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European Equities: German Business Confidence in Focus

Economic Calendar:

Monday, 22nd February

German Ifo Business Climate Index (Feb)

Tuesday, 23rd February

Eurozone CPI (YoY) (Jan) Final

Wednesday, 24th February

German GDP (YoY) (Q4) 2nd Estimate

German GDP (QoQ) (Q4) 2nd Estimate

Thursday, 25th February

GfK German Consumer Climate (Mar)

Friday, 26th February

French Consumer Spending (MoM) (Jan)

French GDP (QoQ) (Q4) 2nd Estimate

Spanish HICP (YoY) (Feb) Prelim

Spanish CPI (YoY) (Feb) Prelim

The Majors

It was a relatively bullish end to the week for the European majors on Friday. The CAC40 and DAX30 rose by 0.79% and by 0.77% respectively, with the EuroStoxx600 rising by 0.53%.

Prelim Manufacturing PMI for February gave the European majors a boost on Friday.

Corporate earnings added to the upside, supporting the market’s optimistic outlook towards the economic recovery.

The Stats

It was a busy day on the economic calendar on Friday. Prelim private sector PMI numbers for France, Germany, and the Eurozone were in focus.

In February, the French Manufacturing PMI jumped from 51.6 to a 3-year high 55.0. Economists had forecast a decline to 51.4.

The services PMI fell from 47.3 to a 3-month low 43.6, leading to a fall in the French Composite PMI from 47.7 to a 3-month low 45.2.

Germany’s manufacturing sector activity picked up in February, with the prelim Manufacturing PMI rising from 57.1 to a 36-month high 60.6. Economists had forecasted a fall to 56.5.

Service sector troubles continued, however, with the services PMI falling from 46.7 to a 9-month low 45,9.

As a result of the jump in manufacturing sector PMI, the composite PMI increased from 50.8 to a 2-month high 51.3.

For the Eurozone, the manufacturing PMI increased from 54.8 to 57.7, while the services PMI fell from 45.4 to 44.7.

The Eurozone’s composite PMI increased from 47.8 to 48.1, supported by the pickup in manufacturing sector activity.

From the U.S

Key stats also included prelim private sector PMI numbers for February. It was also a mixed set of numbers from the U.S.

In February, the all-important services PMI increased from 58.3 to 58.9, while the manufacturing PMI slipped from 59.2 to 58.5. Supported by the services sector, the composite PMI increased from 58.7 to 58.8 in the month.

The Market Movers

For the DAX: It was another mixed day for the auto sector on Friday. BMW and Volkswagen rose by 0.52% and by 1.57% respectively, while and Continental and Daimler fell 1.52% and by 0.15% respectively.

It was a bullish day for the banks, however. Deutsche Bank and Commerzbank rallied by 3.78% and by 3.18% respectively.

From the CAC, it was a bullish day for the banks. BNP Paribas and Credit Agricole rose by 2.66% and by 2.63% respectively, with Soc Gen rallying by 3.78%.

It was a mixed day for the French auto sector, however. Stellantis NV rose by 0.81%, while Renault slid by 4.43%. Disappointing corporate earnings results weighed on Renault on the day.

Air France-KLM rallied by 3.91%, with Airbus SE rising by 0.53% to partially reverse Thursday’s slide.

On the VIX Index

A run of 3 consecutive days in the green came to an end for the VIX on Friday. Partially reversing a 4.60% rise from Thursday, the VIX fell by 1.96% to end the day at 22.05.

The NASDAQ rose by 0.07%, with the Dow ending the day flat. The S&P500 fell by 0.19% on the day.

VIX 220221 Daily Chart

The Day Ahead

It’s a relatively busy day ahead on the European economic calendar. February business confidence figures for Germany are due out later this morning.

Following impressive manufacturing PMI numbers from Friday, a pickup in business confidence should deliver further support to the majors.

From the U.S, there are no material stats later in the day to provide the majors with direction.

The lack of stats from the U.S will leave the majors in the hands of chatter from Capitol Hill later in the day.

The Futures

In the futures markets, at the time of writing, the Dow Mini was up by 7 points.

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