Growing Euro notes arrows over the flag of European Union.

European Equities: Futures Point Northwards Ahead of U.S Nonfarms

Economic Calendar:

Friday, 8th January

German Industrial Production (MoM) (Nov)

German Trade Balance (Nov)

French Consumer Spending (MoM) (Nov)

Eurozone Unemployment Rate (Nov)

The Majors

It was another bullish day for the European majors on Thursday, following Wednesday’s broad-based market rally.

The CAC40 rose by 0.70% to lead the way, with the DAX30 and EuroStoxx600 gaining 0.55 % and 0.51% respectively.

Following Wednesday’s chaos on Capitol Hill, news of Trump stating that there would be an orderly transition on 20th January delivered support.

With the blue wave now affirmed, hopes of substantial stimulus to support the U.S economic recovery added to the upside on the day.

The Stats

It was a relatively busy day on the economic calendar. German factory orders and construction PMI and Eurozone retail sales figures were in focus along with prelim December inflation figures.

From the ECB, the Economic Bulletin and monetary policy meeting minutes had a muted impact on the majors.

Germany

In November, factory orders increased by 2.3%, following a 3.3% rise in October. Economists had forecast a 1.2% decline.

According to Destatis,

  • Domestic orders increased by 1.6% and foreign orders by 2.9% in November, month-on-month.
  • New orders from the euro area rose by 6.1% and by 0.9% from other countries.
  • The manufacturers of intermediate goods saw new orders increased by 4.9%, with capital goods manufacturers reporting a 1.1% rise.
  • Consumer goods manufacturers saw a more modest 0.5% increase in new orders, however.
  • Compared with Feb-2020, new orders in November 2020 were 4.0% higher.

In December, the IHS Markit Construction PMI rose from 45.6 to 47.1.

The Eurozone

From the Eurozone, retail sales slid by 6.1% in November, month-on-month, reversing a 1.4% rise in October. Economists had forecast a 3.4% decline.

Inflation figures provided little support, as deflationary pressures persisted at the end of the year.

For the Eurozone, core consumer price rose by 0.2% in December, following a 0.2% increase in November. Consumer prices continued to decline, however, with the consumer price index falling by 0.3%. In November, consumer prices had also fallen by 0.3%, year-on-year. Economists had forecast a 0.2% decline.

From the U.S

It was a relatively busy day on the economic calendar, with the weekly jobless claims and the market’s preferred ISM Services PMI in focus.

In the week ending 1st January, initial jobless claims stood at 787K, which was down from 790K from the previous week. Economists had forecast an increased to 800k.

In December, the ISM Services PMI increased from 55.9 to 57.2, coming in ahead of a forecasted 54.6.

Trade data for November had a muted impact on the European majors.

The Market Movers

For the DAX: It was a bullish day for the auto sector on Thursday. Continental and Daimler rallied by 2.12% and by 2.83 % respectively, while BMW and Volkswagen saw more modest gains of 0.71% and 1.06% respectively.

It was also a bullish day for the banks. Deutsche Bank rallied by 2.12%, with Commerzbank gaining 0.81%

From the CAC, it was a bullish day for the banks. BNP Paribas rallied by 2.25%, with Credit Agricole and Soc Gen rising by 0.75% and 1.04% respectively.

It was also a bullish day for the French auto sector. Peugeot rose by 1.99%, with Renault rallying by 4.16%.

Air France-KLM and Airbus SE bucked the trend, however, with losses of 1.62% and 0.61% respectively.

On the VIX Index

It was a 3rd consecutive day in the red the VIX on Thursday, marking a 5th day in the red from 6 sessions. Following on from a 1.07% fall on Wednesday, the VIX slid by 10.77% to end the day at 22.37.

Supported by Biden’s certification and the “Blue Wave”, the U.S majors hit record highs on Thursday.

The NASDAQ rallied by 2.56%, with the Dow and the S&P500 rising by 0.69% and by 1.48% respectively.

Following Wednesday’s protests, hopes of substantial fiscal stimulus to support the economy drove demand for riskier assets.

VIX 080121 Daily Chart

The Day Ahead

It’s another relatively busy day ahead on the economic calendar.

Key stats include German industrial production and trade data along with unemployment figures for the Eurozone. French consumer spending figures are also due out.

Germany’s industrial production and trade figures and French consumer spending figures will likely have the greatest influence on the European majors.

From the U.S, nonfarm payrolls and the unemployment rate for December will also influence late in the session.

Chatter from Capitol Hill will also need monitoring along with COVID-19 news updates.

The Futures

In the futures markets, at the time of writing, the Dow Mini was up by 76 points, with the DAX up by 66 points.

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