Cac 40 indice in downtrend mode indicates global economy enter recession

European Equities: ECB President Lagarde and FED Chair Powell in Focus

Economic Calendar

Tuesday, 11th January

ECB President Lagarde Speaks

FED Chair Powell Testimony

Wednesday, 12th January

Eurozone Industrial Production (MoM) (Nov)

Friday, 14th January

French CPI (MoM) (Dec) Final

French HICP (MoM) (Dec) Final

Spanish CPI (YoY) (Dec) Final

Spanish HICP (YoY) (Dec) Final

Eurozone Trade Balance (Nov)

ECB President Lagarde Speaks

The Majors

It was a bearish start to the week for the European majors on Monday. The DAX30 fell by 1.13%, with the CAC40 and the EuroStoxx600 sliding by 1.44% and by 1.48% respectively.

Upbeat economic data from the Eurozone failed to provide support, with market jitters over FED monetary policy weighing. News of Goldman Sachs projecting the FED to lift rates 4 times this year added to the market angst.

The Goldman Sachs projections came ahead FED Chair Powell testimony today and U.S inflation figures tomorrow.

The Stats

It was a relatively quiet start to the week on the Eurozone economic calendar. Key stats included Eurozone investor confidence and Eurozone unemployment figures.

Sentix Investor Confidence

In January, the Eurozone’s Sentix Investor Confidence Index increased from 13.5 to 14.9. Economists had forecast a fall to 12.0.

According to the January survey,

  • The current assessment improved by 3.0 points, while the expectations component stagnated.
  • For Germany, the overall index increased by 2.6%, supported by a 6.2% jump in the current situation component. The expectations component held steady at +15.0 points.

Unemployment

In November, the Eurozone’s unemployment rate slipped from 7.3% to 7.2%, which was in line with forecasts.

According to Eurostat,

  • The youth unemployment rate was 15.5%, down from 15.8% in October.
  • Compared with November 2020, the number of unemployed youths decreased by 188,000.
  • For the Eurozone, the unemployment rate had stood at 8.1% in November 2020.

From the U.S

There were no major stats from the U.S to provide the majors with direction late in the day.

The Market Movers

For the DAX: It was a mixed day for the auto sector on Monday. Continental and Daimler ended the day down by 2.12% and by 0.69% respectively. BMW rallied by 1.67%, however, with Volkswagen rising by 0.01%.

It was also a mixed day for the banks. Deutsche Bank gained 0.06%, while Commerzbank slid by 2.14%.

From the CAC, it was a mixed day for the banks. Credit Agricole gained 0.54%, while Soc Gen and BNP Paribas ended the day down by 0.56% and by 0.78% respectively.

The French auto sector had a bearish session. Stellantis NV and Renault ended the day with losses of 0.77% and 0.61% respectively.

Air France-KLM and Airbus SE rose by 0.96% and by 0.19% respectively.

On the VIX Index

It was back into the green for the VIX on Monday. Partially reversing a 4.33% loss from Friday, the VIX rose by 3.41% to end the day at 19.40.

The NASDAQ gained 0.05%, while the Dow and the S&P500 saw losses of 0.45% and 0.14% respectively.

 

The Day Ahead

It’s a quiet day ahead on the Eurozone’s economic calendar. There are no major stats from the Eurozone or the U.S to provide the majors with direction. While there are no stats, ECB President Lagarde is scheduled to speak later today. The markets will be looking for any shift in view on inflation in the wake of the FED’s latest meeting minutes.

Later in the session, however, FED Chair Powell testimony to lawmakers will likely be the main event of the day. The FED Chair could be in for a tough session on inflation. Any guidance on where he sees rates by the end of the year will be of significance.

The Futures

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

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