European Equities: German Industrial Production and China in Focus

Economic Calendar:

Monday, 8th March

German Industrial Production (MoM) (Jan)

Tuesday, 9th March

German Trade Balance (Jan)

French Non-Farm Payrolls (QoQ) (Q4)

Eurozone GDP (QoQ) (Q4) Final

Eurozone GDP (YoY) (Q4) Final

Thursday, 11th March

ECB Interest Rate Decision (Mar)

ECB Press Conference

Friday, 12th March

German CPI (MoM) (Feb)

Spanish CPI (YoY) (Feb)

Spanish HICP (YoY) (Feb)

Eurozone Industrial Production (MoM) (Jan)

The Majors

It was a bearish end to the week for the European majors on Friday.

On Friday, the DAX30 fell by 0.96%, with the CAC40 and the EuroStoxx600 ending the day with losses of 0.82% and 0.78% respectively.

Economic data from Germany and the U.S failed to reverse losses from early in the day, as U.S Treasury yields climbed further.

For the European markets, it had also been the first opportunity to respond to FED Chair Powell’s post-European session speech.

A lack of commitment to address yields led to a pullback in the U.S equities, which spilled into the European session.

The Stats

It was a relatively busy day on the economic calendar on Friday.  German factory orders were in focus going into the European open.

In January, factory orders increased by 1.4%, coming in ahead of a forecasted 0.7% increase. In December, orders had fallen by 1.9%.

According to Destatis,

  • Compared with January 2020, new orders were up 2.5% and by 3.7% when compared with February 2020.
  • Domestic orders slid by 2.6%, while foreign orders increased by 4.2%, month-on-month.
  • New orders from the euro area rose 3.9%, with new orders from other countries jumping by 4.4%.
  • Manufacturers of intermediate goods saw new orders increase by 0.2%, with new orders of capital goods up 3.3%.
  • Consumer goods manufacturers, however, reported a 5.8% slide in new orders.

From the U.S

It was a busier session, with official government labor market figures for February in focus late in the European session.

Nonfarm payrolls impressed, with a 379K jump in February. The better than expected rise took the unemployment rate down from 6.3% to 6.2%.

In January, nonfarm payrolls had risen by a more modest 166k.

The Market Movers

For the DAX: It was a bullish day for the auto sector on Friday. Volkswagen rallied by 3.68%, with Daimler rising by 1.32%. BMW and Continental saw relatively modest gains of 0.90% and 0.45% respectively.

It was also a bullish day for the banks. Deutsche Bank rallied by 3.59%, with Commerzbank gaining by 0.92%.

From the CAC, it was a mixed day for the banks. BNP Paribas fell by 0.12%, while Credit Agricole and Soc Gen ended the day with gains of 0.87% and 0.57% respectively.

The French auto sector saw further losses. Stellantis NV and Renault fell by 1.04% and by 1.60% respectively.

Air France-KLM and Airbus SE ended the day down by 6.13% and by 4.87% respectively.

On the VIX Index

A run of 3 consecutive days in the green came to an end for the VIX on Friday. Reversing a 7.12% rise from Thursday, the VIX slid by 13.69% to end the day at 24.66.

The NASDAQ rose by 1.55%, with the Dow and S&P500 gaining by 1.85% and by 1.95% respectively.

VIX 08321 Daily Chart

The Day Ahead

It’s quieter day ahead on the European economic calendar. German industrial production figures for January are due out later this morning.

With little else for the markets to consider, we can expect the numbers to influence going into the European session.

From the U.S, there are no material stats to provide direction, leaving the majors in the hands of FOMC member chatter and chatter from Capitol Hill.

Ahead of the European open, any updates from China’s National People’s Congress will need considering.

Trade data from China will also set the tone.

In February, China’s U.S Dollar trade surplus widened from $78.17bn to $103.25bn. Economists had forecast a narrowing to $60.00bn.

Year-on-year, exports jumped by 60.6%, following an 18.1% increase in January. Economists had forecast a 38.9% surge.

Imports rose by 22.2%, following a 6.5% increase in January. Economists had forecast a 15.0% jump.

The Futures

In the futures markets, at the time of writing, the Dow Mini was up by 101 points with the DAX up by 133 points.

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

The Week Ahead – Economic Data, Monetary Policy, and China in Focus

On the Macro

It’s a quieter week ahead on the economic calendar, with 42 stats in focus in the week ending 12th March. In the week prior, 70 stats had been in focus.

For the Dollar:

It’s a quieter week ahead.

February inflation figures are due out on Wednesday and Friday along with consumer sentiment figures on Friday.

JOLT’s job openings and weekly jobless claims figures will also draw attention on Thursday, however.

With market sensitivity to inflation heightened in recent weeks, expect plenty of influence from the numbers.

The Dollar Spot Index ended the week up by 1.22% to 91.985.

For the EUR:

It’s a busier week ahead on the economic data front.

German industrial production figures are due out on Monday ahead of finalized 4th quarter GDP numbers for the Eurozone on Tuesday.

Barring another revision, the GDP figures, expect Germany’s industrial production figures to have the greater impact.

On Tuesday, German trade data will also draw attention, with the markets focused on demand.

In the 2nd half of the week, industrial production figures for the Eurozone are due out.

Finalized inflation figures for Germany and Spain are also due out but will likely have a limited impact.

On the monetary policy front, the ECB monetary policy decision and press conference on Thursday will be the main event.

With market jitters over a possible shift in policy stemming from reinflation, expect the press conference to be key. Lagarde will need to assure the markets that there will be no shift in policy.

The EUR ended the week down by 1.33% to $1.1915.

For the Pound:

It’s another relatively quiet week ahead on the economic calendar.

In the first half of the week, retail sales figures for February are due out on Tuesday. With little else for the markets to consider, the BRC numbers will influence.

The markets will then need to wait for GDP, manufacturing and industrial production figures on Friday for more direction.

Trade data is also due out but will likely have a muted impact on the Pound.

The Pound ended the week down by 0.66% to $1.3841.

For the Loonie:

It’s a quieter week ahead on the economic calendar.

February employment figures and January wholesale sales figures are due out on Friday.

Employment change figures for February will be the key driver on the day.

On the monetary policy front, the Bank of Canada is also in action on Wednesday.

With the markets expecting the BoC to stand pat, the BoC press conference will be the main area of focus. Once more, inflation will likely be a hot topic…

The Loonie ended the week down by 0.62% to C$1.2659 against the U.S Dollar.

Out of Asia

For the Aussie Dollar:

It’s a quiet week.

Business and consumer confidence figures for February and March are due out on Tuesday and Wednesday.

While business investment is also key to an economic recovery, expect consumer sentiment figures to have the greatest impact.

The Aussie Dollar ended the week down by 0.26% to $0.7686.

For the Kiwi Dollar:

It’s another quiet week ahead.

Electronic card retail sales figures are due out on Wednesday ahead of Business PMI numbers on Friday.

With little else for the markets to consider, both data sets will influence.

The Kiwi Dollar ended the week down by 0.91% to $0.7167.

For the Japanese Yen:

It is another quiet week ahead.

2nd estimate GDP numbers for the 4th quarter are due out on Tuesday.

Barring a marked revision from 1st estimates, however, the stats should have a limited impact on market risk sentiment.

At the end of the week, BSI Large Manufacturing Conditions Index numbers for the 1st quarter will draw interest.

The markets will be looking for manufacturing conditions to have improved for the 1st quarter…

The Japanese Yen ended the week down by 1.63% to ¥108.31 against the U.S Dollar.

Out of China

It’s a busier week ahead. Over the weekend, trade data for February is due out and will set the tone.

Expect plenty of interest in the numbers following some disappointing private sector PMIs.

Weak figures and we could see concerns over the Chinese economic recovery begin to hit the markets.

On Wednesday, inflation figures for February will also draw attention.

With the National People’s Congress continuing from last Friday, chatter from the Chinese government will also influence market risk sentiment.

The Chinese Yuan ended the week down by 0.36% to CNY6.4970 against the U.S Dollar.

Geo-Politics

U.S Politics

Iran and the Middle East will remain a key area of focus, particularly following last week’s report on the Khashoggi murder.

For Joe Biden and the Democrats, this could prove to be the first test. A breakdown in U.S – Saudi relations would raise questions over stability in the region.

While the Iran nuclear agreement will be a main area of focus, U.S – China relations also remains a key focal point for the markets.

The Weekly Wrap – Rising Yields and A Dollar Resurgence Was the Story of the Week

The Stats

It was a busier week on the economic calendar, in the week ending 5th March.

A total of 70 stats were monitored, following 52 stats from the week prior.

Of the 70 stats, 40 came in ahead forecasts, with 25 economic indicators coming up short of forecasts. There were 5 stats that were in line with forecasts in the week.

Looking at the numbers, 37 of the stats reflected an upward trend from previous figures. Of the remaining 33 stats, 28 reflected a deterioration from previous.

For the Greenback, it was a 2nd consecutive week in the green, in the week ending 5th March. The Dollar Spot Index rallied by 1.22% to end the week at 91.985. In the previous week, the Dollar had risen by 0.57% to 90.879.

FED Chair Powell’s speech from Thursday delivered 91 levels for the Dollar.

Out of the U.S

It was another relatively busy week on the economic data front.

In the first half of the week, private sector PMI figures were in focus along with ADP nonfarm employment numbers.

It was a mixed set of stats for the markets.

While manufacturing sector activity picked up in February, service sector growth hit a speed bump.

In February, the ISM Manufacturing PMI rose from 52.6 to 54.4. The Non-Manufacturing PMI, however, fell from 58.7 to 55.3.

The ADP numbers were not much better. In February, nonfarm employment rose by 117k in February, according to the ADP. Economists had forecast a 177k rise.

On Thursday, the market attention shifted to the weekly jobless claims figures ahead of the government labor market numbers on Friday.

In the week ending 26th February, initial jobless claims increased from 736k to 745k.

At the end of the week, nonfarm payrolls impressed, however, with a 379K jump in February. The better-than-expected rise took the unemployment rate down from 6.3% to 6.2%.

In January, nonfarm payrolls had risen by a more modest 166k.

On the monetary policy front, FED Chair Powell fueled a Dollar rally overnight on Thursday. Powell failed to address the issue of rising yields, which suggested a willingness to allow yields to rise further.

In the equity markets, the NASDAQ fell by 2.06%, while the Dow and S&P500 rose by 1.82% and by 0.81% respectively.

Out of the UK

It was another relatively quiet week on the economic data front.

Finalized private sector PMI figures for February were in focus along with the Tories annual budget release.

It was a mixed set of numbers for the Pound.

An upward revision to the manufacturing PMI was offset by a downward revision to the services PMI.

Late in the week, construction PMI figures for February had a muted impact on the Pound.

In February, the construction sector joined the manufacturing sector in expansion, with the PMI rising from 49.2 to 53.3.

From the UK government, the annual budget failed to move the dial.

In the week, the Pound fell by 0.66% to end the week at $1.3841. In the week prior, the Pound had fallen by 0.59% to $1.3933.

The FTSE100 ended the week up by 2.27%, reversing a 2.12% slide from the previous week.

Out of the Eurozone

It was a particularly busy week on the economic data front, with private sector PMI figures in focus.

While the manufacturing sector continued to deliver, service sector woes left the Eurozone Composite at 48.8 in February. A continued contraction highlighted some uncertainty towards the economic recovery.

Other stats included German and Eurozone inflation, retail sales and unemployment figures.

The stats were skewed to the negative, however, with a retail sales slump in January worse than expected.

At the end of the week, the German economy was back in focus. Factory orders rose by a larger than anticipated 1.4% and were up by 3.7% when compared with Feb-2020.

For the week, the EUR slid by 1.33% to $1.1915. In the week prior, the EUR had fallen by 0.36% to $1.2075.

For the European major indexes, it was bullish week. The CAC40 rose by 1.39%, with the DAX30 and EuroStoxx600 gaining 0.97% and 0.88% respectively. A bearish end to the week left the majors with relatively modest gains.

For the Loonie

It was a busy week.

4th quarter GDP figures were in focus in the 1st half of the week.

The figures revealed a slowdown in growth from the 3rd quarter, aligned with economies elsewhere.

Quarter-on-quarter, the economy grew by 2.3%, while contacting by 3.23% year-on-year.

In December, the economy expanded by a modest 0.1%, slowing from 0.8% growth in November.

At the end of the week, the focus shifted to January trade data and February’s Ivey PMI

In January, the trade balance jumped from a C$1.98bn deficit to a C$1.41bn surplus. A more marked increase in exports led to the return to a trade surplus mid-way through the quarter.

For February, the Ivey PMI was also Loonie positive, jumping from 48.4 to 60.0. While an impressive figure, the market impact was limited as a result of market concerns over yields.

In the week ending 5th March, the Loonie fell by 0.62% to C$1.2659. In the week prior, the Loonie had fallen by 0.57% to C$1.2738.

Elsewhere

It was a bearish week for the Aussie Dollar and the Kiwi Dollar.

In the week ending 5th March, the Aussie Dollar fell by 0.26% to $0.7686, with the Kiwi Dollar ending the week down by 0.91% to $0.7167.

For the Aussie Dollar

It was a busy week.

Early in the week, manufacturing and company gross operating profit figures were in focus.

It was a mixed bag, with manufacturing sector activity improving in February.

4th quarter profits were dire, however, sliding by 6.6% in the 4th quarter. In the 3rd quarter, company gross operating profits had risen by 3.2%.

In the 2nd half of the week, GDP, retail sales, and trade data were in focus.

The stats were skewed to the positive. The economy contracted by less than had been anticipated, with the trade surplus widening off the back of a marked pickup in exports.

Retail sales figures came up short of prelim numbers but still recovered from December’s 4.1% slide.

On the monetary policy front, the RBA was also in action but stood pat following the previous month’s surprise move.

For the Kiwi Dollar

It was a particularly quiet week.

Economic data was limited to building consent figures that had a muted impact on the Kiwi Dollar

For the Japanese Yen

It was a relatively busy week.

Finalized private sector PMIs for February and 4th quarter capital spending figures were in focus.

The stats were skewed to the positive in the week, though not enough to prevent a Yen slide to ¥108 levels.

In February, the manufacturing sector returned to expansion, with the PMI rising from 49.8 to 51.4.

The services sector continued to contract, however, with the PMI rising from 46.1 to 46.3.

Capital expenditure saw further decline in the 4th quarter, though to a lesser extent than in the previous quarter. Year-on-year, capital expenditure was down by 4.8%. In the 3rd quarter, CAPEX had been down by 10.6%.

The Japanese Yen slid by 1.63% to ¥108.31 against the U.S Dollar. In the week prior, the Yen had fallen by 1.06% to ¥106.57.

Out of China

It was a busier week on the data front, with private sector PMI figures for February in focus.

The stats were skewed to the negative, with growth across the private sector slowing moderately mid-way through the quarter.

In February, the market’s favored Caixin manufacturing PMI fell from 51.5 to 50.9, with the services PMI falling from 52.0 to 51.5.

As a result, the composite PMI slipped from 52.2 to 51.7.

Common themes across the PMI numbers from China and beyond were rising prices but also marked increases in optimism.

In the week ending 5th March, the Chinese Yuan fell by 0.36% to CNY6.4970. In the week prior, the Yuan had fallen by 0.25% to CNY6.4737.

The CSI300 fell by 1.39%, while the Hang Seng rose by 0.41%.

European Equities: A Week in Review – 05/03/21

The Majors

After a bearish final week of the month in February, it was a bullish start to the month in March.

The CAC40 rallied by 1.39%, with the DAX30 and the EuroStoxx600 seeing gains of 0.97% and 0.88% respectively.

Through the early part of the week, better than expected manufacturing PMI figures provided the majors with support.

An easing in U.S Treasury yields from the previous week’s spike, however, was the main driver early in the week.

Later in the week, a combination of weak economic data and pickup in yields saw the majors give up some of their earlier gains.

The Stats

It was a busy week on the economic data front, with February private sector PMIs in focus.

Manufacturing PMI numbers impressed, while the services sector continued to struggle as a result of extended containment measures.

Weighed by service sector woes, the Eurozone’s composite PMI rose modestly from 47.8 to 48.8. The overall picture continued to paint a gloomy picture and reflected the downside risks to the Eurozone economy.

Other stats in the week included German and Eurozone retail sales and unemployment figures and German factory orders.

Retail sales figures were particularly disappointing, while both Germany and the Eurozone’s unemployment rates held steady in January.

At the end of the week, factory orders from Germany impressed, rising by a larger than anticipated 1.4%. More significantly, orders were up by 3.7% when compared with Feb-2020, the month prior to the pandemic.

From the U.S

ISM private sector PMI figures for February also delivered mixed results, For the U.S, manufacturing sector activity picked up, while service sector growth slowed.

The all-important ISM Non-Manufacturing PMI fell from 58.7 to 55.3 in February.

Labor market figures ahead of Friday’s nonfarm payrolls also disappointed.

According to the ADP, nonfarm employment increased by just 117k in February, following a 195k increase in January.

Weekly jobless claims were on the rise in the final week of February, with initial jobless claims increasing from 736k to 745k.

At the end of the week, the government’s official labor market numbers wrapped things up.

Nonfarm payrolls impressed, with a 379K jump in February. The better-than-expected rise took the unemployment rate down from 6.3% to 6.2%.

In January, nonfarm payrolls had risen by a more modest 166k.

On the monetary policy front, FED Chair Powell failed to assure the markets of action to stem the rise in yields on Thursday.

A spike in the Dollar and a sell-off in the U.S equity markets had spilled into the European markets on Friday.

The Market Movers

From the DAX, it was a bullish week for the auto sector. Volkswagen surged by 13.27%, with BMW and Daimler rallying by 6.18% and by 6.52% respectively. Continental ended the week up by a more modest 3.53%.

It was also a bullish week for the banking sector. Deutsche Bank rallied by 4.40%, with Commerzbank gaining 1.47%.

From the CAC, it was yet another particularly bullish week for the banks. Credit Agricole rallied by 5.25%, with BNP Paribas and Soc Gen gaining 4.69% and 3.90% respectively.

It was a relatively bullish week for the French auto sector. Renault and Stellantis NV ended the week up by 1.91% and by 3.85% respectively.

Air France-KLM slid by 7.17%, with Airbus ending the week down by 0.51%.

On the VIX Index

It was back into the red for the VIX  in the week ending 5th March. Partially reversing a 26.76% jump from the previous week, the VIX fell by 11.77% to end the week at 24.66.

The VIX had been on track for a 3rd consecutive weekly gain before a Friday rebound from early losses across the U.S equity markets.

For the week, the NASDAQ fell by 2.06%, while the Dow and the S&P500 rose by 1.82% and by 0.81% respectively.

VIX 06321 Weekly Chart

The Week Ahead

It’s a relatively busy week ahead on the economic calendar.

From Germany, industrial production and trade figures for January are due out on Monday and Tuesday.

Expect the industrial production figures to have the greatest impact on the majors.

On Tuesday, finalized 4th quarter GDP numbers for the Eurozone will also draw interest ahead of Eurozone industrial production figures on Friday.

On the inflation front, finalized inflation figures from Germany and Spain are due out at the end of the week. Barring marked upward revisions, however, these should have a muted impact on the majors.

While the stats will provide direction, it will be the ECB press conference on Thursday, however, that will be the main event.

With the markets expecting the ECB to stand past on policy, Lagarde’s view on inflation, yields and the impact on the economy and monetary policy will be key.

From the U.S, the economic calendar is on the lighter side.

On Wednesday, February inflation figures will draw interest ahead of the weekly jobless claim figures on Thursday.

At the end of the week, prelim March consumer sentiment figures will also influence late in the European session.

Following FED Chair Powell’s comments from last week, FOMC member chatter in the week ahead will also need monitoring.

European Equities: German Factory Orders and U.S Nonfarm Payrolls in Focus

Economic Calendar:

Friday, 5th March

German Factory Orders (MoM) (Jan)

The Majors

It was a mixed day for the European majors on Thursday.

Mixed economic data from the Eurozone and the U.S provided little support for the European boerses.

The lingering fear of the impact of reinflation on monetary policy continued to weigh on the majors late in the week.

On Thursday, the DAX30 the EuroStoxx600 fell by 0.17% and by 0.38% respectively, while the CAC40 rose by 0.01%.

The European majors came under further pressure as the markets responded to a pickup in U.S Treasury yields on the day.

The Stats

It was a relatively busy day on the economic calendar on Thursday.  Key stats from the Eurozone included Eurozone retail sales figures along with January’s unemployment rate.

Retail sales slid by 5.9% in January, reversing a downwardly revised 1.8% increased from December. Economists had forecast a more modest 1.1% fall.

Year-on-year, retail sales fell by 6.4% across the Eurozone in January, which was worse than a forecasted 1.2% decline. In December, retail sales had risen by an upwardly revised 0.9%.

According to Eurostat,

  • Month-on-month, non-food product sales slid by 12.0%, with automotive fuel sales by 1.1%.
  • There was a 1.1% increase in the sales of food, drinks, and tobacco.
  • By member state, Austria (-16.6%), Ireland (-15.7%), and Slovakia (-11.1%) registered the largest falls.
  • Estonia registered the largest increase, rising by a relatively modest 1.7%.

While retail sales figures disappointed, the Eurozone’s unemployment rate held steady at 8.1% in January. December’s unemployment rate was revised down from 8.3% to 8.1%.

According to Eurostat,

  • While stable at 8.1%, this was up from January 2020’s 7.4%.

Ahead of today’s key stats, construction PMI figures from Germany failed to impress. In February, the IHS Markit Construction PMI slid from 46.6 to 41.0.

From the U.S

Weekly jobless claim figures were in focus along with January factory orders late in the European session.

In the week ending 26th February, initial jobless claims increased from 736k to 745k. Economists had forecast a rise to 750k.

Factory orders were positive for riskier assets. In January, factory orders increased by 2.6%, following a 1.6% rise in December. Economists had forecast a 2.1% increase.

The Market Movers

For the DAX: It was a mixed day for the auto sector on Thursday. Volkswagen rallied by 2.02%, with Continental and Daimler rising by 0.16% and by 1.15% respectively. BMW bucked the trend, however, falling by 0.32%.

It was a bearish day for the banks. Deutsche Bank slid by 3.16%, with Commerzbank falling by 1.34%.

From the CAC, it was a bearish day for the banks. BNP Paribas fell by 0.14%, with Credit Agricole and Soc Gen seeing heavier losses of 1.30% and 1.23% respectively.

The French auto sector also struggled. Stellantis NV and Renault fell by 0.25% and by 0.50% respectively.

Air France-KLM and Airbus SE ended the day down by 1.08% and by 0.16% respectively.

On the VIX Index

It was a 3rd consecutive day in the green for the VIX on Thursday. Following a 10.66% gain on Wednesday, the VIX rose by 7.12% to end the day at 28.57.

The NASDAQ slid by 2.11%, with the Dow and S&P500 falling by 1.11% and by 1.34% respectively.

VIX 05321 Daily Chart

The Day Ahead

It’s quieter day ahead on the European economic calendar. German factory order numbers for January are due out later this morning.

Expect any heavy fall in orders to raise questions over the recent uptrend in German survey-based figures.

Back in January, Germany’s Manufacturing PMI survey had reported a continued rise in new orders, albeit at a slower pace than in December.

From the U.S, nonfarm payrolls and February’s unemployment rate will also garner plenty of interest later in the day.

Ahead of the European open, China Premier Li Keqiang’s National People’s Congress speech will draw interest.

The Futures

In the futures markets, at the time of writing, the Dow Mini was down by 12 points.

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

European Equities: Economic Data and Bond Yields in Focus

Economic Calendar:

Thursday, 4th March

German IHS Markit Construction PMI (Feb)

ECB Economic Bulletin

Eurozone Retail Sales (MoM) (Jan)

Eurozone Unemployment Rate (Jan)

Friday, 5th March

German Factory Orders (MoM) (Jan)

The Majors

It was another relatively bullish day for the European majors on Wednesday.

The CAC40 and the DAX30 saw gains of 0.35% and 0.29% respectively, while the EuroStoxx600 ended the day flat.

It was a choppy session for the majors, which faced rising Treasury yields late in the European session. News that the U.S would have enough vaccine doses to vaccinate everyone in the U.S before the summer drove yields higher.

Earlier in the session, economic data from the Eurozone had delivered mixed results. While the February PMI numbers were largely better than expected, the Eurozone’s private sector continued to contract.

The Stats

It was a busy day on the economic calendar on Wednesday.  Service sector PMI numbers for Italy and Spain were in focus early in the European session.

Finalized service and composite PMI figures for France, Germany, and the Eurozone also provided the majors with direction.

In February, Spain’s services PMI increased from 41.7 to 43.1. Economists had forecast a rise to 43.0.

Service sector activity also continued to contract in Italy. In February, the Services PMI increased from 44.7 to 48.8, coming in ahead of a forecasted 46.0.

For France, the services PMI fell from 47.3 to 45.6 in February, which was up from a prelim 43.6.

German’s Services PMI fell from 46.7 to 45.7, which was down from a prelim 45.9.

It was a different story for the composite PMIs, however.

An impressive pickup in manufacturing sector activity in Germany led to a rise in the German composite from 50.8 to 51.1. This was down marginally from a prelim 51.3.

For France, the Composite fell from 47.7 to 47.0. This was up from a prelim 45.2, however.

The Eurozone

For the Eurozone, the Services PMI rose from 45.4 to 45.7 in February, which was better than a prelim 44.7.

As a result of better numbers from Italy and Spain, the Composite PMI rose from 47.8 to 48.8, an upward revision from a prelim 48.1.

According to the February survey,

  • The modest fall in activity was closely linked to a decline in new orders, which fell for a 5th consecutive month.
  • In spite of this, new export business increased at its strongest pace for nearly 3-years.
  • For the Eurozone, there was a net increase in employment for the 1st time in 12-months.
  • Input cost inflation was recorded for the 9th successive month and to the sharpest degree since the Nov-2018.
  • As a result, output charges rose for the first time since last February.
  • Optimism hit its highest level in 3-years, supported by the rollout of vaccines and easing of restrictions.

From the U.S

The market’s preferred ISM Non-manufacturing PMI and ADP nonfarm employment change figures were in focus late in the session.

In February, the ISM Non-Manufacturing PMI fell from 58.7 to 55.3. Economists had forecast for the PMI to hold steady at 58.7.

  • The Price Index rose from 64.2% to 71.8%, aligned with a marked pickup in inflationary pressures in other major economies.
  • Other sub-indexes were in decline, weighing on the headline PMI figures.
    • ISM Non-Manufacturing Business Activity Index fell from 59.9 %to 55.5%.
    • The Employment Index fell from 55.2% to 52.7%.
    • Finally, the New Orders Index slid from 61.8% to 51.9%.

The ADP Nonfarm Employment figures for February also disappointed, with employment rising by just 117k in February. Economists had forecast a 177k rise following a 195k increase in January.

The Market Movers

For the DAX: It was a bullish day for the auto sector on Wednesday. BMW (+4.54%), Continental (+4.49%), and Volkswagen (+4.67%) led the way, while Daimler trailed with a more modest 0.94% gain.

It was also a bullish day for the banks. Deutsche Bank ended the up by 1.62%, with Commerzbank gaining 1.02%.

From the CAC, it was a bullish day for the banks. BNP Paribas and Credit Agricole rose by 2.52% and by 2.46% respectively, with Soc Gen rallying by 3.62%.

It was a mixed day for the French auto sector, however. Stellantis NV slipped by 0.22%, while Renault rallied by 5.21%. While Stellantis closed out the day in the red, Stellantis delivered positive earnings and an optimistic outlook on Wednesday that supported the broader auto sector.

Air France-KLM eked out a 0.07% gain, with Airbus SE ending the day up by 1.37%.

On the VIX Index

It was a 2nd consecutive day in the green for the VIX on Wednesday. Following a 3.21% gain on Tuesday, the VIX rose by 10.66% to end the day at 26.67.

Rising U.S Treasury yields delivered the upside for the VIX, as the U.S equity markets responded to vaccine updates from the administration.

The NASDAQ slid by 2.70%, with the Dow and S&P500 falling by 0.39% and by 1.31% respectively.

VIX 040321 Daily Chart

The Day Ahead

It’s another busy day ahead on the European economic calendar. Key stats include retail sales and unemployment figures for the Eurozone, with the ECB Economic Bulletin due out ahead of the numbers.

While we can expect some market sensitivity to the numbers, expect the ECB Economic Bulletin to be the key driver early on.

With the ECB in action next week, the markets will be looking for clues on what to expect at the press conference. Inflation, the economic outlook, EUR strength, and their impact on monetary policy will likely be the main areas of focus.

From the U.S, the weekly jobless claims figures and January factory order numbers will also influence late in the European session.

The Futures

In the futures markets, at the time of writing, the Dow Mini was down by 45 points.

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

The EUR Gives Up Early Gains Amidst another Data Dump from the Eurozone

It was yet another busy morning on the economic calendar, with Service and Composite PMIs from Spain and Italy in Focus.

Finalized PMIs for France, Germany, and for the Eurozone also provided direction.

The Member States

Spain

In February, Spain’s services PMI increased from 41.7 to 43.1. Economists had forecast an increase to 43.0.

According to the February Survey,

  • Business activity and new orders both continued to see marked declines.
  • Job losses continued to plague the sector and the economy, with workloads remaining depressed.
  • Cost inflation accelerated once more, hitting its highest level since last June.
  • In spite of the doom and gloom, optimism hit its highest level in over two-and-a-half years. Hopes that vaccination programs will bring an end to the pandemic supported optimism.

Italy

Service sector activity also continued to contract. In February, the Services PMI increased from 44.7 to 48.8, coming in ahead of a forecasted 46.0.

According to the February survey,

  • Business activity fell at the slowest pace in 5-months, with the level of new business stabilizing.
  • Looser COVID-19 restrictions had led to higher sales in some sectors, supporting new business.
  • Foreign demand for Italian services continued to decline, however, marking a 20th consecutive monthly contraction. The latest fall in new export orders was the slowest since last February.
  • Firms made further cuts to staffing levels, though the latest decline was the slowest in the current year-long sequence of decline.
  • Cost pressures continued to build, with the rate of cost inflation the most marked since last February.
  • In spite of this, firms continued to reduce their average charges.
  • Looking ahead, optimism was the most upbeat since May-2011, supported by hopes of the further easing of restrictions.

France and Germany

For France, the services PMI fell from 47.3 to 45.6 in February, which was up from a prelim 43.6.

German’s Services PMI fell from 46.7 to 45.7, which was down from a prelim 45.9.

It was a different story for the composite PMIs, however.

An impressive pickup in manufacturing sector activity in Germany led to a rise in the German composite from 50.8 to 51.1. This was down marginally from a prelim 51.3.

For France, the Composite fell from 47.7 to 47.0. This was up from a prelim 45.2, however.

The Eurozone

For the Eurozone, the Services PMI rose from 45.4 to 45.7 in February, which was better than a prelim 44.7.

The Composite PMI rose from 47.8 to 48.8, an upward revision from a prelim 48.1.

According to the February survey,

  • The modest fall in activity was closely linked to a decline in new orders, which fell for a 5th consecutive month.
  • In spite of this, new export business increased at its strongest pace for nearly 3-years.
  • For the Eurozone, there was a net increase in employment for the 1st time in 12-months.
  • Input cost inflation was recorded for the 9th successive month and to the sharpest degree since Nov-2018.
  • As a result, output charges rose for the first time since last February.
  • Optimism hit its highest level in 3-years, supported by the rollout of vaccines and easing of restrictions.

Comp PMI Feb

  • Italy joined Germany as the only nation to record modest growth of output during February. Strong manufacturing performances offset ongoing weakness in service industries for both.
  • Ireland recorded the sharpest contraction, followed by Spain and then France.

Market Impact

Ahead of today’s PMIs, the EUR had hit a current day high $1.21079, after having recovered from a pre-stat low $1.20790.

Through the release of the PMIs, however, the EUR slid to a current day low $1.20742 before finding support.

At the time of writing, the EUR was down by 0.04% to $1.20856

EURUSD 030321 Minute Chart

For the European boerses, today’s stats had a limited impact as the markets continued to respond to falling yields.

At the time of writing, the DAX30 was up by 0.90%, with the CAC40 and EuroStoxx600 up by 0.84% and by 0.69% respectively.

Next Up

ISM Non-Manufacturing PMI and finalized Market services and Composite PMIs from the U.S.

U.S ADP nonfarm employment change figures will also draw interest ahead of the PMIs.

European Equities: Service PMIs from the Eurozone and the U.S in Focus

Economic Calendar:

Wednesday, 3rd March

Spanish Services PMI (Feb)

Italian Services PMI (Feb)

French Services PMI (Feb) Final

German Services PMI (Feb) Final

Eurozone Markit Composite PMI (Feb) Final

Eurozone Services PMI (Feb) Final

Thursday, 4th March

German IHS Markit Construction PMI (Feb)

ECB Economic Bulletin

Eurozone Retail Sales (MoM) (Jan)

Eurozone Unemployment Rate (Jan)

Friday, 5th March

German Factory Orders (MoM) (Jan)

The Majors

It was a relatively bullish day for the European majors on Tuesday.  The EuroStoxx600 and DAX30 both rose by 0.19% respectively, with the CAC40 ending the day up by 0.29%.

Disappointing economic data from the Eurozone failed to peg back the European majors that had kicked off the day in the red.

An easing in government bond yields continued to deliver support, with no major stats from the U.S to rock the boat.

Optimism of a speedy economic recovery remained the key driver, with economies supported by both fiscal and monetary policy and vaccination rollouts.

The Stats

It was a relatively busy day on the economic calendar on Tuesday. Retail sales and unemployment figures from Germany were in focus early in the session.

Later in the morning, prelim February inflation figures for the Eurozone also drew interest.

German Retail Sales and Unemployment

Month-on-month, retail sales fell by 4.5% in January, following an upwardly revised 9.1% slide in December. Economists had forecast a more modest 0.3% decline.

According to Destatis,

  • Year-on-year, retail sales was down by 8.7% in January. In December, retail sales had risen by 2.8%.
  • Compared with Feb-2020, the month prior to the COVID-19 outbreak, turnover was 5.8% lower.

In February, unemployment rose by 9k, partially reversing a 37k fall in January. In spite of the rise, the unemployment rate held steady at 6.0%.

Economists had forecast a 13k fall in unemployment and for the unemployment rate to hold steady at 6.0%.

Eurozone Inflation

The annual core rate of inflation softened from 1.4% to 1.1% in February, according to prelim figures. Economists had forecast for inflation to hold at 1.4%.

The annual rate of inflation held steady at 0.9%, however, which was in line with forecasts.

According to Eurostat,

  • Food, alcohol & tobacco is expected to have the highest annual rate (1.4% compared with 1.5% in January).
  • Services is forecasted to have an annual rate of 1.2% compared with 1.4% in January.
  • Non-energy industrial goods are expected to see its annual rate soften from 1.5% to 1.0%.
  • Energy remained a drag, with an expected annual rate of -1.7% compared with -4.2% in January.

From the U.S

There were no material stats to provide the European majors with direction later in the day.

The Market Movers

For the DAX: It was another mixed day for the auto sector on Tuesday. Daimler rallied by 2.34%, with BMW and Volkswagen seeing gains of 0.29% and 0.76% respectively. Continental saw red once more, however, falling by 0.89%.

It was also a mixed day for the banks. Deutsche Bank ended the day flat, while Commerzbank rose by a modest 0.33%.

From the CAC, it was a mixed day for the banks. BNP Paribas and Credit Agricole rose by 2.68% and by 1.66% respectively, while Soc Gen fell by 0.24%.

It was another bearish day for the French auto sector. Stellantis NV and Renault ended the day with losses of 0.06% and 0.57% respectively.

Air France-KLM fell by 0.96%, with Airbus SE ending the day down by 1.57%.

On the VIX Index

It was back into the green, following 2nd consecutive day in the red, for the VIX on Tuesday. Partially reversing a 16.46% slide from Monday, the VIX rose by 3.21% to end the day at 24.10.

The NASDAQ slid by 1.69%, with the Dow and S&P500 falling by 0.46% and by 0.81% respectively.

VIX 03321 Daily Chart

The Day Ahead

It’s another busy day ahead on the European economic calendar. Key stats include Italian and Spanish service PMI figures for February.

Finalized PMIs for France, Germany, and the Eurozone are also due out.

Barring marked revisions to prelim figures, Italy and the Eurozone’s PMIs will have the greatest impact on the majors.

Expect the stats to draw plenty of interest early in the European session.

From the U.S, the market’s preferred ISM Non-Manufacturing PMI and ADP nonfarm employment change figures will also provide direction later in the day.

Ahead of the European open, service and composite PMI numbers from China will set the tone.

The Futures

In the futures markets, at the time of writing, the Dow Mini was up by 34 points.

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

Economic Data from Germany Tests EUR Support Ahead of Inflation Figures

It was a relatively busy morning on the economic calendar, with economic data from Germany and the Eurozone in focus.

Consumer Spending

After a string of positive stats from Germany and the Eurozone in recent days, retail sales disappointed this morning.

Month-on-month, retail sales fell by 4.5% in January, following an upwardly revised 9.1% slide in December. Economists had forecast a more modest 0.3% decline.

According to Destatis,

  • Year-on-year, retail sales was down by 8.7% in January. In December, retail sales had risen by 2.8%.
  • Compared with Feb-2020, the month prior to the COVID-19 outbreak, turnover was 5.8% lower.

Unemployment

Unemployment figures from Germany were mixed, following the disappointing retail sales figures.

In February, unemployment rose by 9k, partially reversing a 37k fall in January. In spite of the rise, the unemployment rate held steady at 6.0%.

Economists had forecast a 13k fall in unemployment and for the unemployment rate to hold steady at 6.0%.

Market Impact

In response to the retail sales figures, the EUR slipped from 1.20224 to a low $1.19990 before steadying.

German unemployment figures added further downside pressure, leading the EUR back down from a post-retail-sales high $1.20163 to a current day low $1.19919 upon release of the figures.

At the time of writing, the EUR was down by 0.41% to $1.19984. Earlier in the day, the EUR had struck a pre-stat current day high $1.20504 before hitting reverse.

EURUSD 020321 Minute Chart

In spite of the disappointing numbers, the European boerses recovered from early losses.

At the time of writing, the DAX30 was up by 0.20%, with the CAC40 and EuroStoxx600 up by 0.15% and by 0.14% respectively.

Next Up

Prelim February inflation figures for the Eurozone…

European Equities: Economic Data from Germany and Eurozone Inflation in Focus

Economic Calendar:

Tuesday, 2nd March

German Retail Sales (MoM) (Jan)

German Unemployment Change (Feb)

German Unemployment Rate (Feb)

Eurozone CPI (YoY) (Feb) Prelim

Wednesday, 3rd March

Spanish Services PMI (Feb)

Italian Services PMI (Feb)

French Services PMI (Feb) Final

German Services PMI (Feb) Final

Eurozone Markit Composite PMI (Feb) Final

Eurozone Services PMI (Feb) Final

Thursday, 4th March

German IHS Markit Construction PMI (Feb)

ECB Economic Bulletin

Eurozone Retail Sales (MoM) (Jan)

Eurozone Unemployment Rate (Jan)

Friday, 5th March

German Factory Orders (MoM) (Jan)

The Majors

It was a bullish start to the week for the European majors on Monday.  The EuroStoxx600 rose by 1.80%, with the CAC40 and the DAX30 gaining 1.57% and 1.64% respectively.

Economic data from the Eurozone provided support to the European majors on the day.

The upside ultimately, however, came as a result of a calming across the bond markets at the start of the week.

COVID-19 vaccine news also supported demand for the European majors following last week’s pullback. Johnson & Johnson’s single dose vaccine delivery should bring a nearer end to containment measures.

Disappointing private sector PMI numbers out of China on the weekend and head of the European open on Monday failed to peg the majors back.

The Stats

It was a particularly busy day on the economic calendar on Monday, with manufacturing sector activity and inflation in focus.

Manufacturing PMIs

Spain’s manufacturing PMI rose from 49.3 to 52.9, with Italy’s manufacturing PMI increasing from 55.1 to a 37-month high 56.9. For Spain, it was the highest reading since Jul-2020.

Finalized numbers from France and Germany were also better than prelim figures.

The French manufacturing PMI rose from 51.6 to 56.1 in February, revised up from a prelim 55.0.

German manufacturing sector activity also came in better than initially expected. In February, the PMI rose from 57.1 to 37-month high 60.7, revised up from a prelim 60.6.

As a result of the pickup in member state manufacturing sector activity, the Eurozone’s manufacturing PMI increased from 54.8 to 57.9. This was up from a prelim 57.7/

According to the Eurozone’s finalized manufacturing Market Survey,

  • Operating conditions improved to the greatest degree for 3-years.
  • All 3 broad market groups recorded an improvement in operation conditions.
  • Investment goods producers registered the strongest growth (best since Jan-2018), followed by intermediate goods.
  • Consumer goods recorded relatively modest growth but the most marked since Sep-2020.
  • Manufacturing sector growth was broad-based, with the exception of Greece.
  • Germany and the Netherlands continued to sit at the top of the table, with export gains remaining particularly strong.
  • Austria recorded the best performance in 3-years, whilst France and Italy saw the most marked gains since the beginning of 2018.
  • Spain and Ireland recorded relatively modest growth, however.

Inflation

On the inflation front, Italian consumer prices rose by 0.1%, month-on-month, according to prelim February figures. In January, consumer prices had risen by 0.7%.

The annual rate of inflation, however, ticked up from 0.4% to 0.6% in February. Economists had forecast an annual rate of inflation of -0.1%

In Germany, consumer prices increased by 0.7%, month-on-month, following a 0.8% rise in January. Economists had forecast a 0.5% increase.

According to Destatis,

  • The annual rate of inflation accelerated from 1.0% to 1.3% in February, coming in ahead of a forecasted 1.2%.
  • Prices for services increased by 1.4%, year-on-year, while prices for goods increased by a more modest 1.0%.
  • Energy prices increased by 0.3% after having fallen by 2.3% in January, year-on-year.
  • Food prices rose by 1.4% softening from a 2.2% increase in January.

From the U.S

It was a relatively busy day, with the ISM Manufacturing PMI for February the key stats of the day. Finalized Market manufacturing PMI figures were also in focus though had a muted impact on the markets.

In February, the ISM Manufacturing PMI rose from 58.7 to 60.8 in February, coming in ahead of a forecasted 58.8.

  • The new orders index increased by 3.7 percentage points to 64.8%, with the production index rising from 60.7% to 63.2%.
  • Supporting new orders was a pickup in new export orders. The new export orders index increased by 2.3 percentage points to 57.2%.
  • Labor market conditions across the sector also improved, with the Employment Index rising by 1.8 percentage points to 54.4%.

The Market Movers

For the DAX: It was a mixed day for the auto sector on Monday. Volkswagen rose by 1.54%, with BMW and Daimler seeing gains of 0.68% and 0.562% respectively. Continental saw red once more, however, falling by 0.63%.

It was a bullish day for the banks, however. Deutsche Bank rallied by 2.37%, with Commerzbank rising by 0.52%.

From the CAC, it was a mixed day for the banks. BNP Paribas fell by 0.28%, while Credit Agricole and Soc Gen gained 1.42% and 1.19% respectively.

It was also a bullish day for the French auto sector. Stellantis NV rallied by 3.52%, with Renault ended the day up by 1.37%.

Air France-KLM found even more support, rising by a further 0.90%, with Airbus SE rallying by 4.97%.

On the VIX Index

It was a 2nd consecutive day in the red for the VIX on Monday. Following a 3.25% fall from Friday, the VIX slid by 16.46% to end the day at 23.35.

A rebound across the U.S equity markets supported by a pullback in U.S Treasury yields supported the fall in the VIX on the day.

The NASDAQ and S&P500 rallied by 3.01% and by 2.38% respectively, with Dow rising by 1.95%.

VIX 02321 Daily Chart

The Day Ahead

It’s another busy day ahead on the European economic calendar. Key stats include German retail sales, unemployment, and prelim February inflation figures for the Eurozone.

Expect the stats to draw plenty of interest early in the European session.

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

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

The Futures

In the futures markets, at the time of writing, the Dow Mini was up by 38 points.

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

The EUR Hits Reverse in Spite of Impressive Manufacturing PMIs for February

It was a busy morning on the economic calendar, with economic data from France, Germany, Italy, Spain, and the Eurozone in focus.

Manufacturing Sector Activity

It was another positive set of numbers this morning.

Spain’s manufacturing PMI rose from 49.3 to 52.9, with Italy’s manufacturing PMI increasing from 55.1 to a 37-month high 56.9. For Spain, it was the highest reading since Jul-2020.

Finalized numbers from France and Germany were also better than prelim figures.

The French manufacturing PMI rose from 51.6 to 56.1 in February, revised up from a prelim 55.0.

In February, Germany’s manufacturing PMI rose from 57.1 to 37-month high 60.7, revised up from a prelim 60.6.

As a result of the pickup in member state manufacturing sector activity, the Eurozone’s manufacturing PMI increased from 54.8 to 57.9. This was up from a prelim 57.7.

According to the Eurozone’s finalized manufacturing Market Survey,

  • Operating conditions improved to the greatest degree in 3-years.
  • All 3 broad market groups recorded an improvement in operation conditions.
  • Investment goods producers registered the strongest growth (best since Jan-2018), followed by intermediate goods.
  • Consumer goods recorded relatively modest growth but the most marked since Sep-2020.
  • Manufacturing sector growth was broad-based, with the exception of Greece.
  • Germany and the Netherlands continued to sit at the top of the table, with export gains remaining particularly strong.
  • Austria recorded the best performance in 3-years, whilst France and Italy saw the most marked gains since the beginning of 2018.
  • Spain and Ireland recorded relatively modest growth, however.

PMI Table Feb-2021

The details:

  • Both output and new orders drove the manufacturing PMI higher for the Eurozone.
  • In both cases, the upticks were the best since October’s recent peaks.
  • Higher exports, the strongest since Jan-2018, were a key driver to overall new order gains.
  • Input costs rose sharply, with inflation reaching its highest level in nearly a decade.
  • As a result of improving demand, however, firms were able to pass some of the higher expenses to clients.
  • Output prices rose at the sharpest rate since Apr-2018.
  • On the employment front, staffing levels increased for the first time in nearly 2-years.
  • Confidence about the future continued to strengthen, with optimism hitting hits highest ever level in February.

Market Impact

Through the release of today’s stats, the EUR fell from $1.20706 to a current day low $1.20446.

At the time of writing, the EUR was down by 0.21% to $1.20451. Earlier in the day, the EUR had struck a current day high $1.21012 before hitting reverse.

EURUSD 010321 Minute Chart

While the EUR was under pressure, it was a different story for the European boerses, which made further progress following the release of the numbers.

At the time of writing, the DAX30 was up by 1.28%, with the CAC40 and EuroStoxx600 up by 1.64% and by 1.75% respectively.

For the European majors, the early gains came in spite of PMI numbers from China disappointing. While manufacturing sector growth was slower, firms were particularly optimistic about what lies ahead…

Next Up

Prelim inflation figures from Italy and Germany ahead of ISM Manufacturing numbers from the U.S. Finalized Market PMI numbers are also due out of the U.S but should have a muted impact on the European majors.

European Equities: Manufacturing PMIs and Prelim Inflation Figures in Focus

Economic Calendar:

Monday, 1st March

Spanish Manufacturing PMI (Feb)

Italian Manufacturing PMI (Feb)

French Manufacturing PMI (Feb) Final

German Manufacturing PMI (Feb) Final

Eurozone Manufacturing PMI (Feb) Final

Italian CPI (MoM) (Feb) Prelim

German CPI (MoM) (Feb) Prelim

Tuesday, 2nd March

German Retail Sales (MoM) (Jan)

German Unemployment Change (Feb)

German Unemployment Rate (Feb)

Eurozone CPI (YoY) (Feb) Prelim

Wednesday, 3rd March

Spanish Services PMI (Feb)

Italian Services PMI (Feb)

French Services PMI (Feb) Final

German Services PMI (Feb) Final

Eurozone Markit Composite PMI (Feb) Final

Eurozone Services PMI (Feb) Final

Thursday, 4th March

German IHS Markit Construction PMI (Feb)

ECB Economic Bulletin

Eurozone Retail Sales (MoM) (Jan)

Eurozone Unemployment Rate (Jan)

Friday, 5th March

German Factory Orders (MoM) (Jan)

The Majors

It was a bearish end to the week for the European majors on Friday. The CAC40 and EuroStoxx600 slid by 1.39% and by 1.64% respectively, with the DAX30 declining by 0.67%.

Following a string of better-than-expected stats in the week, economic data from France disappointed on Friday.

The downside for the majors, however, came from market fears of a shift in central bank policy rather than weak stats.

A continued rise in government bond yields, fueled by reinflationary fears and the need for action did the damage.

The market angst continued in spite of ECB President Lagarde and FED Chair Powell attempting to comfort the markets in the week.

The Stats

It was a relatively quiet day on the economic calendar on Friday, with the French economy in the spotlight.

In January, consumer spending slumped by 4.6%, month-on-month, partially reversing December’s 22.4% rebound. Economists had forecast a 3.5% decline.

According to Insee.fr,

  • The consumption of manufactured goods tumbled by 12.9%.
    • Durable goods purchases fell by 9.9%, with spending on clothing and textiles sliding by 27.8%.
    • The 27.8% slide in spending on clothing and textiles left spending down by 14.4% year-on-year.
    • Other manufactured goods purchases fell by a relatively more modest 7.7%.
  • Energy consumption rose by 6.3%, however, with food consumption increasing by 1.7%. The upside in energy consumption was attributed to colder weather conditions.

4th quarter GDP numbers were also market negative. According to 2nd estimates, the economy contracted by 1.4%, quarter-on-quarter, revised down from a 1st estimate 1.3%.

Prelim inflation figures were not much better. In February, consumer prices fell by 0.1%, partially reversing a 0.2% rise from January.

From the U.S

It was a relatively busy day, with inflation and personal spending figures the key stats of the day.

Personal spending jumped by 2.4%, reversing a 0.4% decline from December. The numbers supported the more optimistic economic outlook.

Inflationary pressures also picked up in January. The FED’s preferred Core PCE Price Index rose by 1.5%. In December, the index had risen by 1.4%.

The Market Movers

For the DAX: It was a mixed day for the auto sector on Friday. Volkswagen and Daimler saw gains of 1.92% and 1.47% respectively, with BMW rising by 0.90%. Continental saw red, however, falling by 0.04%.

It was a particularly bearish day for the banks, however. Deutsche Bank fell by 2.67%, with Commerzbank sliding by 3.07%.

From the CAC, it was a bearish day for the banks. BNP Paribas slid by 2.06%, with Credit Agricole and Soc Gen falling by 1.57% and by 1.84% respectively.

It was also a bearish day for the French auto sector. Stellantis NV and Renault ended the day down by 0.86% and by 0.62% respectively.

Air France-KLM continued its recovery, rising by a further 1.23%, while Airbus SE slid by 3.05%.

On the VIX Index

It was back into the red for the VIX, delivering a 4th loss in 9 sessions, with the downside coming in spite of the S&P500 seeing red on the day.

Partially reversing a 35.38% jump from Thursday, the VIX fell by a relatively modest 3.25% to end the day at 27.95.

The NASDAQ rose by 0.56%, while the Dow and the S&P500 fell by 1.50% and by 0.48% respectively.

VIX 01321 Daily Chart

The Day Ahead

It’s a busy start to the week. February manufacturing PMI numbers for Italy and Spain are due out.

Finalized PMI numbers are also due out for France, Germany, and the Eurozone.

Barring material deviation from prelims, expect Italy and the Eurozone’s PMIs to have the greatest impact.

Later in the day, prelim inflation figures from Italy and Germany are also due out. Another pickup in inflation and the European majors could come under pressure ahead of the U.S open.

From the U.S, February’s ISM Manufacturing PMI and finalized Market PMI figures are also due out. Expect the ISM figure to have the greatest impact on the European majors.

Ahead of the European open, private sector PMI numbers from China will set the tone. From the weekend, the NBS PMIs disappointed ahead of this morning’s more influential Caixin Manufacturing PMI.

The Futures

In the futures markets, at the time of writing, the Dow Mini was up by 46 points.

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

The Week Ahead – A Particularly Busy Economic Calendar Will Test the Markets…

On the Macro

It’s a busy week ahead on the economic calendar, with 73 stats in focus in the week ending 5th March. In the week prior, 52 stats had been in focus.

For the Dollar:

It’s a busy week ahead.

Private sector PMI and ADP employment change figures for February are in focus in the 1st half of the week.

For the private sector the ISM Manufacturing and Non-Manufacturing PMIs are due out on Monday and Wednesday.

On Wednesday, ADP Nonfarm Employment Change figures for February will also be in focus.

The market focus will then shift to the weekly jobless claim figures on Thursday ahead of the labor market numbers on Friday.

On Friday, expect the unemployment rate and nonfarm payroll figures to be the key drivers.

Other stats in the week include finalized Markit survey PMI numbers, factory orders, and trade data. We don’t expect the stats to have a material impact on the markets, however.

The Dollar Spot Index ended the week up by 0.57% to 90.879.

For the EUR:

It’s also a busy week ahead on the economic data front.

On Monday and Wednesday, private sector PMI numbers for Italy and Spain are due out.

Finalized numbers for France, Germany, and the Eurozone will also draw interest.

Following impressive prelim manufacturing PMI numbers, however, only a marked downward revision would test EUR support.

On Tuesday, German retail sales and unemployment figures will provide the EUR with direction.

The focus will then shift to retail sales and unemployment figures for the Eurozone on Thursday.

German factory orders for January wrap things up. The numbers will need to be aligned with recent survey-based numbers to support the EUR and the broader market.

From the ECB, the Economic Bulletin on Thursday will also draw plenty of interest. How the ECB’s views inflation and the economic outlook will be key…

The EUR ended the week down by 0.36% to $1.2075.

For the Pound:

It’s another relatively quiet week ahead on the economic calendar.

Finalized manufacturing and service PMI numbers are due out on Monday and Wednesday.

Expect any revisions to provide the Pound with direction ahead of construction PMI numbers on Thursday.

While we can expect the numbers to influence, progress on the vaccination front remains key near-term.

From the UK government, the government will also release its annual budget on Wednesday. The markets will be looking to see by how much the UK government has loosened the purse strings to support an economic recovery. Government debt has already rocketed to pre-1970 levels as percentage of GDP…

The Pound ended the week down by 0.59% to $1.3933.

For the Loonie:

It’s a busier week ahead on the economic calendar.

4th quarter and December GDP numbers are due out Tuesday ahead of trade data on Friday.

Other stats in the week include labor productivity and Ivey PMI numbers that will likely have a muted impact on the Loonie.

While key stats will influence, crude oil inventories will also provide direction in the week.

The Loonie ended the week down by 0.98% to C$1.2738 against the U.S Dollar.

Out of Asia

For the Aussie Dollar:

It’s a busy week.

In the early part of the week, manufacturing and gross operating profit figures are in focus.

The focus will then shift to 4th quarter GDP numbers on Wednesday. Following the RBA’s monetary policy decision from February, expect plenty of sensitivity to the numbers.

Retail sales and trade data wrap things up on Thursday. January numbers will need to impress to support the Aussie Dollar

On the monetary policy front, the RBA monetary policy decision on Tuesday will set the tone.

The Aussie Dollar ended the week down by 2.07% to $0.7706.

For the Kiwi Dollar:

It’s a quiet week ahead.

Economic data is limited to building consent figures due out on Wednesday.

The numbers are unlikely to have a material impact, however.

With economic data on the lighter side, expect market risk sentiment to drive the Kiwi in the week.

China’s private sector PMI figures for February will influence in the 1st half of the week.

The Kiwi Dollar ended the week down by 0.90% to $0.7233.

For the Japanese Yen:

It is also a quiet week ahead.

Jobs data and 4th quarter capital spending figures are due out early in the week.

Expect capital spending to draw the greatest interest.

Finalized private sector PMI figures for February are also due out on Monday and Wednesday. Barring any material revision from prelim figures, however, the numbers should have limited impact on the Yen and the broader market.

The Japanese Yen ended the week down by 1.06% to ¥106.57 against the U.S Dollar.

Out of China

It’s a busier week ahead. The market’s preferred Caixin Manufacturing PMI on Monday will set the tone for the week.

On Wednesday, the Caixin Services PMI for February will also influence market risk sentiment.

Ahead of the stats, NBS private sector numbers from the weekend will also influence at the start of the week.

The Chinese Yuan ended the week down by 0.25% to CNY6.4737 against the U.S Dollar.

Geo-Politics

U.S Foreign Policy

Iran is back in the spotlight, as the EU and the U.S look to begin talks on the nuclear agreement.

Airstrikes last week were a clear message of intent from the new U.S administration.

How Iran responds will be of particular interest. Further destabilization in the Middle East will be something the markets would prefer to avoid.

While U.S and Iran relations will be front and center, U.S – China news will also need monitoring in the week.

European Equities: A Month in Review – February 2021

The Majors

It was bullish month for the European majors in February, reversing January’s COVID-19 driven losses. The upside came in spite of a bearish final week of the month.

The CAC40 rallied by 5.63%, with the DAX30 and EuroStoxx600 ending the month with gains of 2.63% and 2.31% respectively.

In the final week of the month, market concerns over reinflation and impact on central bank monetary policy pared some of the gains, however.

Better than expected economic data from the Eurozone and the U.S and optimism towards the economic recovery delivered support.

Corporate earnings also delivered support in the month.

The Stats

It was a busy month on the Eurozone economic calendar and an important one. The stats revealed that the impact of 2nd lockdown measures was less severe than from the first time around.

Key takes away from the economic calendar included a marked pickup in manufacturing sector activity in February.

The French manufacturing PMI and Germany’s manufacturing PMI both jumped to 3-year highs, driving the Eurozone manufacturing PMI to a 3-year high.

Service sector activity continued to struggle, however, with the pace of contraction picking up as a result of extended lockdown measures.

The Eurozone’s services PMI fell to a 3-month low 44.7 in February, according to prelim figures.

Other stats of significance included German ifo and GfK business and consumer sentiment figures, both of which were market positive.

2nd estimate GDP numbers for the 4th quarter were mixed, however. While Germany and the Eurozone saw upward revisions, France saw a downward revision.

The devil was in the details, with the numbers revealing that domestic consumption will need to see a marked pickup to support an economic recovery.

Of concern for the markets, however, was a pickup in inflationary pressures, leading to a late pullback in the European majors.

For the Eurozone, the annual core rate of inflation accelerated from 0.2% to 1.4% in January.

From the U.S

Economic data delivered mixed results once more.

Retail sales bounced back in January, with service sector activity also picking up in January, according to the all-important ISM survey-based figures.

Consumer confidence numbers were mixed, however. While the market’s preferred CB survey showed a pickup in confidence, Michigan survey-based figures showed sentiment waning in February.

Also negative was slower growth in the manufacturing sector.

Labor market numbers also delivered mixed results. While initial jobless claims fell to a February low 730k, NFP numbers for January disappointed.

Following a 227k slide in December, nonfarm payrolls increased by just 49k in January.

While the numbers were mixed, progress towards a U.S stimulus package and continued support from the FED fueled optimism for what lies ahead.

Progress on the COVID-19 vaccine front was also positive for riskier assets. It ultimately culminated, however, in jitters over reinflation and a possible need for central banks to shift position on monetary policy.

Monetary Policy

The ECB and the FED stood pat on monetary policy once more. Significantly, FED Chair Powell looked to assure the markets of continued monetary policy support by ruling out any tapering.

Late in the month Powell also testified on Capitol Hill, again reassuring the markets that the FED would stand pat for the foreseeable future.

The markets were not convinced, however. ECB President Lagarde faced similar pressure to comfort the markets over rising bond yields early in the week. Again, the markets ultimately brushed aside the assurances of unwavering support.

The Market Movers

For the DAX: It was a bullish month for the auto sector in February. Volkswagen and Daimler rallied by 10.19% and by 14.19% respectively to lead the way. BMW and Continental saw relatively modest gains of 2.14% and 2.81% respectively.

It was a mixed month for the banks, however. Deutsche Bank surged by 22.40%, while Commerzbank ended the month down by 0.91%.

From the CAC, it was a particularly bullish month for the banking sector. BNP Paribas and Credit Agricole jumped by 23.88% and by 23.77% respectively. Soc Gen led the way, however, surging by 32.97%.

It was also a bullish month for the auto sector. Renault rose by 5.33%, with Stellantis NV ended the month up by 7.27%.

Air France-KLM and Airbus SE reversed January’s losses, with gains of 14.37% and 15.28% respectively.

On the VIX Index

It was back into the red for the VIX in February, leading to just a 2nd monthly fall in 7-months. Partially reversing a 45.45% jump from February, the VIX fell by 15.53% to end the month at 27.95.

In January, NASDAQ rose by 0.93%, while the Dow and S&P500 ending the month up by 3.17% and by 2.61% respectively.

VIX 270221 Monthly Chart

The Month Ahead

We can expect more of the same in the month ahead on the Eurozone economic calendar. While the markets will look for manufacturing sector activity to deliver, service sector conditions will also need to improve.

Consumer spending will need to pick up across the Euro bloc to support a more sustained economic recovery.

From the U.S, nonfarm payrolls, service sector activity, and consumer confidence will remain key areas of focus.

Out of China, trade data and private sector PMIs will also provide direction.

On the monetary policy front, expect any hawkish chatter to catch the markets off-guard.

Central banks will need to be agile near-term to manage any material shift in economic indicators. The markets will be looking to pre-empt any shift in central bank forward guidance.

Away from the economic calendar, expect COVID-19 news and geopolitics to also influence. In particular, the markets will be looking for an easing to lockdown measures as progress is made on the COVID-19 vaccination front.

Geopolitically, Iran’s nuclear agreement is back in the spotlight. The U.S attack on Iran-linked groups in Syria in late February will set to the tone as both sides look to return to the negotiating table.

From China, not only will the markets need to see continued improvement in economic indicators but also better relations with the U.S on foreign policy and trade…

The Weekly Wrap – Reinflation Fears Overshadowed Economic Data to Drive Dollar Demand

The Stats

It was a quieter week on the economic calendar, in the week ending 26th February.

A total of 52 stats were monitored, following 72 stats from the week prior.

Of the 52 stats, 27 came in ahead forecasts, with 19 economic indicators coming up short of forecasts. There were 6 stats that were in line with forecasts in the week.

Looking at the numbers, 26 of the stats reflected an upward trend from previous figures. Of the remaining 26 stats, 22 reflected a deterioration from previous.

For the Greenback, it was back into the green, following two consecutive weeks in the red. The Dollar Spot Index rose by 0.57% to end the week at 90.879. In the previous week, the Dollar had fallen by 0.13% to 90.364.

Out of the U.S

It was a relatively busy week on the economic data front.

The first half of the week was relatively quiet, however, with consumer confidence figures the key stat on Tuesday.

Consumer confidence was on the rise in February, supporting the market’s optimistic outlook on the economic recovery.

On Thursday, jobless claims and core durable goods orders were also positive.

Initial jobless claims fell back from 841k to 730k in the week ending 19th February.

There was also an upward revision to 4th quarter GDP figures. The U.S economy expanded by 4.1%, up from a 1st estimate 4.0%.

At the end of the week, inflation and personal spending figures also drew plenty of attention.

In January, personal spending jumped by 2.4%, more than reversing a 0.4% decline from December.

Inflationary pressures were also on the rise, albeit marginally. The FED’s preferred Core PCE Price Index ticked up from 1.4% to 1.5% at the start of the year.

On the monetary policy front, FED Chair Powell looked to calm market nerves over inflationary jitters over 2-days of testimony.

The calming was short-lived, however, which ultimately led to a jump in the Dollar at the end of the week to close out in positive territory.

In the equity markets, the NASDAQ slid by 4.92%, with the Dow and S&P500 falling by 1.78% and by 2.45% respectively.

Out of the UK

It was a relatively quiet week on the economic data front.

On Tuesday, December’s unemployment rate and January’s claimant count figures were in focus.

Claimant counts rose by 20k, reversing a 20.4k fall from December. The unemployment rate ticked up from 5.0% to 5.1% in December.

While the numbers were Pound negative, government plans to ease lockdown measures supported the Pound early in the week. The Pound had visited $1.41 levels before risk aversion sent the Pound back to sub-$1.40 levels.

In the week, the Pound fell by 0.59% to end the week at $1.3933. In the week prior, the Pound had risen by 1.21% to $1.4016.

The FTSE100 ended the week down by 2.12%, reversing a 0.52% gain from the previous week.

Out of the Eurozone

It was a relatively busy week on the economic data front, with the French and German economies in focus.

From Germany, both business and consumer confidence improved in February and March respectively. Better than expected figures provided EUR support ahead of a pullback later in the week.

German GDP numbers for the 4th quarter were also better than 1st estimate figures giving further support to the EUR.

At the end of the week, however, numbers from France disappointed. The French economy contracted by more than previously thought, with consumer spending sliding in January.

While the stats were skewed in favor of the EUR, risk aversion weighed at the end of the week to leave the EUR in the red.

On the monetary policy front, ECB President Lagarde spoke early in the week, stating that the ECB was monitoring bond yields closely. The comments came as market jitters began to creep in over possible reinflation that could curb spending and shift central bank policy outlooks.

For the week, the EUR fell by 0.36 % to $1.2075. In the week prior, the EUR had fallen by 0.01% to $1.2119.

For the European major indexes, it was bearish week. The CAC40 and the DAX30 fell by 1.22% and by 1.48% respectively, with the EuroStoxx600 sliding by 2.38%.

For the Loonie

It was a quiet week. The markets had to wait for Friday for RMPI numbers, the only stat of the week.

The RMPI jumped by 5.7% in January, following a 3.5% rise in December.

In spite of the positive numbers, however, risk aversion plagued the Loonie late in the week.

Mid-week the Loonie had visited C$1.24 levels, with a week high $1.24679 before falling back into the red.

In the week ending 26th February, the Loonie fell by 0.98% to C$1.2738. In the week prior, the Loonie had increased by 0.64% to C$1.2615.

Elsewhere

It was a bearish week for the Aussie Dollar and the Kiwi Dollar.

In the week ending 26th February, the Aussie Dollar slid by 2.07% to $0.7706, with the Kiwi Dollar ending the week down by 0.90% to $0.7233.

A Friday sell-off left the pair in the red for the week.

For the Aussie Dollar

It was a relatively quiet week.

Key stats included 4th quarter wage growth, construction work done, new CAPEX, and January private sector credit figures.

It was a mixed set of numbers that had limited impact on the Aussie Dollar.

Wage growth rose by 0.6% in the 4th quarter, following a 0.1% rise in the 3rd quarter, while construction work took an unexpected fall.

Private new CAPEX impressed, rising by 3% to reverse a 3% fall from the 3rd quarter.

On the credit side, however, private sector credit saw a softer increase, weighed by a further fall in personal credit.

While the stats were mixed, it was a shift in market sentiment late in the week pulled the Aussie Dollar into the red.

For the Kiwi Dollar

It was a busy week.

Retail sales, business confidence and trade data were in focus in the week.

The stats were skewed to the negative, with retail sales falling by more than expected in Q4.

Business confidence also softened in February, with new Zealand’s annual trade surplus narrowing in January.

On the monetary policy front, the RBNZ kept policy unchanged, which was in line with expectations. Unlike the RBA, the RBNZ held back from any surprise moves, giving the Kiwi Dollar a boost.

Risk aversion late in the week reversed the gains, however. The Kiwi Dollar had visited $0.74 levels before a late pullback.

For the Japanese Yen

It was a relatively quiet week, with no major stats until Friday.

At the end of the week, inflation, industrial production, and retail sales were in focus.

While retail sales were down by 2.4% in January, year-on-year, industrial production impressed, rising by 4.2%. In December, industrial production had fallen by 1.0%, with retail sales having fallen by 0.2%.

Deflationary pressure eased in February, which was also positive. Tokyo core consumer prices fell by 0.3% year-on-year, following a 0.4% decline in January.

While the stats were skewed in favor of the Yen, demand for the Dollar spiked as the week progressed, pulling the Yen into the red.

The Japanese Yen fell by 1.06% to ¥106.57 against the U.S Dollar. In the week prior, the Yen had fallen by 0.49% to ¥105.45.

Out of China

It was a particularly quiet week on the data front. There were no stats to provide the markets with direction in the week.

In the week ending 26th February, the Chinese Yuan fell by 0.25% to 6.4737. In the week prior, the Yuan had risen by 0.01% to CNY6.4577.

The CSI300 tumbled by 7.65%, with the Hang Seng sliding by 5.43%.

European Equities: A Week in Review – 26/02/21

The Majors

After a run of mixed weeks for the European majors, it was a bearish final week in the week ending 26th February.

The EuroStoxx600 slid by 2.38%, with the CAC40 and the DAX30 ending the week down by 1.48% and by 1.22% respectively.

For the CAC40 and EuroStoxx600 the weekly loss ended a run of 2 consecutive weekly gains, while the DAX30 fell for a 3rd consecutive week.

While economic data continued to favor riskier assets, market jitters over reinflation and possible impact on monetary policy weighed on the majors.

Bond yields were on the rise in the week, with the 10-year U.S Treasury yields reaching a 1-year high.

The upside in the week came in spite of central banker attempts to placate market fears of a possible shift in monetary policy.

The Stats

It was also relatively busy week on the economic data front, with the French and German economies in focus.

From Germany, both business and consumer confidence improved in February and March respectively. Better than expected figures provided support ahead of a pullback later in the week.

German GDP numbers for the 4th quarter were also better than 1st estimate figures giving further support to the European majors.

At the end of the week, however, numbers from France disappointed. The French economy contracted by more than previously thought, with consumer spending sliding in January.

From the U.S

Consumer confidence was on the rise in February, supporting the market’s optimistic outlook on the economic recovery.

On Thursday, jobless claims and core durable goods orders were also positive.

Initial jobless claims fell back from 841k to 730k in the week ending 19th February.

There was also an upward revision to 4th quarter GDP figures. The U.S economy expanded by 4.1%, up from a 1st estimate 4.0%.

At the end of the week, inflation and personal spending figures also drew plenty of attention.

In January, personal spending jumped by 2.4%, more than reversing a 0.4% decline from December.

Inflationary pressures were also on the rise, albeit marginally. The FED’s preferred Core PCE Price Index ticked up from 1.4% to 1.5% at the start of the year.

On the monetary policy front, FED Chair Powell looked to calm market nerves over inflationary jitters over 2-days of testimony.

The Market Movers

From the DAX, it was a mixed week for the auto sector. Daimler fell by 1.19% to buck the trend in the week. Continental and Volkswagen rose by 2.02% and by 1.20% respectively, with BMW gaining 0.35%.

It was a bullish week for the banking sector, in spite of a Friday sell-off. Deutsche Bank rallied by 6.68%, with Commerzbank gaining 1.88%.

From the CAC, it was another particularly bullish week for the banks. Soc Gen rallied by 3.63%, with BNP Paribas and Credit Agricole gaining 1.97% and 2.56% respectively.

It was another mixed week for the French auto sector, however. Renault fell by 2.39%, while Stellantis NV ended the week up by 0.33%.

Air France-KLM surged by 12.98%, with Airbus rallying by 4.51%.

On the VIX Index

It was a 2nd consecutive week in the green for the VIX. In the week ending 26th February, the VIX jumped by 26.76%. Following a 10.42% rise from the previous week, the VIX ended the week at 27.95.

For the week, the NASDAQ slid by 4.92%, with the Dow and the S&P500 falling by 1.78% and by 2.45% respectively.

VIX 270221 Weekly Chart

The Week Ahead

It’s a busy week ahead on the economic calendar.

Private sector PMI figures for Italy and Spain are due out along with finalized PMIs for France, Germany, and the Eurozone.

Barring material revisions to prelim figures, expect Italy and the Eurozone’s PMIs to have the greatest impact.

In the 1st half of the week, German retail sales and unemployment figures are also in focus.

A recent pickup in consumer sentiment suggests improving labor market conditions and a rise in spending. Expect any disappointing numbers to pressure the EUR.

Late in the week, Eurozone retail sales and unemployment figures and German factory orders are due out.

Germany’s factor orders will likely have the greatest impact. Manufacturing PMIs have pointed to a marked improvement in sector activity. Factory orders will need to be on the rise in January to be aligned with the survey-based figures.

From the U.S, the economic calendar is also on the busier side.

The market’s preferred ISM survey PMI numbers are due out along with ADP employment change figures in the first half.

We would expect the ISM non-manufacturing PMI to draw the greatest interest alongside the ADP numbers on Wednesday.

The focus will then shift to the weekly jobless claim figures on Thursday ahead of NFP and unemployment figures on Friday.

While the stats will provide the majors with direction, expect FOMC member chatter to also draw greater interest.

Concerns over a shift in monetary policy will leave the markets in search of more assurances.

A marked improvement in U.S labor market conditions could add more fuel to the reinflation fire that could test risk appetite.

Economic Data from France Disappoints ahead of a Busy U.S Session

After a relatively busy Asian session, on the economic data front, the French economy was in focus early in the European session.

2nd estimate GDP figures for the 4th quarter and consumer spending numbers for January were in focus.

Prelim inflation figures for February were also on the docket this morning.

French Stats Disappoint

In January, consumer spending slumped by 4.6%, month-on-month, partially reversing December’s 22.4% rebound. Economists had forecast a 3.5% decline.

According to Insee.fr,

  • The consumption of manufactured goods tumbled by 12.9%.
    • Durable goods purchases fell by 9.9%, with spending on clothing and textiles sliding by 27.8%.
    • The 27.8% slide in spending on clothing and textiles left spending down by 14.4% year-on-year.
    • Other manufactured goods purchases fell by a relatively more modest 7.7%.
  • Energy consumption rose by 6.3%, however, with food consumption increasing by 1.7%. The upside in energy consumption was attributed to colder weather conditions.

4th quarter GDP numbers were also EUR negative. According to 2nd estimates, the economy contracted by 1.4%, quarter-on-quarter, revised down from a 1st estimate 1.3%.

According to Insee.fr,

  • Gross disposable household income increased by 1.5%, in spite of the contraction in the French economy.
  • The combined effect of the rise in purchasing power and drop in consumption expenditure (-5.4%) strongly increased households’ savings rate, which stood at 22.2%.
  • In the 4th quarter, a 2nd national lockdown coupled with curfews weighed on the economy.
  • In spite of this, the contraction was moderate compared with the 2nd quarter contraction stemming from the first lockdown.
  • Gross fixed capital product rose by 1.1%, while total domestic demand hit reverse.
  • Foreign trade continued to recover, with exports rising by more than imports, delivering a positive contribution to GDP.

French GDP Q4 (QoQ)

Prelim inflation figures were not much better. In February, consumer prices fell by 0.1%, partially reversing a 0.2% rise from January.

According to Insee.fr, the annual rate of inflation softened from 0.6% to 0.4% mid-way through the quarter.

CPI Feb Prelim

Market Impact

Ahead of the stats, the EUR had struck a current day high $1.21830 before falling to a pre-stat and current day low $1.21290.

Upon the release of the inflation figures, the EUR rose from $1.21346 to a post-stat high $1.21594 before easing back.

At the time of writing, the EUR was down by 0.12% to $1.21520.

EURUSD 260221 Minute Chart

For the European majors, there was no support from today’s stats.

At the time of writing, the DAX30 and the EuroStoxx600 were down by 0.87% and by 0.91% respectively. The CAC40 was down by 1.06%.

Next Up

A busy U.S session. Key stats from the U.S include inflation and personal spending figures that will draw plenty of attention.

European Equities: Economic Data in Focus Amidst Inflationary Pressure Fears

Economic Calendar:

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 bearish day for the European majors on Thursday. The CAC40 and EuroStoxx600 fell by 0.24% and by 0.36% respectively, with the DAX30 declining by 0.69%.

Economic data failed to provide the European majors with support in spite of a pickup in consumer confidence in Germany.

Stats from the U.S were also skewed to the positive but were overshadowed by a continued rise in bond yields that weighed on the European majors.

Market concerns over the impact of rising yields has continued to linger in spite of the assurances of the central bankers.

While a pickup in consumer confidence would normally be a boost for the likes of the DAX30, the timing was off. A likely rise in spending added to the fears of a further build of inflationary pressure that may force the hands of the ECB and the FED.

The Stats

It was a relatively quiet day on the economic calendar on Thursday. German consumer sentiment figures for March were in focus early in the European session.

For March, the GfK is forecasting a pickup in consumer sentiment from -15.5 to -12.9. Economists had forecast an increase to -14.3.

While coming in ahead of economists’ forecasts, the improvement was not enough to reverse the deterioration from February.

For February, the GfK had forecasted consumer sentiment to slide from -7.5 to -15.6.

According to the GfK press release:

  • Consumer sentiment began to recover in February after the collapse in confidence in response to the lockdown measures introduced at the start of the year.
  • There were improvements in both economic and income expectations, with propensity to buy also on the rise.
  • The improvement in consumer sentiment was also supported by a decline in propensity to save.
  • After as much as a 37-point slide at the start of the year, the propensity to buy indicator increased by 7.4 points.
  • In spite of the rise, the indicator remained 46 points lower than the same time last year.
  • Income expectations increased by around 9.4 points after 4 consecutive monthly falls.
  • By contrast to the other indicators, the economic outlook indicator was higher than the same time a year ago. In February, the indicator increased by 6.7 points to 8 points.

From the U.S

It was a relatively busy day on the economic data front. Key stats included core durable goods orders for January and the weekly jobless claims figures. Durable goods orders and 2nd estimate GDP numbers for the 4th quarter also drew interest.

In January, core durable goods orders rose by 1.4%, following a 1.7% increase in December. Economists had forecast a 0.5% rise. Durable goods orders increased by 3.4%, following a 1.2% increase in December. Economists had forecast a 1.1% rise.

For the U.S economy, the economy expanded by 4.1% in the 4th quarter, according to 2nd estimate figures. This was a downward revision from a 1st estimate of 4.2%.

In the week ending 19th February, initial jobless claims fell from 841k to 730k. Economists had forecast a decline to 838k.

The Market Movers

For the DAX: It was a mixed day for the auto sector on Thursday. Volkswagen slid by 2.08%, with Continental and Daimler falling by 1.08% and 1.11% respectively. BMW bucked the trend, however, with a 0.90% gain.

It was another bullish day for the banks. Deutsche Bank and Commerzbank rallied by 2.88% and by 2.98% respectively.

From the CAC, it was a bullish day for the banks. BNP Paribas rose by 0.28%, with Credit Agricole and Soc Gen gaining by 1.20% and 2.65% respectively.

It was a mixed day for the French auto sector, however. Stellantis NV slipped by 0.34%, while Renault rose by 1.06%.

Air France-KLM gained a further 1.85%, while Airbus SE slid by 3.69%.

On the VIX Index

It was back into the green for the VIX, delivering a 5th gain in 8 sessions as inflation fears and a tech stock sell-off weighed on the U.S majors.

Reversing a 7.66% fall from Wednesday, the VIX jumped by 35.38% to end the day at 28.89.

The NASDAQ and the S&P500 slid by 3.52% and by 2.45% respectively, with the Dow ending the day down by 1.75%.

VIX 260221 Daily Chart

The Day Ahead

It’s a relatively quiet day ahead on the European economic calendar. French consumer spending and 2nd estimate GDP numbers for the 4th quarter are due out.

Barring any revision to the GDP numbers, consumer spending figures will likely garner the greatest interest.

Expect any downward revisions from 1st estimate GDP numbers to test support, however.

From the U.S, it’s a busier session ahead. Key stats include January inflation and personal spending figures.

Trade data, Chicago PMI, business inventories, and finalized consumer sentiment figures are also due out. These are unlikely to have a material impact on the European majors, however.

The Futures

In the futures markets, at the time of writing, the Dow Mini was down by 13 points.

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

European Equities: German Consumer Sentiment and U.S Stats in Focus

Economic Calendar:

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 bullish day for the European majors on Wednesday. The DAX30 rose by 0.80%, with the CAC40 and the EuroStoxx600 gaining 0.31% and 0.46% respectively.

Economic data from Germany delivered the majors with support mid-week. 4th quarter GDP estimates came in higher than first estimates, providing the upside.

The upside was relatively modest, however, with uncertainty over the economic outlook and concerns over inflation lingering.

The Stats

It was a relatively quiet day on the economic calendar on Wednesday. German 2nd estimate GDP numbers for the 4th quarter were in focus.

In the 4th quarter, the German economy grew by 0.3%, quarter-on-quarter. This was an upward revision to a 1st estimate growth of 0.1%. In the 3rd quarter, the German economy had expanded by 8.5%.

Year-on-year, the German economy contracted by 2.7%, revised up from a 1st estimate 2.9% contraction. In the 3rd quarter, the German economy had contracted by 3.9%.

From the U.S

It was also a relatively quiet day on the economic data front. New home sales figures for January were in focus late in the session.

The numbers had a muted impact on the European majors, however.

The Market Movers

For the DAX: It was a bullish day for the auto sector on Wednesday. BMW and Continental rose by 1.62% and by 1.43% respectively, with Volkswagen gaining 1.12%. Daimler ended the day up by a more modest 0.63%.

It was also a bullish day for the banks. Deutsche Bank and Commerzbank rallied by 2.91% and by 3.23% respectively.

From the CAC, it was a bullish day for the banks. BNP Paribas and Soc Gen rose by 1.46% and by 1.29% respectively, with Credit Agricole rallying by 2.64%.

It was also a bullish day for the French auto sector. Stellantis NV rallied by 2.61%, with Renault rising by 0.69%.

Air France-KLM surged by 5.33% on hopes of an easing to lockdown measures, with Airbus SE rallying by 3.81%.

On the VIX Index

It was a 2nd consecutive day in the red for the VIX on Wednesday, marking the 3rd daily loss in 7 sessions. Following on from a 1.45% decline on Tuesday, the VIX slid by 7.66% to end the day at 21.34.

The Dow and S&P500 ended the day up by 1.35% and by 1.14% respectively, with the NASDAQ rising by 0.99%.

VIX 250221 Daily Chart

The Day Ahead

It’s another relatively quiet day ahead on the European economic calendar. March consumer confidence figures for Germany are due out later this morning.

While service sector activity continues to struggle, a pickup in consumer confidence is going to be needed to support the economic recovery.

Following 2nd estimate GDP numbers from Germany on Wednesday, a pickup in household consumption is going to be needed. The recent optimism towards an easing of containment measures should limit the damage from any disappointing numbers.

From the U.S, it’s a busy session ahead. Key stats include core durable goods orders and weekly jobless claims figures. 2nd estimate GDP numbers for the 4th quarter are also due out. Expect any revisions to also influence.

The Futures

In the futures markets, at the time of writing, the Dow Mini was up by 9 points.

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

European Equities: German GDP Numbers and Day 2 of FED Chair Powell Testimony in Focus

Economic Calendar:

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 mixed day for the European majors on Tuesday. The DAX30 and the EuroStoxx600 fell by 0.61% and by 0.42% respectively, while the CAC40 rose by 0.22%.

Another tech rout on the day weighed on the DAX30.

Despite ECB President Lagarde’s comments from Monday, European bond yields were back on the rise on Wednesday adding further downward pressure on the European majors.

Late in the day, however, FED Chair Powell testimony delivered much-needed support. Powell continued to assure the markets that policy would not shift near-term, while also talking down any inflation concerns.

The CAC40 reversed losses from earlier in the day to end in positive territory, with the DAX30 and EuroStoxx600 managing to reduce their respective deficits.

The Stats

It was a relatively quiet day on the economic calendar on Tuesday. Finalized January inflation figures for the Eurozone were in focus early in the session.

In January, the annual rate of core inflation accelerated to 1.4%, according to finalized figures. This was up sharply from just 0.2% in December, while in line with prelim figures.

The consumer price index was also on the rise after a 0.3% fall in December, year-on-year. In January, consumer prices rose by 0.9%, which was also in line with prelim figures.

Month-on-month, consumer prices rose by 0.2%, following a 0.3% increase in December.

According to Eurostat,

  • A year earlier the rate of annual inflation was 1.4%.
  • Greece (-2.4%), Slovenia (-0.9%), and Cyprus (-0.8%) registered the lowest annual rates of inflation in January.
  • In January, the highest contribution to the annual euro area inflation came from services (+0.65 pp).
  • Non-energy industrial goods (+0.37 pp) and food, alcohol, & tobacco (+0.30 pp) also contributed.

From the U.S

It was a relatively quiet day on the economic data front. Consumer confidence figures were in focus late in the European session.

In February, the CB Consumer Confidence Index rose from 88.9 to 91.3. Economists had forecast an increase to 90.0.

According to the February survey,

  • The Present Situation Index rose from 85.5 to 92.0, while the Expectations Index fell from 91.2 to 90.8.
  • After 3 consecutive monthly declines, the Present Situation Index suggested that economic growth has not slowed further.

The Market Movers

For the DAX: It was another mixed day for the auto sector on Tuesday. BMW slid by 2.37, with Daimler and Volkswagen falling by 1.44% and by 1.26% respectively. Continental bucked the trend, however, rising by 0.59%.

It was a relatively bullish day for the banks, however. Deutsche Bank and Commerzbank ended the day up by 0.73% and by 0.04% respectively.

From the CAC, it was a mixed day for the banks. BNP Paribas rose by 0.30%, while Credit Agricole and Soc Gen fell by 0.83% and by 0.15% respectively.

It was a bullish day for the French auto sector, however. Stellantis NV and Renault rose by 0.30% and by 0.47% respectively.

Air France-KLM and Airbus SE rallied by 2.64% and by 3.29% on the day.

On the VIX Index

It was back into the red for the VIX on Tuesday, marking just the 2nd daily loss in 6 sessions. Partially reversing a 6.35% rise from Tuesday, the VIX fell by 1.45% to end the day at 23.11.

The VIX had hit a day high 23.7 ahead of FED Chair Powell’s assurances that left the VIX in the red for the day.

The NASDAQ slipped by 0.50%, while the Dow the S&P500 rose by 0.05% and by 0.13% respectively on the day.

VIX 240221 Daily Chart

The Day Ahead

It’s another relatively quiet day ahead on the European economic calendar. 2nd Estimate GDP numbers for the 4th quarter are due out of Germany.

Following upward revisions to the Eurozone numbers, expect any revisions to the stats to influence.

From the U.S, stats are limited to housing sector data that will have a muted impact on the European majors.

Day 2 of FED Chair Powell Testimony will need monitoring, though his stance on policy is unlikely to change.

Away from the economic calendar, chatter from Capitol Hill will also need continued monitoring.

The Futures

In the futures markets, at the time of writing, the Dow Mini was down by 15 points.

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