of writing, the Aussie Dollar was down by 0.16% to $0.74026.

For the Japanese Yen

Finalized service sector PMI numbers were in focus this morning. The Markit Services PMI came in at 47.8 for November, which was up from an October 47.7.

According to the finalized November Survey,

  • Incoming new business fell at a faster rate, while output saw a softer decline in November.
  • Firms reduced workforce numbers in the month.
    While optimism softened, the level of optimism towards the next 12-months remained elevated.

The Japanese Yen moved from ¥104.502 to ¥104.479 upon release of the figures. At the time of writing, the Japanese Yen was down by 0.11% to ¥104.53 against the U.S Dollar.

From China

The Caixin Services PMI rose from 56.8 to 57.8 in November. Economists had forecast a decline to 56.5.

According to the November survey,

  • Greater customer demand and sustained recovery of market conditions supported the upside.
  • Total new business rose at the fastest pace since April 2010, with business confidence hitting the highest level in over nine-and-a-half years.
  • Employment rose at the fastest pace in over a decade.
  • There was a sharp increase in operating expenses, however.

The Aussie Dollar moved from $0.74013 to $0.74048 upon release of the figures.

The Day Ahead

For the EUR

It’s a busy day ahead on the economic calendar. Spanish and Italian service sector PMI numbers are due out along with Eurozone retail sales figures for October. Finalized services and composite PMI figures are also due out of France, Germany, and the Eurozone.

Barring any marked revisions to prelim figures, we would expect Italy and the Eurozone’s PMIs to garner the greatest interest.

Away from the economic calendar, Brexit updates will also provide direction.

At the time of writing, the EUR was down by 0.02% to $1.2113.

For the Pound

It’s a relatively quiet day ahead on the economic calendar. Finalized services and composite PMI figures are due out later today.

Barring material revisions to prelim figures the stats are unlikely to have a material impact on the Pound.

Expect Brexit updates to be the key driver on the day.

At the time of writing, the Pound was up by 0.01% to $1.3366.

Across the Pond

It’s a relatively busy day ahead for the U.S Dollar. November’s ISM Non-Manufacturing PMI and weekly jobless claims figures will have the greatest influence on market risk sentiment.

Markit services and composite PMI numbers will likely have a muted impact on the day.

Away from the economic calendar, any chatter from Capitol Hill and COVID-19 news updates will continue to influence.

At the time of writing, the Dollar Spot Index was down by 0.08% to 91.041.

For the Loonie

It’s a particularly quiet day on the economic data front. There are no material stats due out to provide the Loonie with direction.

The lack of stats will leave the Loonie in the hands of crude oil inventories and market risk sentiment.

At the time of writing, the Loonie was down by 0.02% to C$1.2920 against the U.S Dollar.

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

European Equities: Service Sector PMIs and Brexit in Focus

Economic Calendar:

Thursday, 3rd December

Spanish Services PMI (Nov)

Italian Services PMI (Nov)

French Services PMI (Nov) Final

German Services PMI (Nov) Final

Eurozone Markit Composite PMI (Nov) Final

Eurozone Services PMI (Nov) Final

Eurozone Retail Sales (MoM) (Oct)

Friday, 4th December

German Factory Orders (MoM) (Oct)

IHS Markit Construction PMI (Nov)

The Majors

It was a mixed day for the European majors on Wednesday, following Monday’s gains. The DAX30 and EuroStoxx600 fell by 0.52% and by 0.05% respectively, while the CAC40 ended the day up by 0.02%.

For the majors, concerns over a lack of progress towards Brexit pegged the majors back on the day. Also weighing on the majors and the DAX30, in particular, was news that the Democrats would retain the phase 1 trade agreement with China near-term.

There were positives, however, that provided support. News of the UK approving the BioNTech/Pfizer.inc vaccine delivered support, as did Joe Biden talk of a COVID-19 stimulus package.

According to reports on Wednesday, the President-Elect stated that delivering a COVID-19 stimulus package was an immediate priority.

The Stats

It was a relatively busy day on the Eurozone economic calendar. German retail sales figures for October were in focus going into the European open.

According to Destatis, retail sales rose by 2.6% in October, reversing a 1.9% slide in September. Economists had forecast a 1.2% rise.

  • Compared with the same month a year ago, retail sales were up by 8.2%.
  • Supermarket, self-service department shops, and hypermarket sales were up by 7.9%, year-on-year.
  • In the non-food retail sector, sales rose by 9.0%.
  • When compared with February 2020, the pre-COVID-19 pandemic month, retail sales rose by 5.9%.

Unemployment numbers from Spain and the Eurozone released later in the day had a muted impact on the majors.

In Spain, the unemployment rose by 25.3k in September, following a 49.6k jump in August.

For the Eurozone, the unemployment rate slipped from an upwardly revised 8.5% to 8.4% in October. Economists had forecast an unemployment rate of 8.4%.

According to Eurostat,

  • While down from 8.5% in September, unemployment was up from 7.4% in October 2019.
  • Compared with September 2020, Eurostat estimates that the number of unemployed persons fell by 91,000.
  • By contrast, however, the number of unemployed persons increased by 2.186 million when compared with October 2019.

From the U.S

ADP non-farm employment change figures were in focus late in the day.

In November, nonfarm employment increased by 307k, falling short of a forecasted 410k increase. In October, nonfarm employment had increased by 365k.

The Market Movers

For the DAX: It was a mixed day for the auto sector on Wednesday. Continental slid by 1.56%, with BMW and Volkswagen falling by 0.39% and by 0.44% respectively. Daimler rose by 0.24%, however, to buck the trend on the day.

It was a bullish day for the banks. Deutsche Bank rose by 0.90%, with Commerzbank ending the day up by 1.81%.

From the CAC, it was a bullish day for the banks. BNP Paribas and Credit Agricole rose by 1.69% and by 1.67% respectively, with Soc Gen gaining 2.10%.

It was a mixed day for the French auto sector, however. Peugeot fell by 0.79%, while Renault rose by 1.45%.

Air France-KLM slipped by 0.85%, while Airbus SE rose by 2.15%, following Tuesday’s 1.90% gain.

On the VIX Index

It was a 2nd consecutive day in the green for the VIX, after having fallen for 5 consecutive days. Following on from Tuesday’s 0.97% gain, the VIX rose by 1.93% to end the day at 21.17.

Disappointing ADP nonfarm figures had limited impact, while plans to retain the phase 1 trade agreement with China was market negative. On the positive, however, remained progress towards a COVID-19 vaccine and hopes of a stimulus package to support the U.S economy.

For the U.S markets, it was a mixed day after Tuesday’s gains and last month’s rally. The Dow and S&P500 rose by 0.20% and by 0.18% respectively, while the NASDAQ slipped by 0.05%.

VIX 031220 Daily Chart

The Day Ahead

It’s a busy day ahead on the Eurozone economic calendar. Key stats include services and composite PMI numbers for Italy and Eurozone retail sales figures.

Finalized services and composite PMI figures for November are also due out for France, Germany, and the Eurozone.

We would expect the Eurozone’s composite and services PMI to have the greatest impact on the majors.

From the U.S, the all-important ISM services PMI and weekly jobless claims figures will also influence later in the day.

Away from the economic calendar, Brexit and COVID-19 news updates will need monitoring. Any further chatter on a stimulus package from Capitol Hill would influence.

The Futures

In the futures markets, at the time of writing, the Dow Mini was up by 18 points.

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

COVID-19 Vaccine Update – The UK Wastes No Time as MHRA Approves Vaccine

The Latest

BioNTech and Pfizer Inc. became the first pharma to have their mRNA COVID-19 vaccine approved on Wednesday.

The UK’s Medical & Healthcare Products Regulatory Agency (“MHRA”) became the first agency to approve a COVID-19 vaccine.

With the UK suffering at the hands of the COVID-19 pandemic, the independent regulator wasted little time.

The UK Government has pre-ordered 145 million doses of COVID-19 vaccines from Pfizer Inc., Moderna Inc., and AstraZeneca. Of the 145 million doses, the government has pre-ordered 40 million from BioNTech/Pfizer Inc.

With an efficacy rate of 95% and effective across all age groups, the first doses of the vaccine are due to arrive in days.

The UK Government announced that a first batch of 800,000 doses forms part of an expected 10 million doses by the end of the year.

With the vaccine coming in 2 doses, 5 million patients will receive inoculation if BioNTech/Pfizer Inc. delivers the full quota.

The Government’s Joint Committee on Vaccination and Immunisation (“JCVI”) affirmed on Wednesday that the first priorities should be the prevention of COVID-19 mortality and the protection of health and social care staff and systems.

The JVIC has given older adult residents in care homes the highest priority for vaccination, followed by care home workers.

Secondary priorities could include vaccination of those at increased risk of hospitalization and at an increased risk of exposure.

Logistics will now need to be in place to transport the vaccine, at -70C, for administration across the UK.

How the Markets Reacted

The FTSE100 rose by 1.23% on Wednesday, with the upside coming off the back of the MHRA announcement.

For the European majors, while it was a mixed day, the DAX30 and CAC40 came off lows in response to the news.

BioNTech SE share price rose by 6.21% in response to the news. Pfizer Inc. ended the day up by a more modest 3.51%.

While trailing Pfizer Inc. in the race to deliver a global vaccine, there was also support for AstraZeneca and Moderna Inc., which rose by 1.26% and by 1.41% respectively.

What’s next?

With UK regulators beating the FDA and the EU’s European Medicines Agency (“EMA”) to the punch, BioNTech/Pfizer Inc. will now need to deliver the doses.

There’s no trial run for BioNTech/Pfizer Inc. in terms of delivering the doses in a timely manner.

Both BioNTech/Pfizer Inc. and the government will likely face logistical challenges and the markets and governments from overseas will likely watch closely.

Successful distribution and administration of the first batch are now key. For the FDA and the EMA, both will have the benefit of the UK government’s experiences in distribution and vaccination.

The FDA is set to review the BioNTech/Pfizer Inc. vaccine on 10th December. In the New Year, the EMA review is due on 12th January.

Key areas of focus in the coming weeks will be production and distribution and geographical allocation.

The EU has pre-ordered 300 million doses of the BioNTech/Pfizer Inc. vaccine, with the U.S pre-ordering 100 million and an option for an additional 500 million doses.

BioNTech/Pfizer Inc. has projected between 5 million to 50 million doses to be available by the end of the year.

The UK is due to receive 10 million doses, which leaves 40 million assuming that 50 million doses are produced.

With the EU review of the vaccine not due until mid-January, that leaves the U.S and Japan in focus. While the U.S has pre-ordered 100 million, Japan has pre-ordered 120 million of the BioNTech/Pfizer Inc. vaccine.

Pressure may mount on the likes of the EMA to bring forward vaccine reviews. BioNTech/Pfizer Inc. may also feel increased pressure to deliver on the higher side of production forecasts…

US Stock Market Overview – Stock Rise Led By Energy; ADP Payrolls Disappoint

US stocks rose on Thursday following news that House Speaker Nancy Pelosi and Senate Minority Leader Chuck Schumer had urged Senate Majority Leader Mitch McConnell to use a $908 billion bipartisan stimulus plan as the basis for relief talks before the end of the year. Sectors in the S&P 500 index were mixed, led higher by energy shares, consumer staples bucked the trend. News before the opening bell that the UK had approved the Pfizer vaccine, helped buoy stock prices. Mortgage applications in the US jumped more than expected while ADP private payrolls disappointed.

Mortgage Applications Rise

Mortgage applications to purchase a home jumped 9% last week from the previous week, according to the Mortgage Bankers Association’s index. Purchase applications were a robust 28% higher from a year ago.

ADP Private Payrolls Rise Less than Expected

Private companies added 307,000 jobs in November below the 475,000 expected. The October figure was revised higher to 404,000. This was the smallest gain since July’s 216,000. The revision added 39,000 to the original estimate from October, making the November miss not as bad as it appears. This comes ahead of Friday’s payroll report. The Labor Department on Friday is expected to report that the economy in November added 440,000 jobs, down from the 638,000 in October. Private payrolls are estimated to grow by 590,000.

Biden Says He won’t Immediately Terminate Chinese Tariffs

President-elect Joe Biden will not immediately remove tariffs imposed by President Donald Trump on China. Biden said he first wants to conduct a full review of the “phase one” trade deal that the Trump administration reached with China before he makes any decision on the future direction of trade with the worlds second largest economy.

Stocks Retreat As Traders Are Not Impressed With The Restart Of Stimulus Talks

Stimulus Negotiations Are Back Into Spotlight

U.S. Treasury Secretary Steven Mnuchin and House Speaker Nancy Pelosi talked about the potential stimulus package for the first time after the presidential election.

At first glance, Republicans and Democrats remain far apart. Senate leader Mitch McConnell wants to include a targeted relief bill into the $1.4 trillion funding bill for the government, but Democrats will likely oppose this proposal.

Meanwhile, a group of lawmakers unveiled a new coronavirus aid package plan worth $908 billion, which is aimed at bridging the gap between Republicans and Democrats.

It remains to be seen whether both sides are ready to reach a compromise deal. The market is not impressed, and S&P 500 futures are losing ground in premarket trading.

ADP Employment Data Disappoints

The U.S. has just released ADP Employment Change report which indicated that private businesses hired 307,000 workers in November. Analysts expected that the ADP Employment Change report will show that about 400,000 jobs were added.

The report shows that the second wave of coronavirus has started to put material pressure on the job market. Traders will soon have a chance to take a look at additional employment data. On Thursday, Initial Jobless Claims and Continuing Jobless Claims reports will be released. Analysts expect Initial Jobless Claims of 775,000 and Continuing Jobless Claims of 5.9 million.

On Friday, market’s focus will shift to Non Farm Payrolls and Unemployment Rate reports. The Non Farm Payrolls report is projected to show that the economy added 481,000 jobs in November while Unemployment Rate is expected to decline to 6.9% to 6.8%.

If these reports confirm that the recovery of the job market is slowing down, stocks may find themselves under pressure.

UK Approves Pfizer’s COVID-19 Vaccine

UK has just approved the coronavirus vaccine developed by Pfizer and BioNTech. Vaccinations are expected to begin early next week.

Not surprisingly, Pfizer and BioNTech shares are gaining ground in premarket trading.

The reaction of the broader market is muted. Perhaps, traders wait for the approval of Pfizer/BioNTech and Moderna‘s vaccines in the U.S.

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

M4Market Launches New Festive Rebate Promotion for its Clients

M4Markarkets, global Forex and CFD broker announces the launch of their festive rebate promotion which will be exclusively available to all direct clients on the Standard account for a limited period of time.

Rebates allow traders to earn extra cash while they trade and reduce the overall cost of trading. Between December 1st, 2020 and January 31st, 2020. M4Markets clients will win $2 for every lot they trade with no minimum lot requirements and no cap on rebates earned. The rebate promotion paired with M4Markets’ ultra-low spreads, negative balance protection and lightning fast execution will create an enhanced trading experience for all traders.

The Festive Rebate Promotion is available to all direct M4Markets clients on the Standard Account. New clients can register directly through the M4Markets website for a new account, verify their account and meet the minimum deposit requirements of $50. Existing clients who meet the criteria will be automatically enrolled to the promotion. Rebates earned will be credited to the clients’ wallet automatically 10 minutes after a trade is completed.

Commenting on the Festive Rebate Promotion, Mrs. Marilena Iakovou, noted that it’s an opportunity for people to test M4Markets’ conditions while trading at a significantly lower cost. “We have invested in cutting-edge technology and we want to give more people the opportunity to try our services. Our cashback rebate promotion is a wonderful gift to all traders for this holiday season”.

For more information about M4Markets’ promotion visit the dedicated page here: https://www.m4markets.com/festive-rebate/.


About M4Markets:

M4Markets is one of the fastest growing regulated Forex and CFD brokers with a multi-asset offering and a focus on trader experience. With low spreads and no requotes, segregated trust accounts, ultra-fast execution and regulated by the Financial Services Authority (FSA) in the Seychelles, M4Markets is one of the most trusted brokers. The company is in the process of also applying for a European License.

Libertex Adds Yet Another Payment Method

Famed for its accessibility, convenience and security, PayPal will offer Libertex clients yet another quick, easy and secure method for funding their accounts and withdrawing profits.

Nowadays, there aren’t many people who don’t have a PayPal account or haven’t at least considered opening one. And you don’t have to look far to see why. Its ease of use and integrability is unrivalled. All you need is an e-mail address, and you can make and receive payments in a variety of currencies in just one click. Then, your balance can just as easily be converted into the currency of your choice and transferred directly to your personal bank account. The service’s appeal to consumers everywhere is one of the reasons Libertex has been so keen to support this deposit method…and now it does!

This momentous agreement with PayPal puts Libertex firmly among the leaders of the online trading market, and everybody involved really couldn’t be prouder of this fact. Now Libertex clients can add funds to their accounts and withdraw their profits via virtually every method imaginable. In addition to SEPA bank transfers and debit/credit card payments, Libertex has long supported Sofort, Trustly, Skrill and many other deposit methods. Despite this wealth of choice, it always felt as if there was one big hole that needed filling — but not anymore.

Speaking on this special occasion for the company, Libertex CEO Michael Geiger commented: “We truly couldn’t be happier to be able to offer our clients this new payment option. PayPal is a real household name whose user-friendly reputation precedes it. With the addition of this exciting method, we will be making depositing and withdrawing funds even easier and more convenient for our valued customers around the world.”

Just when you thought the news couldn’t get any better, there’s more. PayPal deposits will be completely free for Libertex users. That’s right! The broker won’t take any commission on funds added to your trading account using this latest supported payment option. The service is set to go live on 1 December, and the hope is that this will become a date to remember in Libertex’s history!

If you haven’t yet taken the plunge and registered your own trading account with Libertex, this could be the perfect opportunity. With this new deposit/withdrawal method, it really never has been easier to dive head-first into trading. Libertex has a wide range of different instruments available from a variety of asset classes, and its generous leverage helps you boost your potential profits even more. Register now and start your career in the financial markets today!

Brexit Update – Talks Continue as EU Member States Keep an Eye on Barnier

The Latest

Brexit talks are continuing in London, after EU chief negotiator Barnier’s arrival at the start of the week.

The hot topics of debate remain the same in spite of talks having extended for months, if not years…

UK fisheries and a level playing field remain key sticking points for Britain and the EU.

As far as UK fisheries are concerned, French President Macron continues to take an uncompromising stance. With the presidential elections next year, a loss of access to UK fisheries would be a blow to Macron’s chances.

Losing complete access, in the event of a no-deal Brexit, would be a bigger blow to French fishermen, however.

For the Brexiteers and for Britain, continuing to give the EU access to UK waters makes no sense. Leaving the EU should translate into independence and control over its waters and borders.

Interestingly, the fishing industry contributes very little to the UK economy. In fact, when compared with contribution from trade and services, UK fisheries barely feature in economic reports. The fishing industry comes under agriculture which contributes less than 1% to the UK GDP.

By contrast, the manufacturing sector contributes closer to 20%, with Services more than 70% to GDP.

Therefore, standing firm on UK fisheries at the expense of an EU-Britain trade agreement will have a material economic impact. It’s hardly surprising that Bank of England Governor Bailey viewed Brexit as the greatest threat to the UK economy…

Ceding on UK fisheries, however, is not an option Boris Johnson.

UK Sovereignty in the Spotlight

A British government compromise on UK fisheries will question the entire concept of Brexit.

Back in 2016, those in favor of leaving the EU voted in order for Britain to recapture its independence and sovereignty.

The EU continues to miss the point on this front and continues to push to keep Britain tied to as many EU laws as possible.

With Brexiteer Boris Johnson at the helm, it remains unlikely for the British PM to give up too much ground.

While French President Macron is eyeing next year’s election, Boris Johnson also needs to keep the Tories united.

The British Pound

At the time of writing, the Pound was up by 0.03% to $1.34155 against the Dollar.

GBPUSD 021220 Daily Chart

The minor gain comes off the back of a 0.82% rally back to $1.34 levels for the 1st time since June 2018. That’s quite an achievement when considering the fact that the Pound was languishing at sub-$1.20 levels in March of this year.

It’s an even greater achievement when considering the hurdles that remain for negotiators to overcome in order to reach an agreement.

With Barnier in London, the EU is reportedly set to request updates and line of sight on negotiations before any actual agreement is made.

In recent weeks, we have heard Barnier talk of a willingness to compromise. Since then, however, EU President Ursula von der Leyen and a number of heads of stats have voiced concern.

The EU President’s message was clear that Brexit should not jeopardize the integrity of the EU Single Market. Macron and a number of others would likely argue that any EU compromise on access to UK fisheries would be just that.

In reality, however, more EU member states are likely to be worse off in the event of a no-deal Brexit than those which would benefit from unaltered access to UK fisheries.

From an economic perspective, therefore, the EU should be more than willing to give up the fight on UK fisheries.

The imbalances of power across the EU continue to be highlighted and remains the Achilles Heel of the EU Project.

Brussels is desperate to keep the EU Project afloat. But whether this at any cost remains to be seen. After all, Macron could be out next year. A populist government would find it hard to argue for unaltered access. It wouldn’t be very populist.

Looking Ahead

With the markets having made taken its position on the Brexit front, it now comes down to updates from the respective negotiating teams.

In recent months, the Pound has grown resilient to the strong-arming of the EU and negative chatter across the news wires.

It is crunch time, however. Following yesterday’s move through to $1.34 levels, a deal will need to be forthcoming to support further upside and a move through to $1.40 levels.

Support from the hope of an agreement does leave the Pound exposed to material downside risks, however.

A no-deal and this year’s current low of $1.14098 would have to be a starting point.

Economic Data, Capitol Hill, and Brexit Put the EUR, USD, and GBP in Focus

Earlier in the Day:

It’s was a quieter start to the week on the economic calendar this morning. The Aussie Dollar was in action.

For the Aussie Dollar

The Australian economy was in focus this morning. In the 3rd quarter, the economy grew by 3.3%, quarter-on-quarter, following a 7.0% contraction in the 2nd quarter. Economists had forecast of 2.6% growth.

According to the ABS,

  • The economy only saw a partial recovery in the September quarter. As a result, economic activity fell 3.8% through the year to September quarter.
  • Household spending jumped by 7.9% to drive the economy, with the upside coming from an easing of lockdown measures.
  • In spite of record quarterly growth in household spending, the level in September was 6.8% lower than that recorded in the December Quarter 2019.
  • Compensation of employees rose 2.3% as hours worked increased. The household saving to income ratio remained elevated at 18.9%. This was down from a June quarter 22.1%, however.
  • Net trade detracted 1.9 percentage points from GDP, the largest detraction since the 3rd quarter of 1980.
  • A demand-driven surge in imports and a fall in the exports of goods and services weighed.

The Aussie Dollar moved from $0.73797 to $0.73855 upon release of the figures. At the time of writing, the Aussie Dollar was up by 0.03% to $0.7373.

Elsewhere

At the time of writing, the Japanese Yen was down by 0.04% to ¥104.37 against the U.S Dollar, with the Kiwi Dollar down by 0.10% to $0.7057.

The Day Ahead:

For the EUR

It’s a relatively busy day ahead on the economic calendar. German retail sales and Spanish and Eurozone unemployment figures are due out.

Barring dire unemployment figures from the Eurozone, German retail sales figures will have the greatest impact.

Away from the economic calendar, Brexit and COVID-19 news updates remain key drivers, however.

At the time of writing, the EUR was down by 0.03% to $1.2067.

For the Pound

It’s a particularly quiet day ahead on the economic calendar. There are no material stats due out, leaving the Pound firmly in the hands of Brexit updates.

At the time of writing, the Pound was down by 0.02% to $1.3417.

Across the Pond

It’s a relatively quiet day ahead for the U.S Dollar. November’s ADP Nonfarm Employment Change figures are due out later today. With market concerns over the U.S labor market recovery lingering, today’s stats will provide riskier assets with direction.

Hopes of an imminent COVID-19 vaccine, however, would limit the effect of any disappointing numbers, however.

Away from the economic calendar, any chatter from Capitol Hill and COVID-19 news updates will continue to influence.

At the time of writing, the Dollar Spot Index was up by 0.09% to 91.231.

For the Loonie

It’s a quiet day on the economic data front. There are no material stats due out to provide the Loonie with direction.

The lack of stats will leave the Loonie in the hands of crude oil inventories and market risk sentiment.

At the time of writing, the Loonie was down by 0.02% to C$1.2938 against the U.S Dollar.

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

European Equities: Futures Point South with Economic Data and Brexit in Focus

Economic Calendar:

Wednesday, 2nd December

German Retail Sales (MoM) (Oct)

Spanish Unemployment Change

Eurozone Unemployment Rate (Oct)

Thursday, 3rd December

Spanish Services PMI (Nov)

Italian Services PMI (Nov)

French Services PMI (Nov) Final

German Services PMI (Nov) Final

Eurozone Markit Composite PMI (Nov) Final

Eurozone Services PMI (Nov) Final

Eurozone Retail Sales (MoM) (Oct)

Friday, 4th December

German Factory Orders (MoM) (Oct)

IHS Markit Construction PMI (Nov)

The Majors

It was a bullish start to the month for the European majors on Tuesday. Reversing losses from Monday, the CAC40 rallied by 1.14% to lead the way. The DAX30 and EuroStoxx600 saw more modest gains of 0.69% and 0.65% respectively.

Economic data from China and news of Moderna Inc. submitting a EUA to the FDA provided support to the majors on the day.

Disappointing economic data from the Eurozone and the U.S failed to sink the majors, with the markets expecting a COVID-19 vaccine fuelled economic recovery next year.

The Stats

It was a particularly busy day on the Eurozone economic calendar. November manufacturing PMI figures for Spain, Italy, and Germany unemployment data were in focus through the day.

Finalized manufacturing PMI numbers for France, Germany, and the Eurozone were also out on the day.

The PMIs

In November, Spain’s manufacturing PMI fell from a 3-month high of 52.5 to 49.8. Economists had forecast a fall to 50.5.

Italy’s Manufacturing PMI declined from a 31-month high of 53.8 to 51.5, which fell short of a forecasted 52.0.

The finalized French PMI came in at 49.6, which was up from a prelim 49.1, while down from October’s 51.3, with Germany’s PMI coming in at 57.8. This was down from a prelim 57.9 and from a 31-month high of 58.2 in October.

For the Eurozone, the November PMI came in at 53.8. This was up from a prelim 53.6, while down from October’s 54.8.

According to the Eurozone’s October Markit Survey,

  • Growth in new orders eased to a 5-month low, with new export orders rising at the slowest pace since August.
  • Backlogs increased for a 4th consecutive month, highlighting capacity pressures, while firms cut staffing levels for a 19th month-in-a-row.
  • On the pricing front, input cost inflation accelerated at the sharpest pace in almost 2-years, with output prices also on the rise.
  • Confidence improved to its highest for over two-and-a-half years, with Dutch, German, and Italian companies the most confident.

By Country,

  • With the exception of the Netherlands and Ireland, all countries recorded a weakening in their respective PMIs.
  • Germany remained the best-performing country, followed by the Netherlands and Ireland.
  • While Austria and Italy also reported solid growth, Spain and France reported minor contractions.
  • Greece remained by far the worst-performing.

German Unemployment

November unemployment figures from Germany impressed once more, falling by 39k. Economists had forecast an 8k rise. Following October’s 38k decline, the unemployment rate fell from 6.2% to 6.1% in November.

Eurozone Inflation

Eurozone inflation figures for November failed to impress, however. Consumer prices fell by 0.3%, year-on-year, and by 0.3% month-on-month. Core consumer prices rose by just 0.2%, year-on-year, according to prelim figures.

From the U.S

The market’s preferred ISM Manufacturing PMI fell from 59.3 to 57.5. Economists had forecast a decline to 58.0.

The Market Movers

For the DAX: It was a bullish day for the auto sector on Tuesday. Continental and Volkswagen rallied by 3.45% and by 3.76% respectively to lead the way. BMW and Daimler saw more modest gains of 2.40% and 1.24% respectively.

It was also a bullish day for the banks. Deutsche Bank reversed Monday’s 1.44% loss with a 1.42% gain, with Commerzbank rallying by 3.69%.

From the CAC, it was a bullish day for the banks. Credit Agricole and Soc Gen rallied by 5.49% and by 5.15%, with BNP Paribas rising by 2.89%.

It was also a bullish day for the French auto sector. Peugeot and Renault ended the day with gains of 1.90% and 2.64% respectively.

Air France-KLM resumed its upward trend, rallying by 3.4%, with Airbus SE ending the day up by 1.90%.

On the VIX Index

A run of 5 consecutive days in the red came to an end for the VIX on Tuesday. Partially reversing a 1.30% decline from Monday, the VIX rose by 0.97% to end the day at 20.77.

On Tuesday, the Dow rose by 0.63%, with the NASDAQ and the S&P500 ending the day with gains of 1.28% and 1.13% respectively.

The upside for the VIX came in spite of fresh record highs for the U.S majors, with downside risks lingering in spite of progress towards a COVID-19 vaccine.

VIX 021220 Daily Chart

The Day Ahead

It’s a relatively quiet day ahead on the Eurozone economic calendar. Unemployment figures from Spain and the Eurozone, and German retail sales figures are due out later this morning.

Barring dire numbers, however, the unemployment figures should have a muted impact on the European majors. Lockdown measures are likely to hurt employment conditions further in the near-term. The progress towards a COVID-19 vaccine has raised the hope of a recovery going into 2021.

Germany’s retail sales figures will influence early in the session, however.

From the U.S, November’s ADP non-farm employment change figures are due out that will draw some interest.

Away from the economic calendar, Brexit and COVID-19 news updates will need continued monitoring. Any progress towards a stimulus package on Capitol Hill would influence.

The Futures

In the futures markets, at the time of writing, the DAX was down by 70 points, with the Dow Mini down by 175 points.

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

The Crypto Daily – Movers and Shakers – December 2nd, 2020

Bitcoin, BTC to USD, fell by 4.48% on Tuesday. Partially reversing an 8.25% rally from Monday, Bitcoin ended the day at $18,814.0.

It was a bullish start to the day. Bitcoin rallied to a late morning intraday high and a new swing hi $19,956 before hitting reverse.

Falling short of the first major resistance level at $20,295, Bitcoin slid to an early afternoon intraday low $18,279.0.

The selloff saw Bitcoin fall through the first major support level at $18,647 before finding support.

Bitcoin briefly bounced back to $19,500 levels before falling back through to end the day at sub-$19,000 levels.

The first major support level limited the downside late in the day.

The near-term bullish trend remained intact, in spite of the recent slide back to sub-$17,000 levels. For the bears, Bitcoin would need to slide through the 62% FIB of $10,095 to form a near-term bearish trend.

The Rest of the Pack

Across the rest of the majors, it was a bearish day on Tuesday.

Bitcoin Cash SV (-7.09%), Cardano’s ADA (-9.62%), and Ripple’s XRP (-8.05%) led the way down.

Binance Coin (-4.03%), Chainlink (-6.32%), and Ethereum (-5.02%), and also saw relatively heavy losses.

Crypto.com Coin (-0.74%), Litecoin (-2.87%), and Polkadot (-0.91%) saw relatively modest losses on the day, however.

In the current week, the crypto total market cap rose from a Monday low $531.50bn to a Monday high $589.74bn. At the time of writing, the total market cap stood at $552.36bn.

Bitcoin’s dominance fell to a Monday low 62.47% before rising to a Tuesday high 63.99%. At the time of writing, Bitcoin’s dominance stood at 63.26%.

This Morning

At the time of writing, Bitcoin was up by 0.20% to $18,852.0. A mixed start to the day saw Bitcoin fall to an early morning low $18,528.0 before rising to a high $18,885.0.

Bitcoin left the major support and resistance levels untested early on.

Elsewhere, it was a mixed start to the day.

Binance Coin (-0.10%) and Crypto.com Coin (-1.50%) saw red to buck the trend early on.

It was a bullish start to the day for the rest of the pack, however, which recovered from early losses.

At the time of writing, Litecoin was up by 1.41% to lead the way.

BTCUSD 021220 Hourly Chart

For the Bitcoin Day Ahead

Bitcoin would need to move through the pivot level at $19,016 to bring the first major resistance level at $19,754 into play.

Support from the broader market would be needed for Bitcoin to break through to $19,500 levels.

Barring an extended crypto rally, the first major resistance level and resistance at $20,000 would likely cap any upside.

In the event of a crypto breakout, Bitcoin could test resistance at $20,500 before any pullback. The second major resistance level sits at $20,693.

Failure to move through the $19,016 pivot would bring the first major support level at $18,077 into play.

Barring another extended crypto sell-off, Bitcoin should continue to steer clear of sub-$18,000 levels. The second major support level sits at $17,339.

COVID-19 Vaccine Update – Moderna Inc. Requests Approval from the FDA and the EMA

Moderna Inc.

Moderna Inc. has submitted its request to the FDA for a EUA approval. With the FDA reviewing the Pfizer Inc. vaccine on 10th December, the Moderna Inc. review will take place on 17th December.

With the race to deliver a COVID-19 vaccine to the U.S and beyond continuing, it has become a two-horse race.

Both pharmas have gone down the same road on the virology front, delivering an mRNA vaccine. Until now, no regulator has reportedly approved such a vaccine.

With COVID-19 efficacy rates of between 94% and 95%, the FDA and other regulators will likely have little choice but to approve the vaccines.

Following impressive results from Pfizer Inc. and BioNTech, Moderna Inc.’s final results were as impressive. An efficacy rate of 94.1% and 100% effectiveness in preventing severe cases of COVID-19 were well received.

Assuming that the FDA approves both vaccines, Pfizer Inc. and Moderna Inc. are likely to deliver vaccines days after the approvals.

According to the European Medicines Agency (“EMA”), it has also received applications for COVID-19 vaccines from Pfizer Inc. /BioNTech and Moderna Inc.

The Agency’s human medicines committee has scheduled extraordinary meetings to conclude the evaluations. In terms of timelines, the scientific committee for human medicines (“CHMP”) will conclude its assessment during an extraordinary meeting scheduled for 12th January at the latest.

Production Projections

Since lodging EUA requests, both have provided details on vaccine production numbers for this year and the next.

Moderna Inc. expects to have 20 million doses of the vaccine available to the U.S by the end of this year. For next year, the target is to manufacture between 500 million and 1 billion doses globally.

BioNTech/Pfizer Inc. is aiming to deliver between 5 million and 50 million doses by year-end.

Both vaccines require two doses. This means that Moderna Inc. and BioNTech/Pfizer Inc. could inoculate as many as 30 million people by year-end.

The Centers for Disease Control and Prevention

On Tuesday, the CDC is due to meet in order to deliver prioritization advice to the U.S states.

Expectations are for the CDC to prioritize health-care workers and residents of long-term care facilities.

The recommendations will come ahead of a Friday deadline for U.S states to submit vaccine distribution plans to the Federal Government.

Once phase 1a of the prioritization is complete, the CDC will then deliver further priority recommendations.

FBS Gives Presents Daily in Christmas Advent Project

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Stocks Set To Test New Highs

Traders Are In A Good Mood At The Beginning Of The Month

S&P 500 futures are gaining about 1% in premarket trading as stocks look ready to test new highs.

There are no special catalysts for this move, and it looks like traders continue to believe that vaccines will soon improve the economic situation.

Shares of Moderna, whose vaccine is set to be approved by FDA in December, are the main beneficiary of traders’ hopes. After gaining more than 50% in recent days, Moderna’s stock is up by almost 10% in premarket trading.

In addition to vaccine optimism, investors look forward to the new coronavirus aid package. Expectations of more money-printing have recently put material pressure on the U.S. dollar which is trading near yearly lows.

OPEC+ Postponed Its Meeting To December 3

WTI oil is swinging between gains and losses while traders struggle to evaluate OPEC+ decision to postpone the second part of its meeting from December 1 to December 3.

On the one hand, this decision shows that OPEC+ members are willing to negotiate a viable deal. On the other hand, it is obvious that OPEC+ members failed to reach common ground during the first day of the meeting, and the extension of current production cuts is under question.

Yesterday, oil-related stocks suffered a serious pullback, and they will likely have a chance to rebound during today’s trading session in case oil manages to stay above the $45 level.

PMI Reports In Focus

Today, the U.S. will release the final reading of Manufacturing PMI report for November. Analysts expect that Manufacturing PMI increased from 53.4 to 56.7. Sometimes, final readings differ materially from preliminary estimates, so this report may have a significant impact on the market.

Traders will also have a chance to take a look at ISM Manufacturing PMI report which is projected to show a decline from 59.3 in October to 58 in November. Meanwhile, Construction Spending is projected to grow by 0.8% month-over-month in October.

It remains to be seen whether stocks will be sensitive to economic data or traders will remain focused on vaccines and the potential stimulus package that could be delivered in early 2021.

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

Asia-Pacific Shares Soar on Strong China Factory Activity Growth; RBA Holds Rates Steady

The major Asia-Pacific stock indexes posted strong gains on Tuesday after taking an end-of-the-month breather the previous session. Buyers were aggressive the first day of the new month, helped by the release of a private survey of China’s manufacturing activity. The news comes on the heels of Monday’s official manufacturing PMI for November that came in at the highest reading in more than three years.

In the cash market on Tuesday, Japan’s Nikkei 225 Index settled at 26787.54, up 353.92 or 1.34%, Hong Kong’s Hang Seng Index finished at 26567.68, up 226.19 or +0.86% and South Korea’s KOSPI Index closed at 2634.25, up 42.91 or +1.66%.

In China, the Shanghai Index settled at 3451.94, up 60.18 or +1.77% and Australia’s S&P/ASX 200 Index finished at 6588.50, up 70.70 or +1.08%.

China’s Factory Activity Growth Hits Decade High in November as Economy Recovers

Activity in China’s factory sector accelerated at the fastest pace in a decade in November, a business surveyed showed on Tuesday, as the world’s second-largest economy recovers to pre-pandemic levels.

The Caixin/Markit Manufacturing Purchasing Managers’ Index PMI rose to 54.9 from October’s 53.6, with the gauge staying well above the 50-level that separates growth from contraction for the seventh consecutive month. Analysts polled by Reuters had forecast the headline reading would slip to 53.5.

The Caixin PMI reading was the highest since November 2010, and comes after an official gauge of factory activing, focusing more on larger and state-owned firms, rose at the fastest pace in over three years.

“Manufacturing continued to recover and the economy increasingly returned to normality as fallout from the domestic COVID-19 epidemic faded,” Wang Zhe, senior economist at Caixin Insight Group, wrote in a note accompanying the survey release.

RBA Holds Rates Near Historical Lows

The Reserve Bank of Australia (RBA) held rates at near-zero in a widely expected move on Tuesday as easy monetary and fiscal policies propped up the coronavirus-hit economy, fueling demand for homes and boosting construction activity.

In a short post-meeting statement, Governor Philip Lowe sounded optimistic about a recovery as the country has confidently reopened with almost zero new coronavirus cases.

“The economic recovery is under way and recent data have generally been better than expected,” Lowe said.

“This is good news, but the recovery is still expected to be uneven and drawn out and it remains dependent on significant policy support.”

Lowe also reiterated the board was unlikely to raise the cash rate for at least three years and was prepared to do more if necessary.

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

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The RBA Holds Monetary Policy Unchanged, Delivering Aussie Dollar Support

In line with market expectations, the RBA left its cash target rate unchanged at 0.10%, following last month’s cut from 0.25%.

Additionally,

  • Left the target rate for the yield on 3-year Australian Government Bonds at 0.10%.
  • The Board also left the interest rate on new drawings under the Term Funding Facility at 0.1%.
  • Retained the zero interest rate on Exchange Settlement balances.
  • Left the government bond purchasing program unchanged.

The Statement

Salient points from the RBA Rate Statement included:

Global Outlook

  • Globally, the news has been mixed recently. While infection rates have been on the rise in Europe and the U.S, positive vaccine news should support an economic recovery.
  • The economic recovery slowed as a result of the rise in new COVID-19 cases, however.
  • Any recovery is also dependent on ongoing support from both fiscal and monetary policy.
  • Hours worked in most countries remain noticeably below pre-pandemic levels and inflation is low and below central bank targets.
  • Financial conditions remain accommodative globally.
  • While bond yields sit near historic lows, vaccine news has given the equity markets a boost.

Australian Economy

  • The economic recovery is underway and recent data have generally been better than expected.
  • While positive, the Board expects the recovery to be uneven and drawn out.
  • In the RBA’s central scenario, the GDP will not reach 2019 levels until the end of 2021. Forecasts are for the economy to grow by 5% in 2021 and by 4% over 2022.
  • Employment growth was strong in October, though the unemployment rate rose to 7%.
  • The RBA expects a further rise, as firms restructure in response to the COVID-19 pandemic.
  • However, the Board forecasts the unemployment to decline next year and to sit at around 6% at the end of 2022.
  • As a result of excess capacity, wage growth is subdued and will likely remain so in the coming years.
  • The RBA forecasts inflation to be 1% in 2021 and 1.5% in 2022.
  • To date, authorized deposit-taking institutions have drawn down A$84bn under the Term Funding Facility.
  • Over the past month, the Bank has bought A$19bn of government bonds under the purchasing program.
  • Additionally, the bank purchased a further A$5bn of Aussie government securities in support of the 3-year yield target.
  • Monetary and fiscal support will be required for some time. As a result, the Board will not increase the cash rate until actual inflation is sustainably within the 2-3% target range.
  • Wage growth will have to rise materially to support a pickup in inflationary pressures. This will require significant gains in employment and a return to a tight labor market.
  • Based on the outlook, the Board is not expecting to increase the cash rate for at least 3-years.
  • In light of the evolving outlook for jobs and inflation, the Board will continue to review the size of the bond purchase program.

In response to the RBA monetary policy decision, the Aussie Dollar rose to a morning high of $0.73685 before easing back.

At the time of writing, the Aussie Dollar was up by 0.31% to $0.70638.

AUDUSD 011220 Daily Chart


 

A Busy Economic Calendar and Brexit Put the EUR, Loonie and the Pound in Focus

Earlier in the Day:

It’s was another busy start to the week on the economic calendar this morning. The Japanese Yen and the Aussie Dollar were in action, with economic data from China also in focus.

Later this morning, the RBA will also be in action, delivering its final scheduled monetary policy decision of the year.

For the Japanese

Employment and capital spending figures were in focus early on.

In the 3rd quarter, capital spending slid by 10.6%, following an 11.3% slide from the 2nd quarter. Economists had forecast a 12% tumble.

The jobs/applications ratio increased from 1.03 to 1.04. Economists had forecast a ratio of 1.03.

The Japanese Yen moved from ¥104.344 to ¥104.347 upon release of the figures. At the time of writing, the Japanese Yen was down by 0.03% to ¥104.34 against the U.S Dollar.

For the Aussie Dollar

In the early hours, the AIG Manufacturing Index drew attention. In November, the index fell from 56.3 to 52.10.

According to the November report,

  • An easing of activity restrictions in Victoria supported a return to expansion for the sector in October.
  • In November, there was a slowdown in growth, however, due to lost production as a result of a 3-day shut down in South Australia.
  • The agriculture sector drove demand for F&B and machinery & equipment manufacturers, however.
  • Victoria reported its first month of expansion since March.

The Aussie Dollar moved from $0.73428 to $0.73419 upon release of the figures that preceded the RBA monetary policy decision.

Also in focus ahead of the RBA were October building approvals and 3rd quarter current account figures.

In October, building approvals rose by 3.8%, following a 15.4% jump in September. Economists had forecast a 3% decline.

According to the ABS,

  • Private sector dwellings excluding houses rose by 6.2%, while private sector houses rose by 3.1%.

The current account surplus narrowed from A$17.7bn to A$10.0bn in the 3rd quarter, coming in ahead of a forecasted A$7.1bn surplus.

The Aussie Dollar moved from $0.73585 to $0.73578 upon release of the figures that preceded private sector PMIs from China and the RBA.

Out of China

The Caixin Manufacturing PMI rose from 53.6 to 54.9 in November. Economists had forecast a decline to 53.5.

According to the November survey,

  • Operating conditions saw the strongest improvement for a decade.
  • Growth of both output and new orders jumped to 10-year highs.
  • Domestic demand continued to drive new orders, with overseas new orders rising at a less marked pace.
  • Employment increased at the fastest pace since May 2011 as a result.
  • Increased demand led to stronger inflationary pressures, though both input costs and output charges saw marked increases.
  • Purchase activity was also on the rise, with the increase in purchase activity the sharpest since 2011.

The Aussie Dollar moved from $0.73546 to $0.73590 upon release of the figures that preceded the RBA. At the time of writing, the Aussie Dollar was up by 0.19% to $0.7358.

Elsewhere

At the time of writing, the Kiwi Dollar was up by 0.09% to $0.7023.

The Day Ahead:

For the EUR

It’s a busy day ahead on the economic calendar. Manufacturing PMIs from Italy and Spain are due out along with unemployment figures from Germany. Finalized manufacturing PMIs from France, Germany, and the Eurozone are also due out.

Barring material revisions to prelim figures, Italy and the Eurozone’s PMIs and German unemployment figures will have the greatest influence.

Away from the economic calendar, Brexit and COVID-19 news updates will also remain in focus.

At the time of writing, the EUR was up by 0.18% to $1.1949.

For the Pound

It’s a quiet day ahead on the economic calendar. November’s finalized manufacturing PMI is due out that should have a muted impact on the Pound.

Updates from Brexit negotiations will remain the key driver on the day. While the news is mixed, hopes of a deal continue to prop up the Pound.

At the time of writing, the Pound was up by 0.19% to $1.3348.

Across the Pond

It’s a relatively quiet day ahead for the U.S Dollar. The ISM Manufacturing and finalized Markit Manufacturing PMI figures are due out later today.

Expect the ISM Manufacturing PMI to have a greater influence from the two.

Away from the economic calendar, any chatter from Capitol Hill and COVID-19 news updates will continue to influence.

At the time of writing, the Dollar Spot Index was up by 0.03% to 91.901.

For the Loonie

It’s a busy day on the economic data front. Key stats include 3rd quarter and September GDP numbers.

Following a lack of economic data last week, expect plenty of interest in today’s numbers. Hopes of a COVID-19 vaccine before the end of the year should soften the effects of any disappointing numbers, however.

At the time of writing, the Loonie was up by 0.18% to C$1.2977 against the U.S Dollar.

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

European Equities: Economic Data and Brexit in Focus

Economic Calendar:

Tuesday, 1st December

Spanish Manufacturing PMI (Nov)

Italian Manufacturing PMI (Nov)

French Manufacturing PMI (Nov) Final

German Manufacturing PMI (Nov) Final

German Unemployment Change (Nov)

German Unemployment Rate (Nov)

Eurozone Manufacturing PMI (Nov) Final

Eurozone Core CPI (YoY) Prelim

Eurozone CPI (MoM) Prelim

Eurozone CPI (YoY) (Nov) Prelim

Wednesday, 2nd December

German Retail Sales (MoM) (Oct)

Spanish Unemployment Change

Eurozone Unemployment Rate (Oct)

Thursday, 3rd December

Spanish Services PMI (Nov)

Italian Services PMI (Nov)

French Services PMI (Nov) Final

German Services PMI (Nov) Final

Eurozone Markit Composite PMI (Nov) Final

Eurozone Services PMI (Nov) Final

Eurozone Retail Sales (MoM) (Oct)

Friday, 4th December

German Factory Orders (MoM) (Oct)

IHS Markit Construction PMI (Nov)

The Majors

It was a bearish end to the month and the start of the week for the European majors on Monday. Coming off the back of a bullish week, the DAX30 and EuroStoxx600 fell by 0.33% and by 0.98% respectively. The CAC40 slid by 1.42%, however, to lead the way down.

On the day, a lack of progress towards Brexit and some profit-taking following an impressive November rebound left the majors in the red.

Inflation figures from the Eurozone and stats from the U.S didn’t help, however, with the stats skewed to the negative.

The Stats

It was a relatively busy day on the Eurozone economic calendar. Prelim November inflation figures for Spain, Italy, and Germany were in focus on the day.

In Spain, consumer prices fell by 0.8% in November, compared with November 2019. In October, consumer prices had also fallen by 0.8%. The harmonized index of consumer prices fell by 0.9%, following a 0.9% decline in October. Economists had forecast a 0.8% decline, year-on-year.

Things were not much better from Italy, with consumer prices falling by 0.1% in November, month-on-month. In October, consumer prices had risen by 0.2%.

From Germany, deflationary pressures saw a marked pickup. Consumer prices slid by 0.8% in November, reversing a 0.1% rise from October. Economists had forecast a 0.7% decline.

From the U.S

Chicago PMI numbers for November and October pending home sales figures also disappointed.

The Chicago PMI fell from 61.1 to 58.2 in November, with pending home sales falling by 1.1% in October. In September, pending home sales had fallen by 2.0%.

The Market Movers

For the DAX: It was a mixed day for the auto sector on Monday. Daimler rose by 0.32% to buck the trend on the day. Continental and Volkswagen slid by 2.35% and by 3.27% respectively, however, with BMW seeing a more modest 0.04% loss on the day.

It was also a bearish day for the banks. Deutsche Bank fell by 1.44%, with Commerzbank sliding by 3.38%.

From the CAC, it was a bearish day for the banks. BNP Paribas and Credit Agricole fell by 1.96% and by 1.93% respectively. Soc Gen slid by 3.70% to lead the way down, however.

It was also a bearish day for the French auto sector. Peugeot fell by 1.13, with Renault sliding by 2.23%.

Air France-KLM also hit reverse, tumbling by 7.34%, with Airbus SE ending the day with a 2.52% loss.

On the VIX Index

It was a 5th consecutive day in the red for the VIX on Monday. Following a 1.93% decline on Friday, the VIX fell by 1.30% to end the day at 20.57.

On Monday, the Dow and S&P500 fell by 0.91% and by 0.46% respectively, with the NASDAQ slipping by 0.06%.

The downside for the VIX came in spite of the losses across the U.S benchmarks, with COVID-19 vaccine hopes weighing.

VIX 011220 Daily Chart

The Day Ahead

It’s a busy day ahead on the Eurozone economic calendar. November Manufacturing PMIs for Italy and Spain, and prelim Eurozone inflation figures for November are due out in the early part of the session.

German unemployment figures and finalized manufacturing PMIs for France, Germany, and the Eurozone are also due out.

Expect Italy, Germany, and the Eurozone’s manufacturing PMIs and Germany’s unemployment figure to have the greatest influence.

From the U.S, the market’s preferred ISM Manufacturing PMI for November will also provide direction late in the session.

Earlier in the day, China’s CAXIN Manufacturing PMI for November will set the tone following impressive NBS numbers on Monday.

Away from the economic calendar, Brexit and COVID-19 news updates will need monitoring. Any progress towards a stimulus package on Capitol Hill would influence.

The Futures

In the futures markets, at the time of writing, the Dow was up by 15 points.

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

European Equities: A Month in Review – November 2020

The Majors

It was a particularly bullish month for the European majors in November, with COVID-19 vaccine news delivering a much-needed bounce.

After 2 consecutive months in the red, the CAC40 surged by 20.12%. The DAX30 and the EuroStoxx600 weren’t far behind, with gains of 15.01% and 13.73% respectively. For the DAX30, November’s gains reversed losses from the year to move into positive territory year-to-date. The CAC40 and EuroStoxx600 still have some way to go in order to reverse losses from earlier in the year, however.

While the news of a COVID-19 vaccine drove demand for riskier assets, Joe Biden’s victory in the Presidential Election added support for riskier assets.

On the negative side, however, was a reintroduction of lockdown measures by member states including France and Germany.

Towards the end of the month, the COVID-19 numbers reflected the effect of the lockdown measures.

In France, the number of new COVID-19 cases and hospitalizations were in decline allowing the government to ease lockdown measures going into December.

On the geopolitical risk front, last-ditch Brexit negotiations failed to deliver a deal, which left the majors in the red at the end of the month.

The Stats

It was a busy month on the Eurozone economic calendar. Looking at the private sector PMIs, it was a disappointing set of numbers for November.

Service sector activity contracted in France, Germany, and across the Eurozone as a result of a reintroduction of containment measures.

France’s services sector suffered the most, with the PMI tumbling from 46.5 to 38.0. With Germany’s Services PMI falling to 46.2, the Eurozone’s Services PMI fell from 46.9 to 41.3.

While Germany’s manufacturing sector avoided a contraction, sector activity in France contracted. The PMI fell from 51.3 to 49.1, dragging the Eurozone’s Composite PMI down from 50.0 to 45.1.

In spite of the disappointing numbers, hopes of a COVID-19 vaccine fuelled economic recovery fuelled muted the effect of the PMIs.

Other stats were mixed in the month.

Consumer and business sentiment weakened in October as a result of the 2nd wave of the pandemic and lockdown measures.

Germany’s ZEW Economic Sentiment Indicator fell from 52.3 to 32.8, with the Ifo Business Climate Index falling from 92.5 to 90.7.

Things were not much better on the consumer confidence front. The GfK Consumer Climate Indicator fell from -3.2 to -6.7.

For the Eurozone, consumer confidence also waned, with the Eurozone Consumer Confidence Index falling from -15.5 to -17.6.

On the positive front, however, were 3rd quarter GDP numbers for France, Germany, and the Eurozone. The respective economies had made progress in recovering from the 2nd quarter economic meltdown before November’s lockdown measures.

From the U.S

Labor market stats pointed to a stalling in the labor market recovery. Initial jobless claims inched up to 778k after having eased down to 709k in the 1st week of November.

While new COVID-19 cases surged across the U.S and a number of states reintroduced containment measures, COVID-19 vaccine news eased any market tensions in the month.

As a result of the jump in COVID-19 cases, consumer confidence softened in November. The CB Consumer Confidence Index fell from 101.4 to 96.1, with the Michigan Consumer Sentiment Index falling from 77.0 to 76.9.

On the positive, however, were private sector PMIs. Both the manufacturing and services sectors saw activity pick up in November.

In November, the Markit Manufacturing PMI rose from 53.4 to 56.7, with the Services PMI rising from 56.9 to 57.7.

The divergence from the Eurozone stemmed from a decision by the U.S administration to keep the economy running.

Monetary Policy

The ECB monetary policy meeting minutes, Economic Bulletin, and Financial Stability Review talked of doom and gloom.

From the minutes and other ECB reports and from ECB President Lagarde commentary, the markets are expecting further policy easing, however.

While the ECB minutes stated that there should be no commitments made, the 2nd wave COVID-19 pandemic is likely to force the ECB’s hands. It remains to be seen how far the ECB will go with a COVID-19 vaccine on the horizon.

From the FED, the FOMC meeting minutes also provided few surprises. Both central banks were focused on the effects of COVID-19 on their respective economies.

The respective minutes followed decisions by both to keep rates unchanged in the month.

The Market Movers

For the DAX: It was a bullish month for the auto sector in November. Daimler surged by 26.99%, with BMW and Continental jumping by 23.99% and by 24.73% respectively. Volkswagen trailed with a 12.52% gain in the month.

It was also a bullish month for the banks. Deutsche Bank rallied by 17.04%, with Commerzbank ending the month up by an impressive 28.8%.

From the CAC, it was a particularly bullish month for the banking sector. BNP Paribas surged by 43.95%, with Credit Agricole and Soc Gen ending the month with gains of 42.63% and 43.38% respectively.

It was also a bullish month for the auto sector. Peugeot rose by 28.06%, with Renault jumping by 56.94%.

Supported by COVID-19 vaccine news, however, it was Air France-KLM that impressed the most with a 77.94% rebound. Airbus SE also impressed, surging by 40.17%.

On the VIX Index

It was back into the red for the VIX in November, ending a run of 2 consecutive monthly gains. Reversing a 44.18% surge in October, the VIX tumbled by 45.90% to end the month at 20.57.

The downside for the VIX came as pharmas released impressive COVID-19 phase 3 clinical trial results. Talk of a vaccine being available by mid-December supported riskier assets, which sank the VIX.

In November, the Dow and NASDAQ rallied by 11.84% and by 11.80% respectively, with the S&P500 ending the month up by 10.75%.

VIX November Monthly Chart

The Month Ahead

We can expect another busy month ahead on the Eurozone economic calendar. Much of the economic data, however, will likely take a backseat in the month ahead.

We would expect COVID-19 vaccine updates and any progress towards a COVID-19 stimulus package on Capitol Hill to be key drivers.

On the geopolitical front, there’s also Brexit for the markets to consider. In late November, last-ditch talks failed to deliver an agreement. The two sides have just one month left until the end of the transition period.

Key stats that will draw interest, however, will include private sector PMIs for December, unemployment figures, and consumer and business sentiment numbers.

From the U.S, private sector PMIs, labor market numbers, and consumer confidence and spending will also influence.

There are also stats out of China that will need to continue reflecting China’s post-pandemic economic recovery.