Friday, 7th January
German Industrial Production (MoM) (Nov)
German Trade Balance (Nov)
French Consumer Spending (MoM) (Nov)
Eurozone CPI (YoY) (Dec) Prelim
Eurozone Retail Sales (MoM) (Nov)
It was a choppy day for the European majors on Thursday. The CAC40 slid by 1.72%, with the DAX30 and the EuroStoxx600 ending the day down by 1.35% and by 1.25% respectively.
Economic data from Germany took a back seat as the markets responded to more hawkish than expected FOMC meeting minutes from Wednesday.
Economic data from the U.S also failed to deliver support. Another big jump in payrolls in December could more than pencil in a FED rate hike in March.
It was quieter Eurozone economic calendar this morning. German factory orders were in focus early in the European session. Later in the day, German prelim inflation figures for December will drew interest. German construction PMI numbers that were also early in the session had a muted impact on the majors.
In November, factory orders increased by 3.7% month-on-month, partially reversing a 5.8% slide from October. Economists had forecast a 2.1% increase.
According to Destatis,
- In November 2021, the largest increase in orders (+32.0%) was recorded in the manufacture of other transport equipment. These include aircraft, ships, trains, etc.
- New orders in the manufacture of motor vehicles and semi-trailers were up 7.0%. In October, orders had been down by 4.7%.
- Foreign demand drove new orders (+8.0%) in November. Significantly, new orders from the euro area increased by 13.1%.
- Producers of intermediate goods recorded a 1.2% increase in new orders.
- Capital goods (+5.3%) and consumer goods (+3.8%) fared better in the month.
- Year-on-year, factory orders were up 1.3%.
In December, the annual rate of inflation picked up from 5.2% to 5.3% versus a forecasted 5.1%. Month-on-month, consumer prices rose by 0.5%, reversing a 0.2% decline from November.
From the U.S
Weekly jobless claims and ISM Non-manufacturing PMI numbers were in focus.
In the week ending 31st December, initial jobless claims rose from 200k to 207k. Economists had forecast a decline to 197k.
Service sector activity took a hit in December, with the Omicron strain weighing. The ISM Non-manufacturing PMI fell from 69.1 to 62.0 versus a forecasted 66.9.
The Market Movers
For the DAX: It was a bearish day for the auto sector on Thursday. Volkswagen led the way down, falling by 0.99%, with Continental ending the day with a 0.64% loss. BMW and Daimler saw more modest losses of 0.02% and 0.12% respectively.
It was also a bullish day for the banks, however. Deutsche Bank and Commerzbank rose by 2.53% and by 1.74% respectively.
From the CAC, it was also a bullish day for the banks. Soc Gen gained 1.86%, with BNP Paribas and Credit Agricole ending the day up by 1.36% and by 1.15% respectively.
The French auto sector had a mixed session. Stellantis NV fell by 0.99%, while Renault ended the day up by 0.38%.
Air France-KLM gave up more of Tuesday’s 8.13% gain, falling by 2.20%, with Airbus SE declining by 1.46%
On the VIX Index
It was back into the red for the VIX on Thursday, marking a 9th fall in 12 sessions.
Partially reversing a 14.05% jump from Wednesday the VIX slipped by 0.61% to end the day at 19.61.
The Dow fell by 0.47%, with the NASDAQ and the S&P500 seeing losses of 0.13% and 0.10% respectively.
The Day Ahead
It’s a busy day ahead on the Eurozone’s economic calendar. Early in the European session, industrial production and trade data for Germany will be in focus. Later in the session, Eurozone inflation and retail sales figures will also draw interest. Expect the Eurozone’s inflation figures to be key. Other stats due out include French consumer spending figures that should have a muted impact on the majors.
From the U.S, nonfarm payrolls will be the key stat of the day, however. A sharp rise in nonfarm payrolls would likely be considered a greenlight for a March rate hike.
Away from the economic calendar, COVID-19 news will need continued monitoring, however. Downside risks remain with the threat of new strains ever present.
In the futures markets, at the time of writing, the Dow Mini was up by 63 points, while the DAX was down by 16 points.
For a look at all of today’s economic events, check out our economic calendar.