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European Equities: Service Sector PMIs and US Labor Market Data in Focus

Economic Calendar

Wednesday, 5th January

Spanish Services PMI (Dec)

Italian Services PMI (Dec)

French Services PMI (Dec) Final

German Services PMI (Dec) Final

Eurozone Markit Composite PMI (Dec) Final

Eurozone Services PMI (Dec) Final

Thursday, 6th January

German Factory Orders (MoM) (Nov)

IHS Markit Construction PMI (Dec)

German CPI (MoM) (Dec)

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)

The Majors

It was another bullish day for the European majors on Tuesday. The CAC40 rallied by 1.39% to lead the way, with the DAX30 and the EuroStoxx600 both ending the day up by 0.82% respectively. For the EuroStoxx600, it was another record high on the day.

Upbeat economic data from Germany delivered support for the majors, with inflation figures from France also market positive.

Travel stocks were amongst the front runners on the day, with autos and bank stocks also finding strong support.

The Stats

It was another busy Eurozone economic calendar this morning. German retail sales and unemployment figures were in focus along with prelim French inflation numbers for December.

The German Economy

According to Destatis, retail sales rose by 0.6% in November, following a 0.5% increase in October. Economists had forecast a 0.5% decline. Year-on-year, retail sales fell by 2.9% versus a forecasted 4.9% slide. In October, retail sales had fallen by 2.0%.

Unemployment figures were also upbeat. In December, unemployment fell by a further 23k after having fallen by 34k in November. As a result, the unemployment rate slipped from 5.3% to 5.2%. Economists had forecast a fall in unemployment of 15k and for the unemployment rate to hold steady at 5.3%.

French Inflation

According to Insee.fr, December’s annual rate of inflation held steady at 2.8% in December, according to prelim figures, which was in line with forecasts.

  • Food prices increased by 1.4% versus 0.5% in November.
  • Energy prices were up 18.6% versus 21.6% in November.
  • Prices for manufactured products increased by 1.2% and prices for services by 1.8%.
  • In November, prices for manufactured products had been up by 0.8% and services by 1.9%.
  • Month-on-month, consumer prices rose by 0.2% after having risen by 0.4% in November.

From the U.S

ISM Manufacturing PMI and JOLT’s job openings drew attention late in the European session.

In December, the ISM Manufacturing PMI slipped from 61.1 to 58.7 versus a forecasted decline to 60.0. The ISM Manufacturing Employment sub-index climbed from 53.3 to 54.2%, however.

In November, JOLT’s job openings fell from 11.091m to 10.562m. Economists had forecast openings of 11.075m.

The Market Movers

For the DAX: It was a bullish day for the auto sector on Tuesday. Daimler led the way, rallying by 4.96%, with BMW and Volkswagen ending the day up by 3.13% and by 3.42% respectively. Continental saw a more modest 1.21% gain on the day.

It was also a bullish day for the banks. Deutsche Bank rose by 3.03%, with Commerzbank rallying by 4.75%.

From the CAC, it was a bullish day for the banks. Soc Gen rallied by 4.83%, with BNP Paribas and Credit Agricole ending the day up by 3.35% and by 2.37% respectively.

The French auto sector also had a bullish session. Stellantis NV and Renault saw gains of 3.95% and 2.77% respectively.

Air France-KLM led the way, surging by 8.13%, with Airbus SE rising by 2.36%

On the VIX Index

It was back into the green for the VIX on Tuesday, marking just the 2nd rise in 10 sessions.

Partially reversing a 3.60% fall from Monday, the VIX rose by 1.87% to end the day at 16.91.

The NASDAQ slid by 1.33%, with the S&P500 declining by 0.06%. It was a bullish day for the Dow, however, which rose by 0.59%.

VIX 050122 Daily Chart

The Day Ahead

It’s yet another busy day ahead on the Eurozone’s economic calendar. Service sector PMIs for Italy and Spain are due out in the early part of the European session. Finalized services and composite PMIs are also due out for France, Germany, and the Eurozone.

Barring marked revisions to prelims, expect Italy’s services PMI and the Eurozone’s composite PMI to be key.

From the U.S, ADP employment change figures will also influence along with finalized service sector PMI numbers.

Away from the economic calendar, COVID-19 news will need continued monitoring, however. While it has been a bullish start to the year, downside risks remain over the Omicron strain and vaccine efficacies.

The Futures

In the futures markets, at the time of writing, the Dow Mini was down by 19 points.

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