European Equities: German Retail Sales and Geopolitics in Focus

Economic Calendar:

Monday, 30th December 2019

German Retail Sales (MoM) (Nov)

Spanish GDP (QoQ) (Q3)

Spanish HICP (YoY) (Dec)

Thursday, 2nd January 2020

Spanish Manufacturing PMI (Dec)

Italian Manufacturing PMI (Dec)

French Manufacturing PMI (Dec) Final

German Manufacturing PMI (Dec) Final

Eurozone Manufacturing PMI (Dec) Final

Friday, 3rd January 2020

German Unemployment Change & Rate (Dec)

German CPI (MoM) (Dec)

The Majors

It was a positive end to the week for the European majors, with the DAX30 rising by 0.27% to lead the way. The EuroStoxx600 and CAC40 saw more modest gains of 0.21% and 0.13% respectively.

While the EuroStoxx600 trailed the DAX30, it was a record close on Friday.

Positive sentiment towards trade and the anticipated boost to global trade terms continued to provide support at the end of the week.

The ECB’s economic bulletin also painted a slightly rosier picture, though there was a downward revision to growth forecasts to 2020…

The Stats

It was a quiet day on the Eurozone economic calendar on Friday. There were no material stats from the Eurozone to provide the European majors with direction.

There were also no stats from the U.S to provide direction, with volumes on the lighter side during the Christmas holidays.

A lack of stats placed greater emphasis on the ECB’s final economic bulletin of the decade.

Key points from the bulletin included:

  • Incoming economic data and survey information, while remaining weak overall, point to some stabilization in the slowdown of economic growth in the euro area.
  • The service and construction sectors remain resilient in spite of some moderation in the 2nd half of 2019.
  • Favorable financing conditions, further employment gains, in conjunction with rising wages, the mildly expansionary euro area fiscal stance and growth in global activity are expected to support the euro area economy.
  • On the projections, growth for 2020 was revised downwards to 1.1%. In 2021 and 2022 growth is expected to pick up to 1.4%.
  • Risks towards growth remain, however. Geopolitical factors, rising protectionism, and vulnerabilities in the emerging markets leave risks to growth tilted to the downside. This has become less pronounced, however.

The Market Movers

For the DAX: It was a mixed end to the week for the auto sector. BMW led the way, rising by 0.85%, with Daimler and Volkswagen seeing more modest gains of 0.08% and 0.31% respectively. Continental bucked the trend on the day, falling by 0.24%.

It was also a mixed day for the banks. Commerzbank rose by 0.22%, while Deutsche Bank fell by 0.41%. 

From the CAC, it was a mixed day for the banks. BNP Paribas and Soc Gen fell by 0.02% and by 0.30% respectively, while Credit Agricole rose by 0.04%.

It was a bearish day for the French auto sector, however, with Peugeot and Renault falling by 0.05% and by 0.54% respectively.

On the VIX Index

The VIX rallied by 6.17% on Friday. Reversing a 0.16% decline from Thursday, the VIX ended the day at $13.4.

A bounce from a day low of 11.9 in the early afternoon delivered the upside on the day.

While optimism over trade had provided support in the earlier part of the week, concerns over how phase 2 of trade negotiations will play out tested the U.S majors at the end of the week.

The S&P closed out the day flat, with the NASDAQ down by 0.17%, while the Dow saw a modest 0.08% rise on the day.

There’s been increasing talk of a market correction. This time last year, it was Christmas Eve that had delivered one of the Dow’s worst days…

VIX 30/12/19 Daily Chart

The Day Ahead

It’s a relatively busy day on the Eurozone economic calendar. Key stats include November retail sales figures out of Germany and 3rd GDP and December prelim inflation figures out of Spain.

We expect Germany’s retail sales figures to have the greatest impact on the day.

With the ECB continuing to rely on consumer spending to support the Eurozone economy, the figures will need to impress to prevent the DAX30 from hitting reverse.

On the geopolitical front, any further updates from Beijing or Washington will also influence as will sentiment towards Brexit.

Over the holidays, there was some pessimistic chatter on Britain and the EU having sufficient time to wrap up a trade agreement within 2020…

In the futures markets, at the time of writing, the DAX30 was down by 26.5 points, while the Dow was up by 44 points.

European Equities: A Week in Review – 28/12/19

The Majors

It was a relatively bullish week for the European equity majors in the week ending 27th December, with the EuroStoxx600 rising by 0.32% to lead the way.

The CAC40 and DAX30 saw more modest gains of 0.26% and 0.14% in the shortened week.

For the DAX30, a pullback at the start of the week left Friday to deliver a recovery to end the week in the green.

The German markets were closed on Tuesday, Wednesday, and Thursday, while the EuroStoxx600 and CAC40 traded a half-day on Tuesday ahead of Wednesday and Thursday’s closures.

Positive sentiment towards the U.S – China phase 1 trade agreement provided the upside in the week that saw the EuroStoxx600 hit record highs.

Comments from both Beijing and Washington in the week continued to support risk appetite that drove the EUR back to $1.11 levels.

The Stats

It was a particularly quiet week on the Eurozone economic calendar, with no material stats to provide the majors with direction.

While there were no stats from the Eurozone, the ECB’s economic bulletin, provide support on Friday.

The ECB delivered a slightly rosier picture on the economic outlook, with incoming economic data and surveys pointing to some stabilization in the slowdown of economic growth within the Eurozone.

Growth forecasts for 2020 were revised down to 1.1%, however, though economic growth is expected to pick up to 1.4% in 2021.

Judging from the bulletin, employment and wage growth remain key when considering the ECB’s more optimistic outlook.

From elsewhere, U.S durable goods orders and core durable goods orders didn’t help on Monday. Durable goods orders slid by 2% in November. Core durable goods stalled, which was also negative, which weighed on the DAX30 and the EuroStoxx600 at the start of the week.

The Market Movers

From the DAX, it was another bearish week for the auto sector. BMW led the way, falling by 1.15%. Continental, Daimler, and Volkswagen saw more modest losses of 0.67%, 0.36%, and 0.26% respectively.

It was also a bearish week for the banking sector, with Deutsche Bank falling by 1.85% and Commerzbank by 2.51%.

From the CAC, it was a week in the red for the banks. BNP Paribas and Soc Gen led the way down, with losses of 1.10% and 1.02% respectively. Credit Agricole saw a more modest 0.31% loss for the week.

Things were not much better for the French auto sector. Peugeot and Renault fell by 1.98% and by 2.14% respectively.

On the VIX Index

The VIX Index rose by 6.17% in the week ending 27th December. Following on from a 0.95% rise from the previous, the VIX ended the week at 13.4.

For the VIX, the upside came in spite of the U.S equity markets enjoying fresh record highs in the week.

A 6.17% gain on Friday delivered the weekly gain, with the S&P500 ending the day flat and the NASDAQ in the red on Friday.

While phase 1 of the U.S – China trade agreement is wrapped up, a trade war is still ongoing.

Talk of market corrections has also done the rounds, with fresh record highs hit over the holidays. It wouldn’t be the first time that the majors hit the slopes in January.

VIX 28/12/19 Weekly Chart

The Week Ahead

It’s a busy week on the Eurozone economic calendar. In a shortened week, key stats include German retail sales figures on Monday that will influence ahead of the holidays.

The focus will then shift to manufacturing PMI numbers out of Italy and Spain due out on Thursday. Finalized PMIs out of France, Germany, and the Eurozone will also garner interest.

Barring any revisions to prelim numbers, however, we expect Italy and the Eurozone’s PMIs to have the greatest impact.

On Friday, December unemployment numbers from Germany will also provide direction at the end of the week.

From elsewhere

China’s private sector PMIs on Tuesday and Thursday will influence. There are also U.S consumer confidence and ISM manufacturing PMI numbers on Tuesday and Friday to provide direction.

Over the New Year period, the DAX30 is closed on Tuesday and Wednesday. The CAC40 and EuroStoxx600 are on a shortened session on Tuesday and closed on Wednesday.

European Equities: Futures Point Northwards Fueled by Trade Optimism

Economic Calendar:

Friday, 27th December 2019

  • ECB Economic Bulletin

The Majors

While the German markets were closed on Christmas Eve, the CAC40 and EuroStoxx600 saw limited movement on the day. The CAC40 ended the day up by just 0.18 points, while the EuroStoxx600 rose by 0.14%.

With volumes on the lighter side, support came from progress towards phase 1 of the U.S – China trade agreement.

The U.S majors had hit record highs ahead of the holidays, providing support on Tuesday, with more gains coming on Thursday.

The Stats

It was a quiet day on the Eurozone economic calendar on Tuesday. There were no material stats from the Eurozone to provide the European majors with direction.

There were also no stats from the U.S to provide direction, with the European and U.S markets on a shortened trading session ahead of Wednesday’s holiday.

The Market Movers

From the CAC, it was a mixed day for the banks. BNP Paribas and Soc Gen fell by 0.24% and by 0.05% respectively, while Credit Agricole rose by 0.04%.

It was a bearish day for the French auto sector, with Peugeot and Renault falling by 0.73% and by 0.01% respectively.

On the VIX Index

The VIX fell by 0.16% on Thursday. Partially reversing 0.48% rise from Tuesday, the VIX ended the day at $12.7.

Positive sentiment towards the U.S – China trade war pinned back the VIX, as the U.S majors continued to rise northwards.

Losses on the day were minor, however, as some concern over current levels in the U.S equity markets raised doubts over whether the momentum can continue.

VIX 26/12/19 Daily Chart

The Day Ahead

It’s another particularly quiet day on the Eurozone economic calendar. There are no material stats due out of the Eurozone to provide the European majors with direction.

From the ECB, the Economic Bulletin will garner some interest later this morning, though it may ultimately be a catch-up session. U.S stocks and crude oil prices were on the move, supported by trade optimism, on Thursday.

On the geopolitical front, any further updates from Beijing or Washington will also influence. From the early part of the week, news of China removing tariffs on $850m worth of U.S imports was positive.

There were also reports of China ramping up soybean imports to levels not seen in 2-years.

In the futures markets, at the time of writing, the DAX30 was up by 53.5 points, with the Dow up by 29 points.

IMF Sounds Alarm as Indian Economy Gripped by Slowdown

The International Monetary Fund has sent out a stark warning about India’s economy, which is experiencing a significant economic slowdown. The Indian economy has boasted one of the fastest growth rates in the world, so much so that it has been an important driver of global growth. What’s behind the downturn of the ‘Indian miracle’?

According to the IMF, the economy has suffered from a decline in consumption and investment, which has led to less tax revenue for the government. In October, the IMF sharply reduced its growth forecast for 2019, from 6.1% to just 5.0 percent. The downturn is even more severe when we focus at the third quarter of 2019 – on an annualized basis, growth fell to 4.5%, compared to 7% in Q3 of 2018.

With the economy slowing down, the Indian government may be tempted to embark on public spending projects, but this will only increase the country’s debt load. This approach is clearly anathema to the IMF, which recently sounded the alarm over the heavy debts of emerging market nations – debts which could become unsustainable and trigger a financial crisis if interest rates were to rise. Rather, the IMF has urged India to reduce its debt: “Economic development projects and enhanced social initiatives in India will be vital in the coming years,” the IMF said in a recent statement. “But to generate the revenue needed to get them off the ground, India’s debt – among the highest in emerging markets – must be reduced.”

According to Gita Gopinath, chief economist at the IMF, the Reserve Bank of India should continue to reduce interest rates in order to stimulate the economy. The bank has already cut trimmed rates five times this year, and Gopinath says there is more room for rate-cutting.

As the year 2019 fades into the sunset, Indian policymakers will have to make some tough decisions in order to re-energize the economy in 2020.

European Equities: Expect A Particularly Quiet Day Ahead

Economic Calendar:

Friday, 27th December 2019

  • ECB Economic Bulletin

The Majors

It was a mixed day as the holidays begin. The DAX30 and EuroStoxx600 fell by 0.16% and by 0.03% respectively, while the CAC40 rose by 0.13% to buck the trend.

There were no stats from the Eurozone or from the Asian session, earlier in the day, to provide direction.

If there was a bourse to suffer on any given day, it was the DAX30 once more, with ongoing woes in the manufacturing sector weighing.

Following the recent run, profit-taking ahead of the holidays contributed to the lackluster start to the week.

On the geopolitical front, there were further positive comments on trade but even that wasn’t enough to deliver a holiday rally.

Reports hit the Chinese news wires on Monday that the government is to cut tariffs on 850 U.S products.

The Stats

It was a quiet day on the Eurozone economic calendar on Monday. There were no material stats from the Eurozone to provide the European majors with direction.

From the U.S, November’s new home sales figures had a muted impact on the day.

With the U.S and China reaching a phase 1 agreement that is due to be signed in early January, it will now boil down to what impact this will have on the Eurozone economy…

The Market Movers

For the DAX: It was a bearish day for the auto sector. BMW led the way, sliding by 1.98%, with Continental, Daimler, and Volkswagen seeing more modest losses of 0.43%, 0.45%, and 0.57% respectively.

It was also a bearish day for the banks. Commerzbank slid by 2.74%, with Deutsche Bank down by 1.47%.

From the CAC, it was a bearish day for the banks. BNP Paribas led the way, falling by 0.84%. Credit Agricole and Soc Gen fell by 0.42% and by 0.67% respectively.

Things were not much better for the French auto sector, with Peugeot and Renault falling by 1.21% and by 1.60% respectively.

On the VIX Index

The VIX saw green on Monday, rising by 0.8% gain. Following on from a 0.08% gain on Friday, the VIX ended the day at $12.6.

The upside on the day came in spite of the U.S majors closing out the day in positive territory and the news wires delivering upbeat comments from China on trade.

With the holiday season now kicking off, there was some caution evident.

VIX 24/12/19 Daily Chart

The Day Ahead

It’s another particularly quiet day on the Eurozone economic calendar. There are no material stats due out of the Eurozone to provide the European majors with direction.

With a lack of stats and a shorted trading session for CAC40 and EuroStoxx600, there are unlikely to be any major moves. Volumes will be on the lighter side with the German markets closed until Friday’s European open.

From the U.S, there are also no material stats to consider.

On the geopolitical front, there will need to be something particularly material to impact the majors through the morning.

In the futures markets, at the time of writing, the Dow was up by 5 points.

Mark Carney Bids Adieu, Bailey to Take Helm at Bank of England

Mark Carney, Governor of the Bank of England for the past eight years, will bid farewell in March. After intense speculation over who would succeed Carney when his term expired, the chancellor of the Exchequer, Sajid David has named Andrew Bailey as Carney’s replacement.

There is no arguing that Bailey will have very large shoes to fill at the helm of one of the most powerful central banks in the world. Carney was a major player on the global financial scene, and investors listened closely when the calm, cool and collected Carney had something to say. Bailey may not be a high-profile choice for the job, but he does have extensive experience at the BoE, most notably as head of the Prudential Regulation Authority, which is the BoE’s supervisory body.

What are some of the key issues that Bailey and the BoE will face? First and foremost, is the UK-Europe relationship in the post-Brexit era. Mark Carney was not shy about weighing in during the difficult Brexit negotiations, and his sometimes outspoken statements about Brexit did on occasion lead to volatility in the currency markets. Prime Minister Johnson and EU officials have a frosty relationship, so Bailey could play a constructive role if he develops a smoother relationship with senior officials at the ECB.

The BoE will also have to deal with an environment of weak inflation and low-interest rates. The BoE has held the benchmark rate at 0.75% since August 2018, but at the past two rate meetings, two of the nine rate-setters voted in favor of immediately trimming rates. If the British economy remains stagnant, Bailey will face more pressure to cut rates.

Finally, there is the issue of climate change. Although at first glance this would not be a topic concerning central bankers, the climate crisis has become too large an issue to ignore. Sarah Breeden, a senior British bank analyst has warned that the global climate crisis could cause a collapse in confidence and wipe out as much as $20 trillion in assets. Christine Lagarde, the new president of the ECB, has already said that climate change will be a priority, and under Carney, the BoE has called attention to this issue. Under Bailey, climate change is expected to remain a key issue.

European Equities: Trade Optimism and Weak Stats to Battle It Out

Economic Calendar:

Friday, 27th December 2019

  • ECB Economic Bulletin

The Majors

It was a bullish end to the week for the European majors, with the EuroStoxx600 rising by 0.92% to lead the way on Friday. The CAC40 and DAX30 weren’t far behind, with gains of 0.82% and 0.81% respectively.

Support for the majors continued to come from upbeat sentiment towards the U.S and China’s phase 1 trade agreement. At the end of the week, the U.S administration announced that both sides will sign the agreement in early January.

Jitters over the possibility of a hard Brexit eased late in the week, with a trade war cease-fire of far greater significance for the global financial markets.

The Eurozone has more to lose should Britain leave without an agreement and trade terms default to those of the WTO. The immediate focus must be on the U.S and China, however, when considering that Britain has a full-year to go before such an outcome can become a reality…

The Stats

It was a busy day on the Eurozone economic calendar on Friday. Key stats included consumer spending figures out of France and German and Eurozone consumer confidence figures.

There was nothing from the numbers to support the upswing on the day, however.

From France, consumer spending rose by just 0.1%, following a 0.2% increase in October. Economists had forecast a 0.3% increase.

According to Insee,

  • The purchase of food purchases slid by 0.8%, reversing a 0.8% rise in October.
  • By contrast, the consumption of manufactured goods increased by 0.5%, following on from a 0.5% rise in October. Energy consumption was also on the rise, jumping by 1.2% to reverse most of a 1.5% slide in October.

Out of Germany, the GfK German Consumer Climate Index fell from 9.7 to 9.6, with both economic and income expectations weighing, while propensity to buy increased in January. While views over the economy remained bleak, the willingness to continue spending will be key for the ECB.

For the Eurozone, the Eurozone’s consumer confidence indicator fell from -7.2 to -8.0 in December, reversing gains from November. In spite of the decline, the indicator remained above the long-term average of -10.6. It was the lowest reading since January, however, when the indicator sat at -8.3%.

From the U.S, economic data was also on the heavier side.

Key stats included finalized 3rd quarter GDP and November inflation figures along with personal spending and December consumer sentiment numbers.

A pickup in personal spending and a rise in consumer confidence provided support late on, overshadowing the weak numbers from the Eurozone.

The Market Movers

For the DAX: It was a mixed day for the auto sector. Continental and Volkswagen saw red, with losses of 0.84% and 0.19% respectively. BMW and Daimler managed to find support, rising by 0.22% and by 0.09% respectively.

The sector was under pressure through the week following news of BMW and Daimler announcing plans to pull out of the North America market.

It was a bearish day for the banks, however. Commerzbank fell by 0.83%, with Deutsche Bank down by 0.82%.

From the CAC, it was a mixed day for the banks. BNP Paribas and Soc Gen rose by 0.09% and by 1.05% respectively. Credit Agricole bucked the trend, falling by 0.65%.

It was also mixed for the French auto sector, with Peugeot falling by 0.18%, while Renault rallied by 1.19%.

On the VIX Index

The VIX saw red for a 2nd consecutive day on Friday, falling by 0.08%. Following a 0.64% decline on Thursday, the VIX ended the day at $12.5.

It was a bullish day for the U.S equity markets as holiday season approaches, with the majors closing out at record highs.

Positive news on the trade front and solid economic data from the U.S pinned back the VIX at the end of the week.

VIX 23/12/19 Daily Chart

The Day Ahead

It’s a particularly quiet day on the Eurozone economic calendar. There are no material stats due out to provide the majors with direction,

From the U.S, new home sales figures for November are unlikely to have too much of an impact as the markets prepare for the holidays.

On the geopolitical front, there could be a few final tweets and comments from world leaders ahead of the break…

In the futures markets, at the time of writing, the DAX30 was up by 9.5 points, with the Dow up by 14 points.

European Equities: A Week in Review – 21/12/19

The Majors

It was a bullish week for the European equity majors in the week ending 19th December, with the CAC40 gaining 1.73% to lead the way.

The EuroStoxx600 wasn’t far behind, rising by 1.55% to hit a new record high, while the DAX30 increased by a more modest 0.27% in the week.

Negative sentiment towards Brexit pressured the majors through the week, with the DAX30 needing a 0.81% gain on Friday to reverse losses from mid-week.

Boris Johnson’s plan to amend the Brexit Bill to prevent any extension to the transition phase pinned the majors and the Pound back.

In spite of the negative sentiment towards Brexit, support kicked in on Friday. News of the U.S – China phase 1 agreement being signed in early January delivered on the day.

The Stats

It was a particularly busy week on the Eurozone economic calendar.

Key stats included December prelim private sector PMI numbers from France, Germany, and the Eurozone on Monday.

The Eurozone Markit Composite PMI rose from 50.6 to 50.8 in December, according to prelim figures. The Eurozone Manufacturing PMI decreased from 46.9 to 45.9 in December, while the Eurozone Services PMI rose from 51.9 to 52.4.

  • Service sector activity hit a 4-month high, while the manufacturing output index fell to an 86-month low.

On Tuesday, the Eurozone’s trade surplus saw a sizeable widening in October, driven by strong exports to non-EU countries.

The impact on the majors was muted, however, with geopolitics weighing.

On Wednesday, German business sentiment figures for December also failed to move the dial, in spite of the improvement in both the current assessment and outlook.

The Eurozone’s finalized inflation figures for November also had a muted impact, with the annual rate of core inflation of 1.3% being in line with prelim and forecasts.

With no economic data out of the Eurozone on Thursday, focus then shifted to German and Eurozone consumer confidence figures on Friday.

Out of Germany, the GfK German Consumer Climate Index fell from 9.7 to 9.6, with both economic and income expectations weighing, while propensity to buy increased. In spite of negative views towards the economy, the willingness to continue spending will be key for the ECB.

For the Eurozone, the Eurozone’s consumer confidence indicator fell from -7.2 to -8.0 in December, reversing gains from November. In spite of the decline, the indicator remained above the long-term average of -10.6. It was the lowest reading since January, however, when the indicator sat at -8.3%.

From elsewhere

Economic data out of China also provided support, with industrial production delivering at the start of the week.

Stats out of the U.S were also skewed to the positive, with consumer sentiment and personal spending on the rise. Service sector activity also picked up in December, which was key at the start of the week. While the combination was negative for the EUR, it was equity market positive.

The Market Movers

From the DAX, it was a bearish week for the auto sector. Volkswagen led the way, sliding by 3.79%. BMW, Continental, and Daimler, also struggled. BMW and Continental fell by 2.28% and by 2.81% respectively, while Daimler saw a more modest 1.48% loss.

It was another bullish week for the banking sector, however. Deutsche Bank rallied by 4.47%, with Commerzbank gaining 2.01%.

From the CAC, it was also a positive week for the banks. While Credit Agricole ended the week flat, Soc Gen and BNP Paribas rose by 3.63% and by 2.90% respectively.

For the French auto sector, it was a bullish week, with Peugeot and Renault rising by 1.69% and by 3.49% respectively.

On the VIX Index

The VIX Index rose by 0.95% in the week ending 20th December. Partially reversing a 7.27% fall from the previous week, the VIX ended the week at 12.5.

There was plenty to keep the markets busy throughout the week. Economic data was on the heavier side, with stats skewed to the positive for the U.S markets that hit fresh record highs.

U.S President Trump became only the 3rd U.S President in history to be impeached and Boris Johnson laid down the law on Brexit.

While the markets brushed aside Trump’s impeachment, the British PM’s plans to amend the Brexit Bill to prevent any extensions to Britain’s transition period weighed. A vote in favor of the changes would raise the possibility of a hard-Brexit.

VIX 21/12/19 Weekly Chart

The Week Ahead

It’s a particularly quiet week on the Eurozone economic calendar. It’s a shortened week, with the major markets closed mid-week. The markets will need to wait ‘til Friday for the ECB’s economic bulletin.

ECB President Lagarde’s first release will garner plenty of interest that will influence with volumes on the lighter side.

There should be little to rattle the markets in the week, however, following Trump’s impeachment…

European Equities: UK Parliament and EUR Consumer Confidence in Focus

Economic Calendar:

Friday, 20th December 2019

  • GfK German Consumer Climate (Jan)
  • French Consumer Spending (MoM) (Nov)
  • Eurozone Consumer Confidence (Dec) Prelim

The Majors

It was a mixed day for the European majors on Thursday, with the CAC40 and EuroStoxx600 rising by 0.21% and 0.05% respectively, while the DAX30 fell by 0.08%.

On the geopolitical risk front, there was little reaction to the impeachment of U.S President Trump. The House of Representatives, controlled by the Democrats, voted to impeach for abuse of power and obstruction.

Negative sentiment towards Brexit lingered, however, as the Queen delivered the traditional Queen’s Speech following Johnson’s General Election victory.

The Stats

It was a particularly quiet day on the Eurozone economic calendar on Thursday. There were no material stats to provide the majors with direction, leaving geopolitics and U.S data to influence on the day.

From the U.S

Economic data included the Philly FED’s Manufacturing PMI and weekly jobless claims figures.

The stats were skewed to the negative limiting any major breakout, with the Philly FED Manufacturing Index falling from 10.4 to 3.0 in December. The weekly jobless claims figures were also negative, with initial jobless claims rising from 225k to 234k.

Existing home sales figures for November had a muted impact, however.

The Market Movers

For the DAX: It was a bearish day for the auto sector. Continental and Volkswagen led the way down, with losses of 1.90% and 1.48%. BMW and Daimler saw more modest losses of 1.39% and by 0.97% respectively.

The sector was under pressure following news of BMW and Daimler announcing plans to pull out of the North America market.

It was a bullish day for the banks, however. Commerzbank rose by 0.25%, with Deutsche Bank rallying by 1.49%.

From the CAC, it was a mixed day for the banks. BNP Paribas and Soc Gen rose by 0.06% and by 0.24% respectively. Credit Agricole bucked the trend, falling by 0.68%.

It was bearish for the French auto sector, however, with Peugeot and Renault falling by 0.67% and by 1.15% respectively.

On the VIX Index

The VIX ended a short run of 2 consecutive days in the green on Thursday, after falling by 0.64% on the day.

Partially reversing a 2.36% gain from Wednesday, the VIX ended the day at $12.4.

The downside came in spite of Trump’s impeachment, as the U.S majors also brushed aside disappointing weekly jobless claims and Philly FED Manufacturing numbers.

In spite of the weak numbers, a pickup in service sector activity at the year-end and positive labor market conditions reinforced the positive view on the economy. This ultimately offset any effects of negative numbers from the manufacturing sector.

JOLTs job openings for October had also impressed following strong NFP numbers for November, suggesting that the initial jobless claims figures are unlikely to spike.

VIX 20/12/19 Daily Chart

The Day Ahead

It’s a relatively busy day ahead on the Eurozone economic calendar. Key stats include German and Eurozone consumer confidence figures that will influence.

Later in the day, economic data from the U.S will also influence. Finalized 3rd quarter GDP numbers, inflation, and consumer sentiment figures will provide direction.

On the geopolitical front, expect further pressure in the day ahead as Boris Johnson looks to hasten Britain’s departure from the EU. Parliament is scheduled to debate on Johnson’s amended Brexit Bill later today. The UK Parliament is also scheduled to vote on whether to leave the EU on 31st January. Johnson’s majority will be put to the test for the first time later today. If all Tory members remain aligned, that threat of a hard Brexit may become all the more real…

In the futures markets, at the time of writing, the Dow was up by 8 points.

Changing of the Guard at the European Commission

With 2019 winding down, major changes are taking place at key institutions in Europe, which could have a significant effect on the euro and on European stock markets. In October, Mario Draghi stepped down as president of the European Central Bank, one of the most influential financial positions in the world. Draghi has been replaced by Christine Lagarde, who until recently was head of the International Monetary Fund. The currency and equity markets showed little reaction to the changing of the guard, which no doubt delighted Draghi, who deplored volatility in the markets under his watch.

Another key appointment took place earlier this month at the European Commission. Paolo Gentiloni was appointed as European Commissioner for Economic and Financial Affairs. Gentiloni acted as Italy’s foreign minister and then became prime minister from 2016-2018. Gentiloni is a staunch Europeanist and a strong supporter of European countries becoming more closely integrated. On Thursday, Gentiloni warned that the European Union’s current budget framework is not a good fit with current economic conditions in the EU, which are characterized by weak growth and low inflation. The European Commission is conducting a review of its fiscal framework in early 2020, and Gentiloni will be seeking to establish a more coordinated fiscal policy in the eurozone, with the aim of increased monetary integration among countries that share the euro.

For her part, Christine Lagarde has pledged to carry out a review of the ECB’s monetary policy framework, similar to Gentiloni’s plan to review the EU’s fiscal setup. This means that we could see significant changes in 2020 at two of the most influential institutions in the European Union – the European Central Bank and the European Commission.

European Equities: Geopolitics and U.S Stats to Influence

Economic Calendar:

Friday, 20th December 2019

  • GfK German Consumer Climate (Jan)
  • French Consumer Spending (MoM) (Nov)
  • Eurozone Consumer Confidence (Dec) Prelim

The Majors

It was a 2nd consecutive day in the red for the European majors, with the DAX30 falling by 0.49% to lead the way down. The CAC40 and EuroStoxx600 saw more modest losses of 0.15% and 0.13% respectively.

The reversal came in spite of better economic data out of Germany on the day.

Market jitters over the prospects of a no-deal Brexit continued to weigh on the majors on Wednesday.

The Stats

It was a busier day on the Eurozone economic calendar on Wednesday. Key stats included business sentiment figures out of Germany and finalized inflation figures for the Eurozone.

According to the Ifo’s December business survey,

  • The Business Expectations Index rose from 92.3 to 93.8, with the Current Assessment Index rising from 98.0 to 98.8.
  • There was a recovery in the manufacturing sector reported, with companies’ considerably less pessimistic. By contrast, however, their assessment of their current situation worsened marginally.
  • Manufacturers were reportedly planning for production cutbacks, while also noting it being harder to access credit.
  • The service sector indicator hit its highest level in 6-months, with companies more satisfied with their current situation. Service sector firms were also cautiously optimistic over their business outlook.
  • For the manufacturing sector, the Business Climate Index rose from -5.8 to -5.0, while the services sector index rose from 17.4 to 21.3.

On the inflation front,

  • The Eurozone’s annual rate of core inflation stood at 1.3% in November, which was in line with prelim and forecasts. In October, the annual rate of core inflation had stood at 1.1%.
  • Month-on-month, consumer prices fell by 0.3%, however, reversing a 0.1% increase in October.
  • The annual rate of inflation came in at 1.0%, which was in line with prelim and forecasts. In October, the annual rate of inflation had come in at 0.7%.

According to Eurostat,

  • Italy, Portugal (both 0.2%) and Belgium (0.4%) registered the lowest annual rates of inflation.
  • Slovakia registered the highest annual rate of inflation at 3.2%.
  • The highest contribution to the annual rate of inflation came from services (+0.82 pp), food, alcohol & tobacco (+0.37 pp), non-energy industrial goods (+0.10 pp).

From the U.S

There were no material stats to provide the majors later in the day…

The Market Movers

For the DAX: It was another mixed day for the auto sector. BMW bucked the trend on the day, rising by 0.21%. It was bearish for the rest, however. Continental, Daimler, and Volkswagen fell by 1.51%, 1.41% and by 0.72% respectively.

It was also a mixed day for the banks. Commerzbank rose by 0.29%, while Deutsche Bank fell by 0.11%.

From the CAC, it was a bullish day for the banks. Soc Gen led the way, rising by 0.50%. BNP Paribas and Credit Agricole saw more modest gains of 0.36% and 0.27% respectively.

It was mixed for the French auto sector, however, with Peugeot rising by 1.36%, whilst Renault fell by 0.17%.

On the VIX Index

The VIX saw a 2nd consecutive day in the green on Wednesday, rising by 2.36%. Following on from a 1.24% gain on Tuesday, the VIX ended the day at $12.6.

Market jitters over a hard Brexit and a slight pullback on Trump’s impeachment provided the upside on the day.

VIX 19/12/19 Daily Chart

The Day Ahead

It’s a quiet day ahead on the Eurozone economic calendar. There are no material stats due out of the Eurozone to provide the majors with direction.

A lack of stats will leave the majors in the hands of geopolitics ahead of key stats from the U.S.

On the geopolitical front, expect further pressure in the day ahead as Boris Johnson looks to hasten Britain’s departure from the EU. There’s also the small matter of Trump’s impeachment to consider.

From the U.S, the Philly FED Manufacturing Index and weekly jobless claims figures will likely have an impact late in the European session.

In the futures markets, at the time of writing, the DAX30 was down by 12.5 points, with the Dow down by 16 points.

European Equities: Economic Data and Brexit in Focus

Economic Calendar:

Tuesday, 17th December 2019

  • Eurozone Trade Balance (Oct)

Wednesday, 18th December 2019

  • German PPI (MoM) (Nov)
  • German Ifo Business Climate Index (Dec)
  • Eurozone Core CPI (YoY) (Nov) Final
  • Eurozone CPI (YoY) (Nov) Final
  • Eurozone CPI (MoM) (Nov) Final

Friday, 20th December 2019

  • GfK German Consumer Climate (Jan)
  • French Consumer Spending (MoM) (Nov)
  • Eurozone Consumer Confidence (Dec) Prelim

The Majors

It was a bullish start to the week for the European majors, with a 4th consecutive day in the green leading to a record high for the EuroStoxx600.

On the day, the EuroStoxx600 jumped by 1.39%, with the CAC40 and DAX30 gaining 1.23% and 0.94% respectively.

The markets were able to brush aside the negative stats from the Eurozone, with sentiment towards the U.S – China trade war providing support.

As anticipated, the markets were forgiving of weaker manufacturing PMI numbers, with a phase 1 trade agreement expected to deliver a recovery in the sector.

The Stats

It was a busy day on the Eurozone economic calendar on Monday. Key stats included December prelim private sector PMI figures and 3rd quarter wage growth from the Eurozone.

The PMIs

The French Composite PMI slipped from 52.1 to 52.0, which was in line with forecasts.

  • French Manufacturing PMI (Dec) Prelim fell from 51.7 to 51.3, which was worse than a forecast of 51.5.
  • French Services PMI (Dec) Prelim rose from 52.2 to 52.4, coming in ahead of a forecast of 52.1.

The German Composite PMI held steady at 49.4, falling short of a forecast of 49.9.

  • German Manufacturing PMI (Dec) Prelim slid from 44.1 to 43.4, which was worse than a forecasted rise to 44.5.
  • German Services PMI (Dec) Prelim increased from 51.7 to 52.0, which was in line with forecasts.

The Eurozone Markit Composite PMI rose from 50.6 to 50.8 in December, according to prelim figures. According to the Markit Survey,

  • The Eurozone Manufacturing PMI decreased from 46.9 to 45.9 in December, while the Eurozone Services PMI rose from 51.9 to 52.4.
  • Service sector activity hit a 4-month high, while the manufacturing output index fell to an 86-month low.
  • A failure to see a pickup in economic activity in the 4th quarter left the rise in output at its slowest pace since 2013.
  • Employment growth slowed to a five-year low.
  • There was a rise in new orders in December, a first since August, though the increase was only marginal.
  • Backlogs fell for a 10th consecutive month, with depleting work-in-hand leading to further overcapacity.
  • While up from recent lows, optimism continued to sit at one of the lowest levels seen since 2013.

For the ECB, a further deterioration in manufacturing sector activity, weak new orders and the weakest pace of hiring in 5-years will be a major concern.

From the Eurozone, wages grew by 2.6% in the 3rd quarter, year-on-year, following a 2.8% increase in the 2nd quarter.

According to Eurostat,

  • Hourly labor costs rose by 2.9% in industry, by 2.3% in construction, by 2.5% in services and by 2.6% in non-business economy.
  • Luxembourg reported the lowest increase in hourly labor costs, with wages growing by just 0.3%.

From the U.S

According to the prelim survey, the Composite PMI came in at 52.2, rising from a November 52.0.

  • The Manufacturing PMI fell from 52.6 to 52.5 in December, while the services PMI rose from 51.6 to 52.2.

Earlier in the day, economic data out of China had given the markets reason to be bullish. China’s industrial production rose by 6.2%, year-on-year, coming in ahead of a forecasted 5% and October 4.7%. Retail sales were also on the rise, jumping by 8.0% in November, following a 7.2% rise in October, year-on-year. Economists had forecast a 7.6% increase.

The Market Movers

For the DAX: It was a mixed day for the auto sector. Volkswagen and BMW fell by 0.84% and by 0.09% respectively. Continental and Daimler rose by 0.30% and by 0.59% respectively.

It was a bullish day for the banks, however. Commerzbank rose by 2.52%, with Deutsche Bank rallying by 2.91%.

From the CAC, it was also a bullish day for the banks. BNP Paribas and Soc Gen led the way, rallying by 2.21% and by 1.53% respectively. Credit Agricole saw a more modest gain of 0.73%.

The French Auto sector also found support, with Peugeot and Renault rising by 0.14% and by 1.38% respectively on Monday.

On the VIX Index

The VIX saw red for a 5th consecutive day, falling by 3.88% on Monday. Following on from a 9.4% decline on Friday, the VIX ended the day at 12.1.

Economic data from the Eurozone had a muted impact, with a pickup in service sector activity in the U.S providing support to the U.S majors.

The upbeat sentiment, following news of the phase 1 trade agreement between the U.S and China, also continued to pressure the VIX on the day.

VIX 17/12/19 Daily Chart

The Day Ahead

It’s a quiet day ahead on the Eurozone economic calendar. October trade data from the Eurozone will provide direction in the early part of the day.

While trade data from Germany last week impressed, forecasts are for the trade surplus to narrow. An unexpected widening would be a boost for the European majors.

From the U.S, housing sector numbers, industrial production, and JOLTS job openings will also be in focus later in the day.

On the geopolitical front, we’ve got Brexit back in the driving seat. The big question is whether ‘The Establishment’ will be willing to give Boris an easy ride. It would certainly send the wrong message to other member states that had previously threatened referendums…

In the futures markets, at the time of writing, the DAX30 was down by 16 points, with the Dow down by 22 points.

Current Equities Rally Similarities To 1999

As the Internet burst into homes and businesses across the world, the US-led the way with dozens of new Internet-based IPOs touting glorious expectations, potential earnings and more.  Everyone had the idea this new medium would dramatically change the economy for the better and breakthrough traditional economic boundaries.

The rally that took place in 1995 through 2000 was incredible.  The S&P 500 rallied from 463 to 1535 – +235.57%.  What we find interesting is the “price wave formation” that took place within that rally.  There were a number of key price rotations that took place as the market continued to rally, we’ve labeled them A, B, and C.  The first rotation, A, took place in July~Dec 1997.  The second, B, took place from May 1998 to November 1998.  The last, C, took place between January 1999 and November 1999.  Technically, these rotations are significant because they represent “true price exploration” related to price advancement.  The price must always attempt to identify true support/resistance levels while trending.

When we compare the rally from 1995 to 2000 with the current rally in the US stock market, we can see a defined level of euphoric price advance after the 2016 US elections.  We must also pay attention to the previous price advance from the 2009 price lows as the global markets were struggling to recover from the Credit Crisis. Our research team identified the A, B, C rotations in the current price and associated them to the similar rotations in the 1995-2000 price rally as “key components of the current rally and a potential warning sign of a pending top formation”.

Our researchers believe the QE processes of the global central banks have set up a similar type of euphoric price rally in the current global markets even though current economic metrics are warning of weakening economic activity and weakening global market output.  The US Fed and global central banks seem to want to keep pumping money/credit into the global markets to keep the rally going – most likely because they are fearful of what a crash/correction may do to the future growth opportunities around the planet.

Yet, our research team focused on the C rotation in 1999 and 2019 – a full 20 years apart.  What interested our research team the most was the fact that the rotation in 1999 set up a full 21 months before the November 2000 US Presidential election.  The current C rotation initiated in January 2018 – a full 34 months before the November 2020 US Presidential Elections.  Anyone paying any attention will recognize the 21 and 34 are both Fibonacci Numbers – relating a 1.619 ratio advancement.

Are we setting up a massive top in the US stock market based on a Fibonacci price range expansion related to the patterns we have identified in this SP500 chart?  Have we advanced from the 2000 peak and 2009 bottom in some form of Fibonacci Ratio expansion that aligns with the C rotation pattern we have identified?

The rally from Bill Clinton’s second term start date to the peak in 2000 totaled 932.9 pts – +153.61%.  the rally from Donald Trump’s first term start date to our projected peak level totals 997.5 pts – +44.38%.  The rally in 2000 peaked at a range that is 200% larger than the ration between the two separate percentage point ranges.  Is this significant to traders?  Does it help to align our peak with the 1.619 Fibonacci ratio?

153.61 / 44.38 = 3.4612

3.4612 / 2 = 1.7306

Given the alignment of these values with a potential 200% range expansion theory, we need to start to look at TIME/PRICE ratios to determine if these rallies are aligned efficiently.

The rally from 1995 to the peak in 2000 consisted of 63 Months.  The rally from 2009 to our projected peak consists of 131 bars.  This represents a price TIME expansion of 207.9%

The rally from 1995 to the peak in 2000 consisted of a price move of +1081.2 pts (+235.57%).  The rally from 2009 to our projected peak consists of a price move of 2585.6 pts (390.49%).  The ratio between these two price expansions is 1.657.

The correction from the peak in 2000 to the low in 2009 consisted of 109 months.  The ratio between the 63 months (1995~2000 peak) to this correction time is 1.73.  The ration of the 2009~2019 rally time span is 1.20.  Thus, the correction between the peak in 2000 to the bottom in 2009 expanded at a rate of 1.73x the time it took to complete the DOT COM rally from 1995 to 2000.  The recovery that has taken place from the 2009 bottom to our projected top in 2019 would expand at a rate of 1.20x the correction time rate.  All of these levels align with common Fibonacci numbers and ratios.

In other words, we believe the current expansion in price is nearing a completed Elliot Wave/Fibonacci ratio peak (likely wave C) that maintains proper aspect ratios related to previous major price rotations.

Other major sectors and asset classes also look to be showing similar topping patterns like the real estate values and charts here.

CUSTOM VOLATILITY INDEX MONTHLY CHART

Our Custom Volatility Index shows extended volatility is increasing with price nearing the upper range for December 2019.  Notice the increase in the range of these bars since the just before the peak in January 2018.  This increased range suggests extreme price volatility has been pushing the markets for the past 24+ months.  If this volatility continues into early 2020 as our projected peak sets up, we may see some very big rotation in 2020.

2000 AND 2019 PRICE SIMILARITIES IN S&P 500

This 2000 peak to 2019 peak comparison chart highlights the similarities in the C price pattern that has setup.  In 1999, the C pattern set up with an initial peak, followed by minor downside rotation – just like in January 2018. The second peak was higher, followed by a much deeper downside price rotation – just like in Nov/Dec 2018.  And the final rally broke upward after a Pennant/Flag formation pushing higher by +25% in 2000.  The current upside breakout from the December 2018 lows suggests a 39.5% price peak – just above our predicted 32% scaled Fibonacci rally expectation.

FIBONACCI PRICE AMPLITUDE TOP LEVEL IS NOT MUCH HIGHER

The total scope of this price move over the past 40+ years is impressive.  These longer-term patterns still drive the markets to establish major peaks and valleys.  Take a look at this chart and try to understand the ratios that are being presented here.  21%, 34%, 50%, 62%, 100% and any combination of these levels using 2x, 3x or any multiplier constitute a Fibonacci structure.  One of the most important facets of attempting to understand the Fibonacci price theory is that the ratios must be somewhat aligned.

Pay attention to the Fibonacci Price Amplitude arcs (the circles) drawn on this chart.  They represent the price range from the peak in 2000 to the low in 2009.  The reason this range is important to our researchers is that it will properly measure the previous upward price rally and the current price rally in terms of price amplitude.  Pay attention to how the current price rally stalled and rotated near these arcs.  We believe the upper GREEN arc level will operate as major resistance for the markets – possibly setting up another “rollover” type of top similar to the one in 1999~2000.

Skilled technical traders still need to be cautious headed into 2020.  The current rally, and most of 2018 and 2019, have been setting up a very serious type of pre-top setup.  Any downside rotation in early 2020 may attempt to move lower in multiple waves – possibly spanning multiple years.

Currently, our research suggests a limited 2.5% upside price range before the SP500 will reach the GREEN resistance arc.  The US markets may reach this level before the end of 2019 and may begin a topping pattern before you finish reading this article.  Please stay informed and understand the structures, trends, and dynamics that are at play in these markets to attempt to reduce your risk.  Now is the time to trim your equity/stock positions and prepare for a much bigger swing in price/volatility.

As a technical analysis and trader since 1997, I have been through a few bull/bear market cycles. I believe I have a good pulse on the market and timing key turning points for both short-term swing trading and long-term investment capital. The opportunities are massive/life-changing if handled properly.

We’ll keep you informed as this plays out with Wealth Building & Global Financial Reset Newsletter if you like what I offer, join me with the 1 or 2-year subscription to lock in the lowest rate possible and ride my coattails as I navigate these financial market and build wealth while others lose nearly everything they own during the next financial crisis. Join Now and Get a Free 1oz Silver Round or Gold Bar Shipped To You!

Chris Vermeulen
Founder of Technical Traders Ltd.
www.TheTechnicalTraders.com

European Equities: Private Sector PMIs in Focus as Geopolitics Takes a Break

Economic Calendar:

Monday, 16th December 2019

  • French Manufacturing PMI (Dec) Prelim
  • French Services PMI (Dec) Prelim
  • German Manufacturing PMI (Dec) Prelim
  • German Services PMI (Dec) Prelim
  • Italian CPI (MoM) (Nov) Final
  • Eurozone Manufacturing PMI (Dec) Prelim
  • Eurozone Markit Composite PMI (Dec) Prelim
  • Eurozone Services PMI (Dec) Prelim
  • Eurozone Wage Growth (YoY) (Q3)

Tuesday, 17th December 2019

  • Eurozone Trade Balance (Oct)

Wednesday, 18th December 2019

  • German PPI (MoM) (Nov)
  • German Ifo Business Climate Index (Dec)
  • Eurozone Core CPI (YoY) (Nov) Final
  • Eurozone CPI (YoY) (Nov) Final
  • Eurozone CPI (MoM) (Nov) Final

Friday, 20th December 2019

  • GfK German Consumer Climate (Jan)
  • French Consumer Spending (MoM) (Nov)
  • Eurozone Consumer Confidence (Dec) Prelim

The Majors

It was a bullish end to the week for the European majors, with a 3rd consecutive day in the green contributing to a reversal of losses from the start of the week.

The EuroStoxx600 led the way on Friday, rallying by 1.15%, while the CAC40 and DAX30 saw more modest gains of 0.59% and 0.46% respectively.

Economic data and sentiment towards monetary policy took a backseat, in spite of ECB President Lagarde’s first ECB press conference on Thursday.

News of a phase 1 trade agreement drove demand for riskier assets on Friday, with Boris Johnson’s comfortable victory in the UK General Election also market risk positive.

The Stats

It was a relatively quiet day on the Eurozone economic calendar on Friday. Key stats were limited to finalized November inflation numbers out of Spain that had a muted impact on the majors.

From the U.S

Weaker than forecast retail sales figures were also brushed aside by a market relieved that China and the U.S managed to find a way forward.

Retail sales rose by 0.2%, month-on-month, following a 0.4% increase in October. Economists had forecast a rise of 0.5%. Core retail sales rose by just 0.1%, coming up short of a forecast of 0.4%. In October core retail sales had risen by 0.3%.

Import and export prices and business inventory figures garnered little to no attention.

The Market Movers

For the DAX: It was a bullish day for the auto sector. Volkswagen rallied by 2.23% to lead the way. BMW and Daimler weren’t far behind with gains of 1.35% and 1.32% respectively. Continental trailed, however, rising by a more modest 0.15%  on the day.

It was a mixed day for the banks, with Commerzbank rising by 0.53%, while Deutsche Bank slid by 1.18% to buck the trend on the day. The slide came in spite of Deutsche Bank announcing that it’s looking to cut its bonus pool by as much as 20%.

From the CAC, it was a bullish day for the banks. Credit Agricole led the way, rising by 1.01%. BNP Paribas and Soc Gen saw more modest gains of 0.77% and by 0.63% respectively.

News of the phase 1 trade agreement also supported the French Auto sector. Peugeot rallied by 2.24%, while Renault saw a more modest 0.40% gain on the day.

On the VIX Index

The VIX saw red for a 4th consecutive day, falling by 9.4% on Friday. Following on from a 6.2% decline on Thursday, the VIX ended the day at 12.6.

A phase 1 trade agreement between the U.S and China and Boris Johnson’s victory in the UK General Election left the VIX on the ropes.

Economic data was largely brushed aside on the day, in spite of U.S retail sales figures coming in softer than forecasts.

VIX 16/12/19 Daily Chart

The Day Ahead

It’s a busy day ahead on the Eurozone economic calendar. December’s prelim private sector PMI numbers are due out of France, Germany, and the Eurozone.

We will continue to expect Germany’s manufacturing PMI and the Eurozone’s Composite to be the main area of focus.

We may see, however, that the markets may be more insensitive to the numbers should they be skewed to the negative. A phase 1 trade agreement eases some pressure on the global trade environment. We don’t expect the markets to ignore the numbers, however.

Wage growth figures for the Eurozone will also influence, with consumer spending continuing to be key for the Eurozone economy.

From the U.S, prelim private sector PMIs later in the day will also provide direction.

Earlier in the day, economic data out of China was on the positive side. Industrial production rose by 6.2%, coming in well ahead of a forecast of 5.0%. Retail sales also bounced, rising by 8.0%. Economists had forecast a 7.6% rise, year-on-year.

On the geopolitical front, barring any unexpected events, there’s unlikely to be anything too negative to weigh.

We are expecting the House to vote on Trump’s impeachment at some point this week, though it is unlikely to end in a conviction…

In the futures markets, at the time of writing, the DAX30 was up by 36.5 points, with the Dow up by 18 points.

European Equities: A Tory Victory and A U.S – China Trade Agreement!

Economic Calendar:

Friday, 13th December 2019

  • Spanish CPI (YoY) (Nov) Final
  • Spanish HICP (YoY) (Nov) Final

The Majors

It was another bullish day for the European majors, which saw green for a 2nd consecutive day, with the DAX30 rising by 0.57% to lead the way. The CAC40 and EuroStoxx600 weren’t far behind with gains of 0.40% and 0.33% respectively.

Twitter delivered the upside on the day, with a Trump tweet late on Thursday announcing that a trade deal was close leading to a broad-based market rebound.

The tweet came off the back of reports that the U.S administration was not only going to cancel the 15th December tariffs, but also half existing tariffs on $360bn worth of Chinese goods.

The majors had been in the red ahead of the tweet, however, though the losses were minor in spite of uncertainty as Britain headed to the polls.

While the UK opinion polls had Johnson ahead going into Thursday’s vote, it wouldn’t be the first time that they were wrong…

The Stats

It was a relatively busy day on the Eurozone economic calendar on Thursday. Key stats included October industrial production figures for the Eurozone. German and French finalized inflation numbers for November were also released.

According to Eurostat,

  • Industrial production fell by 0.5% in October, month-on-month, which was in line with forecast. In September, production had fallen by a revised 0.1%.
  • The production of capital goods slid by 2.0%, with energy production falling by 0.7%.
  • Partially offsetting the slide were increases in the production of non-durable consumer goods (0.4%), intermediate goods (0.6%) and durable consumer goods (1.9%).
  • Greece (-2.6%) recorded the largest fall in production, while Portugal saw industrial production rise by 3.1% to lead the way.
  • Year-on-year, industrial production fell by 1.7%, with Germany seeing the largest slide, falling by 6.3%.

Finalized German and French inflation figures for November had a muted impact on the majors on the day.

The ECB

While the markets had correctly anticipated a hold on policy, ECB President Lagarde’s first press conference garnered plenty of attention.

Key points from the press conference included:

  • Growth revised down from 1.2% to 1.1% for 2020.
  • Risks tilted to the downside.
  • Inflation to average at 1.6% through to 2022.
  • In 2022, economic growth forecasted to rise to 1.4%.
  • Accommodation still required to support inflation.
  • Other policy areas must contribute to reducing vulnerability, including structural policies.
  • On fiscal policy, the outlook remains mild expansionary.
  • Member states with a means to loosen the purse strings must do so.
  • ECB’s focus on credit growth will make lending numbers all the more influential…

For the European majors, a downward revision to growth forecasts was negative.

From the U.S

The markets also responded to the FOMC’s economic projections released overnight on Wednesday. Any major upside was limited, however, with the UK General Election and mixed sentiment towards trade influencing early in the session.

The Market Movers

For the DAX: It was a bullish day for the auto sector. Continental rallied by 1.77% to lead the way. Daimler and BMW trailed with gains of 0.88% and by 0.80%, while Volkswagen saw a more modest 0.64% gain on the day.

It was also a bullish day for the banks, with Commerzbank and Deutsche Bank rallying by 5.00% and by 3.26%, respectively.

From the CAC, it was a bullish day for the banks. Soc Gen led the way, rallying by 2.92%, with BNP Paribas and Credit Agricole up by 2.48% and by 2.05% respectively.

Improved sentiment towards trade also supported the French Auto sector. Peugeot and Renault rose by 2.43% and by 2.66% respectively.

On the VIX Index

The VIX saw red for a 3rd consecutive day, falling by 7.0% on Thursday. Following a 4.40% decline on Wednesday, the VIX ended the day at 13.9.

Once more the VIX gave up gains from earlier in the day, with updates on trade talks from the U.S administration weighing on the day.

Positive updates from the U.S President, via Twitter, provided much-needed support to the equity markets that had struggled at the open.

VIX 13/12/19 Daily Chart

The Day Ahead

It’s a relatively quiet day ahead on the Eurozone economic calendar. Economic data due out of the Eurozone is limited to finalized November inflation numbers out of Spain.

The lack of stats leaves the market focus on the outcome of the UK General Election and updates from the U.S and China on trade.

News of an in-principal U.S – China phase 1 agreement will set the majors on their way at the open.

A key exit poll showing a Johnson majority victory added to the early fervor in the early hours of this morning, supporting a bullish open for the European majors.

Later in the day, retail sales figures from the U.S will likely be brushed aside.

In the futures markets, at the time of writing, the Dow Mini was up by 226 points.

European Equities: The FED Reaction, the ECB and Geopolitics in Focus

Economic Calendar:

Thursday, 12th December 2019

  • German CPI (MoM) (Nov) Final
  • French CPI (MoM) (Nov) Final
  • French HICP (MoM) (Nov) Final
  • Eurozone Industrial Production (MoM) (Oct)
  • ECB Deposit Facility Rate (Dec) / ECB Interest Rate Decision (Dec)
  • ECB Press Conference

Friday, 13th December 2019

  • Spanish CPI (YoY) (Nov) Final
  • Spanish HICP (YoY) (Nov) Final

The Majors

There was finally some green on the board for the European majors, with the DAX30 rising by 0.58% to lead the way. The CAC40 and EuroStoxx600 saw more modest gains, with both rising by 0.22% on the day.

On the day, the main areas of focus were updates from the U.S on whether the 15th December tariffs would go ahead.

Some caution was evident, however, with the FED delivering its final monetary policy of the year after the European close. Expectations were for the FED to hold rates unchanged, leaving the FOMC economic projections to have the greatest influence going into today.

From the UK, there was also a narrowing in Boris Johnson’s lead in the final opinion polls raising doubts over a Johnson majority.

The Stats

It was a quiet day on the Eurozone economic calendar on Wednesday. There were no material stats to provide the majors with direction on the day.

From the U.S,

From the U.S, inflation figures had a muted impact on the European majors, with the core annual rate of inflation holding steady at 2.3% in November.

Uncertainty over the interest rate path for 2020 left the majors on a more cautious footing. Economic data from the U.S had been quite mixed ahead of today’s decision. While nonfarm payrolls and wage growth had impressed last week, private sector PMI numbers for November had been disappointing…

Late on Wednesday, after the European close, the FED held rates unchanged as forecasted.

From the economic projections’ median numbers,

  • Economic growth for 2020 is projected to grow by 2.0%, which was in line with September forecasts.
  • For inflation, the Core PCE Price Index is forecasted to pick up to 1.9% in 2020 and to hit 2.0% by 2021. This is up from 1.5% for 2019.
  • On unemployment, while predicting an unemployment rate of 3.5% for 2020, revised from 3.7% in September, the FED predicts a longer-run rate of 4.1%.
  • Finally, on the projected path for interest rates, FOMC members see rates unchanged through 2020, with 1 rate hike in 2021.
  • The Federal funds rate had a median of 1.6% for 2020 and 1.9% for 2021. In September, the medians had stood at 1.9% and 2.1% respectively.
  • Trump may not like the anticipated hold and longer run FED Funds Rate of 2.5%, however…
  • When looking at the dot plot, just 4 members of the Committee predict a single rate hike next year. The remaining 14 members see rates on hold throughout next year.

All in all, no downward revisions to growth forecasts and an accommodative FED are considered positives for the equity markets.

The Market Movers

For the DAX: It was a bullish day for the auto sector. Volkswagen rallied by 1.77% to lead the way, with Daimler close behind, rising by 1.67%. BMW and Continental also found strong support, with the pair up by 1.5% and by 1.37% respectively. Upside on the day came as the markets responded to news of the U.S planning to delay 15th December tariffs.

It was also a bullish day for the banks. Deutsche Bank rose by 0.91%, with Commerzbank up by 0.48%.

From the CAC, it was a positive day for the banks. Credit Agricole led the way, rising by 0.36%. BNP Paribas and Soc Gen saw more modest gains of 0.26% and 0.31% respectively.

The French auto sector, bucked the trend, however, in spite of the more positive sentiment towards trade. Peugeot and Renault fell by 0.05% and by 0.16% respectively.

On the VIX Index

The VIX saw red for a 2nd consecutive day, falling by 4.4% on Wednesday. Following a 1.13% decline on Tuesday, the VIX ended the day at 15.0.

FED monetary policy contributed to the downside on the day, with the FOMC economic projections forecasting a hold on rates through 2020.

Earlier in the day, the VIX had hit an intraday high 16.0, with the upside coming in spite of news of the U.S administration planning to delay tariffs due to be rolled out on Sunday.

VIX 12/12/19 Daily Chart

The Day Ahead

It’s a relatively busy day ahead on the Eurozone economic calendar. Economic data due out of the Eurozone includes October Eurozone industrial production figures.

Of less influence on the day, will be finalized November inflation figures out of Germany and France.

Outside of the numbers, while the FOMC’s latest projections are positive for the European majors, both trade and the UK General Election will also be in focus…

Any negative chatter and expect risk aversion to weigh, with uncertainty over the outcome of the UK General Election later today also a test for the bulls.

In the futures market, at the time of writing, the DAX30 was down by 13.5 points, with the Dow down by 4 points.

European Equities: No Stats Leaves Geopolitics and the FED in Focus

Economic Calendar:

Thursday, 12th December 2019

  • German CPI (MoM) (Nov) Final
  • French CPI (MoM) (Nov) Final
  • French HICP (MoM) (Nov) Final
  • Eurozone Industrial Production (MoM) (Oct)
  • ECB Deposit Facility Rate (Dec) / ECB Interest Rate Decision (Dec)
  • ECB Press Conference

Friday, 13th December 2019

  • Spanish CPI (YoY) (Nov) Final
  • Spanish HICP (YoY) (Nov) Final

The Majors

It was a mixed day for the European majors on Tuesday, with the CAC40 rising by 0.18% to buck the trend on the day. The DAX30 and EuroStoxx600 ended the day with losses of 0.27% and 0.26% respectively.

News of a possible delay to 15th December tariffs provided limited support as uncertainty over the prospects of a phase 1 agreement continued to linger.

The U.S administration reportedly called for a ramp-up in spending on U.S agri in exchange for a delay to the 15th December tariffs. According to reports, the U.S President has demanded a hard line of US$50bn spending on soybeans and pork.

Trump’s focus on farming is not too surprising with the 2020 Presidential Elections less than a year away…

In spite of the talk of a possible delay to tariffs, members of the U.S administration continued to contradict each other at the start of the week, however.

The Stats

It was a relatively busy day on the Eurozone economic calendar on Tuesday. Key stats included the ZEW’s December economic sentiment figures from Germany and the Eurozone.

According to the latest ZEW figures,

Germany’s ZEW Economic Sentiment Index rose from -2.1 to 10.7 in December. Economists had forecast a rise to 1.1. The ZEW Current Conditions Index was also on the rise, with the index up from -24.7to -19.9. Economists had forecast a rise to -17.7.

For the Eurozone, sentiment figures were also positive, with the Eurozone ZEW Economic Sentiment Index increasing from -1 to 11.2.

French nonfarm payroll figures for the 3rd quarter had a muted impact on the majors on the day, Nonfarm payrolls increased by just 0.2% in the 3rd quarter. In the 2nd quarter, payrolls had risen by 0.3%.

From the U.S,

Economic data from the U.S had a muted impact, with stats limited to 3rd quarter nonfarm productivity and unit labor cost figures.

The Market Movers

For the DAX: It was a mixed day for the auto sector. BMW rose by 0.07% to buck the trend on the day. Continental, Daimler, and Volkswagen fell by 0.98%, 0.64% and by 0.43% respectively.

It was a bearish day for the banks, however, with Commerzbank and Deutsche Bank falling by 0.90% and by 0.92% respectively.

From the CAC, it was a mixed day for the banks. Credit Agricole rose by 0.08% to buck the trend on the day. BNP Paribas and Soc Gen fell by 0.98% and by 0.58% respectively.

Mixed sentiment towards trade weighed on the Auto sector. Peugeot and Renault fell by 0.85% and by 1.45% respectively.

On the VIX Index

In spite of the U.S equity markets closing out in the red on Tuesday, the VIX fell by 1.13%. Partially reversing a 16.45% bounce from Monday, the VIX ended the day at $15.7

Hopes of a phase 1 agreement pinned the VIX back on the day, as the markets took a more cautious approach ahead of tonight’s FOMC policy decision.

While the FED is not expected to make a move on interest rates, the FOMC economic projections will have a material impact on the majors…

With economic data from the U.S mixed last week, some uncertainty lingers…

VIX 11/12/19 Daily Chart

The Day Ahead

It’s a quiet day ahead on the Eurozone economic calendar. There are no material stats due out of the Eurozone to provide the majors with direction.

The lack of stats leaves the majors in the hands of inflation figures out of the U.S and sentiment towards FED monetary policy.

Expect geopolitics to also influence, with trade and UK politics in focus on the day. For the majors, an optimal would be continued expectations of a Tory victory, a trade deal and for the FED to have an optimistic outlook on the U.S economy. That would need to be combined with plans to leave rates unchanged near-term…

In the futures markets, at the time of writing, the DAX30 was up by 4 points, while the Dow was down by 40 points.

European Equities: The Trade Obsession Will Sideline the Stats

Economic Calendar:

Tuesday, 10th December 2019

  • French Non-Farm Payrolls (QoQ) (Q3)
  • German ZEW Current Conditions (Dec)
  • German ZEW Economic Sentiment (Dec)
  • Eurozone ZEW Economic Sentiment (Dec)

Thursday, 12th December 2019

  • German CPI (MoM) (Nov) Final
  • French CPI (MoM) (Nov) Final
  • French HICP (MoM) (Nov) Final
  • Eurozone Industrial Production (MoM) (Oct)
  • ECB Deposit Facility Rate (Dec) / ECB Interest Rate Decision (Dec)
  • ECB Press Conference

Friday, 13th December 2019

  • Spanish CPI (YoY) (Nov) Final
  • Spanish HICP (YoY) (Nov) Final

The Majors

It was a bearish start to the week for the European majors, with the CAC40 falling by 0.59% to lead the way down.

The DAX30 and EuroStoxx600 weren’t far behind, with losses of 0.46% and 0.24% respectively.

Economic data from the weekend weighed on the futures markets from the get-go on Monday, as trade data out of China disappointed.

If the trade data and failure to deliver a phase 1 agreement is anything to go by, more economic doom and gloom could be on the horizon. Year-on-year, China exports fell for a 4th consecutive month in November. That made it 7 monthly declines out of 11 for the current year…

On the geopolitical front, a lack of progress towards a phase 1 agreement also pressured the majors at the start of the week.

Talk from U.S administration, late last week, of 15th December tariffs to go ahead as scheduled was the negative, particularly with China demanding a rollback on existing tariffs.

With the UK General Election now just days away, there’s plenty for the markets to consider in the coming days.

The Stats

It was a relatively quiet day on the Eurozone economic calendar on Monday. Key stats were limited German trade data for October that delivered some much needed positive news.

According to Destatis, the trade surplus widened from €19.2bn to €20.6n in October. Economists had forecast a surplus of €19.0bn.

  • Germany exported goods to the value of €119.5bn, an increase of 1.9% year-on-year.
    • Exports to EU member states increased by just 0.1% to €70.0bn.
    • Goods to the value of €43.8bn (-0.9%) were exported to the Euro area.
    • Exports of goods to countries outside the EU totaled €49.5bn, a 4.6% rise year-on-year.
  • Imports decreased by 0.6% to €98.0bn
    • Imports from EU member states fell by 0.2% to €55.2bn.
    • The value of goods imported from the Euro area stood at €35.5bn, up by 0.1% year-on-year.
    • Imports from countries outside of the EU totaled €42.8bn, down by 1.0%.

From the U.S,

There were no material stats to provide direction late in the session.

The Market Movers

For the DAX: It was a bearish day for the auto sector, with negative sentiment towards trade overshadowing positive trade figures. Continental and Daimler led the way down, with losses of 1.19% and 1.00% respectively. BMW and Volkswagen weren’t far behind, with declines of 0.95% and 0.37% respectively on the day.

By contrast, it was a positive day for the banks, with Deutsche Bank and Commerzbank rising by 0.35% and by 0.13% respectively.

From the CAC, it was a mixed day for the banks. Credit Agricole bucked the trend with a 0.28% gain on the day. BNP Paribas and Soc Gen fell by 0.33% and by 0.09% respectively.

In spite of the negative sentiment towards trade, Renault avoided red on the day, rising by 0.11%. Peugeot tracked its peers from Germany, however, sliding by 1.86%.

On the VIX Index

A run of 3 consecutive days in the red came to an abrupt end on Monday, with the VIX jumping by 16.5% on the day.

Reversing a 6.2% slide from Friday, with interest, the VIX closed out the day at 15.9.

The trade sentiment pendulum swung back in favor of the bears on Monday, as economic data from China and a lack of progress towards a phase 1 agreement weighed on the U.S markets.

With the 15th December deadline rapidly approaching and the UK General Election on Thursday also there, it’s unlikely to be smooth sailing… At a minimum, the U.S administration would need to delay the rollout of tariffs that are due to kick in on Sunday…

VIX 10/12/19 Daily Chart

The Day Ahead

It’s a busy day ahead on the Eurozone economic calendar. Key stats due out of the Eurozone include 3rd quarter nonfarm payrolls out of France and business sentiment figures for Germany and the Eurozone.

Barring particularly dire numbers from France, the market focus will be on the sentiment numbers due out later this morning. Forecasts are DAX negative.

From the U.S, 3rd quarter nonfarm productivity and unit labor cost figures are unlikely to influence, leaving geopolitics in focus late on.

On the geopolitical front, the 15th December tariff deadline is approaching and there’s still no phase 1 agreement. From the UK, some uncertainty going into Thursday’s General Election will also be a test for the majors.

Expect chatter on trade to be the main area of focus, with any updates likely to overshadow the numbers.

In the futures market, at the time of writing, the DAX30 was down by 19 points, while the Dow was up by 8 points.

European Equities: A Light Economic Calendar Leaves Geopolitics in Focus

Economic Calendar:

Monday, 9th December 2019

  • German Trade Balance (Oct)

Tuesday, 10th December 2019

  • French Non-Farm Payrolls (QoQ) (Q3)
  • German ZEW Current Conditions (Dec)
  • German ZEW Economic Sentiment (Dec)
  • Eurozone ZEW Economic Sentiment (Dec)

Thursday, 12th December 2019

  • German CPI (MoM) (Nov) Final
  • French CPI (MoM) (Nov) Final
  • French HICP (MoM) (Nov) Final
  • Eurozone Industrial Production (MoM) (Oct)
  • ECB Deposit Facility Rate (Dec) / ECB Interest Rate Decision (Dec)
  • ECB Press Conference

Friday, 13th December 2019

  • Spanish CPI (YoY) (Nov) Final
  • Spanish HICP (YoY) (Nov) Final

The Majors

It was a bullish end to the week for the European majors, with the CAC40 rallying by 1.21% to lead the way.

The EuroStoxx600 wasn’t far behind, rising by 1.16%, while the DAX30 saw a more modest 0.86% on the day.

Upside on the day came from impressive economic data from the U.S and hopes of a phase 1 trade agreement between the U.S and China.

On Thursday, Trump spoke of the U.S and China making progress towards an agreement, which contradicted comments from earlier in the week. At the start of the week, Trump had stated a desire to delay any agreement until after the next year’s Presidential Election…

The Stats

It was a relatively quiet day on the Eurozone economic calendar on Friday. Key stats were limited German industrial production figures for October that once again delivered more bad news.

According to Destatis, industrial production slid by 1.7% in October, following on from a 0.6% fall in September. Economists had forecast a 0.1% rise.

  • Within industry, the production of intermediate goods increased by 1%, with the production of consumer goods rising by 0.3%.
  • The production of capital goods slumped by 4.4%, however, dragging the headline figure deep into the red.
  • Production in industry, excluding energy and construction, fell by 1.7%.
  • Energy production rose by 2.3%, while production in construction fell by 2.8%.
  • Year-on-year, production slumped by 5.3%.

From the U.S,

Economic data ultimately led to the upswing on the day. Nonfarm payrolls surged by 266k in November, following a 163k rise in October. Economists had forecast a 186k rise. The numbers were significant when compared with the ADP numbers from earlier in the week that reported a 67k rise in nonfarm payrolls.

Wage growth also accelerated in the month, supporting a positive outlook for consumer spending going into the holiday season.

The Market Movers

For the DAX: It was a bullish day for the auto sector. BMW rallied by 1.15% to lead the way, with Continental up by 0.84%. Volkswagen and Daimler saw more modest gains of 0.55% and 0.19% respectively on the day.

It was a mixed day for the banks, however. Deutsche Bank rose by 0.73%, while Commerzbank fell by 0.08%.

From the CAC, it was a bullish day for the banks. Credit Agricole led the way, rising by 1.41%, with BNP Paribas up by 1.35%. Soc Gen saw a more modest 0.89% gain on the day.

Improved sentiment towards trade and positive stats from the U.S also supported the French Auto sector. Peugeot and Renault rose by 1.27% and by 0.67% respectively.

On the VIX Index

The VIX saw red for a 3rd consecutive day, sliding by 6.2% on Friday. Following a 1.89% decline on Thursday, the VIX ended the day at 13.6.

With the bulls in action, as the markets reacted to the latest labor market figures from the U.S, there was no hope for the VIX, which fell back to sub-14 levels in response to the NFP numbers.

Positive sentiment towards trade also pressured the VIX late in the week.

VIX 09/12/19 Daily Chart

The Day Ahead

It’s a relatively quiet day ahead on the Eurozone economic calendar. Key stats due out of the Eurozone are limited to trade data due out of Germany.

We can expect the DAX to respond to the numbers, which may well reflect more doom and gloom…

Trade data from China over the weekend will also test risk appetite later in the day.

Through the early part of the day, the Asian majors were on the move, responding to the U.S data from Friday. Trade data from China on the weekend, may limit any upside, however.

From the U.S, the administration stated that tariffs would go ahead as scheduled on 15th December, which will also limit any upside on the day. Any further updates on trade will likely overshadow today’s stats.

In the futures market, at the time of writing, the DAX30 down by 15 points, with the Dow down by 27 points.

European Equities: A Week in Review – 07/12/19

The Majors

It was a bearish week for the European majors in the week ending 6th December, with the CAC40 falling by 0.56% to lead the way down.

Things were not much better for the DAX30, which fell by 0.53%, while the EuroStoxx600 slipped by just 0.02%.

The losses came in spite of a bullish end to the week that saw the CAC40 and EuroStoxx600 rally by 1.21% and by 1.16% respectively.

Disappointing industrial production figures out of Germany left the DAX30 with a more modest 0.86% gain on the day.

Market sentiment towards the prospects of a U.S – China phase 1 agreement provided support on Friday, after having sunk the markets at the start of the week.

On the economic data front, a jump in U.S nonfarm payrolls and wage growth ultimately delivered the Friday bounce, however.

The Stats

It was a busy week on the Eurozone economic calendar.

In the 1st half of the week, the focus was on November private sector PMI figures out of China, the Eurozone, and the U.S.

While the PMI numbers out of China had provided support, the Eurozone and U.S PMI figures were far from impressive.

The stats coincided with negative chatter on trade in the 1st half, with the U.S administration threatening tariffs on all French goods. On the prospects of a U.S – China phase 1 agreement, Trump had also doused expectations of a pre-Christmas deal.

In the 2nd half of the week, things didn’t get much better on the data front, with German and Eurozone retail sales disappointing. While the markets have been able to stomach weak manufacturing sector figures, weak consumer spending is a different proposition…

That sentiment was reflected by a slide in factory orders and industrial production figures out of Germany that had a relatively muted impact on the majors.

On Friday, U.S nonfarm payroll and wage growth figures, however, did have a material impact. Impressive figures fuelled a rebound in both the European and U.S majors.

Nonfarm payrolls jumped by 266k, with wages rising by 3.1% in November. Both came in ahead of expectations and points to strong consumer demand in the months ahead…

The Market Movers

From the DAX, it was a mixed week for the auto sector. Continental and Daimler fell by 0.88% and by 3.36% respectively. BMW and Volkswagen found support, however, with the pair up by 0.70% and 0.57% respectively.

It was a bearish week for the banking sector, however. Deutsche Bank fell by 0.91%, with Commerzbank down by 1.14%.

From the CAC, it was a mixed week for the banks. Credit Agricole and Soc Gen rose by 1.25% and by 2.80% respectively. BNP Paribas bucked the trend, falling by 0.06%, the loss coming in spite of a 1.35% gain on Friday.

French auto sector took another hit in the week, with Peugeot and Renault falling by 1.87% and by 3.76% respectively.

The U.S. threat of tariffs on all French goods certainly didn’t help.

On the VIX Index

The VIX Index rose by 7.92% in the week ending 6th December. Following a 2.27% gain from the previous week, the VIX ended the week at 13.6.

A choppy week for the markets saw the VIX jump by 18.15% on Monday. The jump came in response to negative chatter on trade. This was followed up by a 7% gain on Tuesday that ultimately delivered the upside in the week.

In the 2nd half of the week, a shift in sentiment towards trade and the particularly impressive labor market figures out of the U.S limited the upside in the VIX.

VIX 07/12/19 Weekly Chart

The Week Ahead

It’s a relatively busy week on the Eurozone economic calendar. Through the 1st half of the week, German trade data and business sentiment figures for Germany and the Eurozone are due out

Barring dire trade figures, expect the sentiment figures to have the greatest influence on Tuesday. Following disappointing industrial production figures out of Germany last week, a fall in Eurozone industrial production wouldn’t be a surprise…

Industrial production figures are due out on Thursday.

On Thursday, the focus will be on the ECB and ECB President Lagarde, however. Economic indicators going into the 4th quarter have not been great, which raises the question of what’s next from the ECB…

Finalized inflation numbers from France, Germany, and Spain due out in the week will unlikely influence.

From elsewhere, expect economic data from the U.S and, more importantly, the FOMC economic projections from Wednesday to also influence.

On the geopolitical front, updates from China and the U.S in the early part of the week will influence. In the 2nd half of the week, expect the European majors to respond to the UK general election. Results will start trickling in overnight on Thursday…

A Tory Party loss would extend Britain’s membership with the EU.  This would also raise plenty of uncertainty over what lies ahead for the UK economy, however.