European Equities: Economic Data from China to Set the Tone ahead of the European Open

Economic Calendar

Monday, 17th January

Italy CPI (MoM) (Dec) Final

Tuesday, 18th January

German ZEW Current Conditions (Jan)

German ZEW Economic Sentiment (Jan)

Eurozone ZEW Economic Sentiment (Jan)

Wednesday, 19th January

German CPI (MoM) (Dec) Final

Thursday, 20th January

German PPI (MoM) (Dec)

Eurozone Core CPI (YoY) (Dec) Final

Eurozone CPI (YoY) (Dec) Final

Eurozone CPI (MoM) (Dec) Final

The Majors

It was a bearish end to the week for the European majors on Friday. The EuroStoxx600 slid by 1.01%, with the CAC40 and the DAX30 ending the day with losses of 0.81% and by 0.93% respectively.

Following some particularly hawkish chatter from FOMC members on Thursday, disappointing economic data from the Eurozone and the U.S weighed. Adding to the bearish mood was a negative outlook from JPMorgan Chase. Corporate earnings results from the U.S. Citi, JPMorgan Chase, and Wells Fargo were due out on the day.

Ahead of the European open, economic data from China had been upbeat but not enough to support the majors throughout the session.

In December, China’s USD trade surplus widened from $71.71bn to $94.46bn, with exports up 20.9% year-on-year.

The Stats

It was a busier day on the Eurozone economic calendar. Finalized inflation figures for France and Spain were in focus along with trade data for the Eurozone.

French inflation

France’s annual rate of inflation held steady at 2.8% in December, which was in line with prelim figures.

Month-on-month, consumer prices increased by 0.2% after having risen by 0.4% in November, which was in line with prelim figures.

According to Insee.fr,

  • Energy prices fell by 0.9%, month-on-month, after having risen by 1.5% in November.
  • The prices of services were up 0.4% versus 0.2% in November and food prices were up 0.5% versus 0.4% in the month prior.
  • Year-on-year, core inflation was up 2.0%, however, which was up from 1.7% in November.
    • Prices for manufactured goods were up 1.2% versus 0.8% in November.
    • Food prices rose by 1.4% after a 0.5% in November.

Spanish Inflation

Spain’s annual rate of inflation accelerated from 5.5% to 6.5%, which was down from a prelim 6.7%.

Eurozone Trade

In November, the Eurozone’s goods trade balance narrowed from €3.3bn surplus to €1.5bn deficit versus a forecasted €7.6bn surplus.

According to Eurostat,

  • Euro area exports of goods to the rest of the world increased by 14.4% to €225.1bn, compared with Nov-2020.
  • Imports from the rest of the world were up 32% to €226.6bn, compared with Nov-2020.
  • The rise in imports was as a result of an increase in the value of energy imports.
  • In Nov-2020, the Eurozone had a €25bn surplus.
  • The last time the Eurozone recorded a deficit was in Jan-2014.
  • Intra-euro area trade rose to €204.3bn in Nov-2021, up by 22.1% compared with Nov-2020.

From the U.S

Retail sales and consumer sentiment figures were the key U.S stats of the day, with the stats skewed to the negative.

In December, U.S core retail sales slid by 2.3% versus a forecasted 0.2% rise. Core retail sales had risen by just 0.1% in November. Retail sales fell by 1.9% versus a forecasted 0.1% decline. In November, retail sales had risen by 0.2%.

According to prelim figures, the Michigan Consumer Sentiment Index fell from 70.6 to 68.8% in January. Economists had forecast a fall to 70.0. The Consumer Expectations Index slid from 68.3 to 65.9.

The Market Movers

For the DAX: It was a mixed day for the auto sector on Friday. Continental and Daimler fell by 0.14% and by 0.85% respectively. BMW and Volkswagen ended the day up by 0.30% and by 1.60% respectively.

It was a bearish day for the banks, however. Deutsche Bank and Commerzbank fell by 2.02% and by 1.51% respectively.

From the CAC, it was also a bearish day for the banks. Soc Gen slipped by 0.03%, with Credit Agricole and BNP Paribas seeing losses of 0.86% and 0.99% respectively.

The French auto sector had a bearish session. Stellantis NV and Renault ended the day down by 0.19% and by 1.00% respectively.

Air France-KLM fell by 1.49%, while Airbus SE ended the day up by 0.03%.

On the VIX Index

It was back into the red for the VIX on Friday, marking a 3rd loss of the week.

Partially reversing a 15.27% surge from Thursday, the VIX fell by 5.51% to end the day at 19.19.

The Dow fell by 0.56%, while the NASDAQ and the S&P500 saw gains of 0.59% and 0.08% respectively.

VIX 170122 Daily Chart

The Day Ahead

It’s a relatively quiet day ahead on the Eurozone’s economic calendar. Finalized December inflation figures from Italy will be in focus. Barring any marked revisions from prelim figures, however, the stats should have a muted impact on the majors.

Ahead of the European open, 4th quarter GDP numbers from China will set the tone. Other stats from China later this morning will include fixed asset investment, industrial production, and retail sales figures. Expect some interest in the industrial production figures.

With the U.S markets closed today, there are no stats from the U.S to influence late in the European session.