European Equities: Economic Data from the Eurozone and the U.S and the ECB in Focus

Economic Calendar:

Thursday, 21st January

ECB Interest Rate Decision (Jan)

ECB Press Conference

Eurozone Consumer Confidence (Jan) Prelim

Friday, 22nd January

French Manufacturing PMI (Jan) Prelim

French Services PMI (Jan) Prelim

German Manufacturing PMI (Jan) Prelim

German Services PMI (Jan) Prelim

Eurozone Manufacturing PMI (Jan) Prelim

Eurozone Markit Composite PMI (Jan) Prelim

Eurozone Services PMI (Jan) Prelim

The Majors

It was a bullish day for the European majors on Wednesday, with the DAX30 rising by 0.77% to lead the way. The EuroStoxx600 and CAC40 ended the day with gains of 0.72% and 0.53% respectively.

Economic data was on the lighter side, leaving the majors in the hands of corporate earnings and Inauguration Day.

With Joe Biden sworn in as U.S President, the markets are expecting plenty of fiscal stimulus to drive a U.S economic recovery.

Coupled with a planned drive to ramp up vaccination rates, the markets bet on a more rapid economic recovery.

Demand for riskier assets was broad-based as a result, also leading to a pullback in the U.S Dollar.

The Stats

It was a busier day on the economic calendar. Economic data included finalized inflation figures for the Eurozone and wholesale inflation figures from Germany.

In December, Germany’s producer price index rose by 0.8%, month-on-month, following a 0.2% increase in November. Economists had forecast a 0.7% rise.

According to Destatis,

  • The producer prices of industrial products were 0.2% higher in December 2020 than in December 2019.
  • Energy prices, however, were on average 0.1% lower than in December 2019.
  • Excluding energy, producer prices were 0.3% higher than in December 2019.

For the Eurozone, consumer prices rose by 0.3% in December, reversing a 0.3% decline from November.

While the annual core rate of inflation held steady at 0.2%, consumer prices fell by a further 0.3%, year-on-year, in December.

According to Eurostat,

  • Annual inflation was stable at -0.3% for a 4th consecutive month in December.
  • A year earlier, the annual rate of inflation had stood at 1.3%.
  • Greece (-2.4%), Slovenia (-1.2%), and Ireland (-1.0%) registered the lowest annual rates.
  • The highest contribution to the annual euro areas inflation came from services (+0.30 percentage points).
  • Food, alcohol & tobacco contributed +0.25 pp.

From the U.S

There was no economic data from the U.S to provide the European majors with direction late in the session.

The Market Movers

For the DAX: It was a bullish day for the auto sector on Wednesday. Daimler rallied by 3.51%, with BMW and Volkswagen ending the day up by 3.01% and by 3.13% respectively. Continental rose by a more modest 1.82% on the day.

Daimler led the way mid-week as the markets responded to the unveiling of  the latest Mercedes-Benz’s electric compact SUV.

It was a mixed day for the banks, however. Deutsche Bank fell by 0.99%, while Commerzbank rose by 0.93%.

From the CAC, it was a bullish day for the banks. BNP Paribas and Soc Gen gained 0.70% and 0.59% respectively, with Credit Agricole rising by 1.54%.

It was a mixed day for the French auto sector. Peugeot ended the day flat, while Renault gained 1.86% on the day.

Air France-KLM bucked the general trend, falling by 0.86%, while Airbus SE ended the day up by 1.22%.

On the VIX Index

It was a 2nd consecutive day in the red for the VIX on Wednesday, marking the 8th daily loss of the year. Following a 4.52% fall on Tuesday, the VIX slid by 7.14% to end the day at 21.58.

The NASDAQ and the S&P500 rallied by 1.97% and by 1.39% respectively, with the Dow gaining by 0.83%.

A lack of economic data left the markets in the hands of corporate earnings and hopes of sizeable fiscal support from the new U.S administration.

Fresh record highs came as President Joe Biden was sworn in as the 46th U.S President.

On the corporate earnings front, Netflix was a front runner off the back of its earnings release, surging by 16.85%.

VIX 210121 Daily Chart

The Day Ahead

It’s a quiet day ahead on the economic calendar. Eurozone consumer confidence figures are due out late in the session to provide the European majors with direction.

Ahead of the stats, the ECB is in action this afternoon. With the markets expecting the ECB to stand pat on policy, the press conference will be the key driver.

From the U.S, the weekly jobless claims figures will also influence, though expect a delayed response with the release coinciding with the ECB press conference.

Away from the economic calendar, COVID-19 news, together with updates from Capitol Hill will also influence.

The Futures

In the futures markets, at the time of writing, the Dow Mini was up by 18.5 points.

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

European Equities: COVID-19 and U.S Politics in Focus

Economic Calendar:

Wednesday, 20th January

German PPI (MoM) (Dec)

Eurozone Core CPI (YoY) (Dec) Final

Eurozone CPI (MoM) (Dec) Final

Eurozone CPI (YoY) (Dec) Final

Thursday, 21st January

ECB Interest Rate Decision (Jan)

ECB Press Conference

Eurozone Consumer Confidence (Jan) Prelim

Friday, 22nd January

French Manufacturing PMI (Jan) Prelim

French Services PMI (Jan) Prelim

German Manufacturing PMI (Jan) Prelim

German Services PMI (Jan) Prelim

Eurozone Manufacturing PMI (Jan) Prelim

Eurozone Markit Composite PMI (Jan) Prelim

Eurozone Services PMI (Jan) Prelim

The Majors

It was a bearish day for the European majors on Tuesday. The CAC40 fell by 0.33%, with the DAX30 and EuroStoxx600 seeing losses of 0.24% and 0.19% respectively.

News from Germany of a lockdown extension to mid-February sent the European majors into the red.

In addition to an extended lockdown, the possibility of reintroducing border controls was also raised over concerns of new COVID-19 strains.

Sentiment had been more bullish early on, with a pickup in economic sentiment in Germany and the Eurozone providing support.

The Stats

Economic sentiment figures for Germany and the Eurozone and finalized German inflation figures were in focus.

For January, Germany’s ZEW Economic Sentiment Indicator rose from 55.0 to 61.8, with the current conditions indicator rising from -66.5 to -66.4.

Economists had forecasted an economic sentiment indicator of 60.0 and a current conditions indicator of -68.5.

For the Eurozone, the Economic Sentiment Indicator increased from 54.4 to 58.3.

On the inflation front, consumer prices increased by 0.5% in December in Germany, which was in line with prelim figures. Consumer prices had fallen by 0.8% in November.

According to Destatis,

  • Consumer prices were down by 0.3% on the same month a year earlier.
  • A temporary reduction in value added tax contributed to the fall in consumer prices.
  • Energy product prices slid by 4.8%. Prices had risen by 1.4% in 2019.
  • Prices of goods were down by 0.4% on 2019, while prices of services rose by 1.3%.

From the U.S

There were no material from the U.S.

The Market Movers

For the DAX: It was a mixed day for the auto sector on Tuesday. Volkswagen rose by 0.81% to buck the trend on the day. BMW and Daimler fell by 0.95% and by 1.22% respectively, while Continental saw more modest loss of 0.59%.

It was a mixed day for the banks, however. Deutsche Bank slid by 3.90%, while Commerzbank rose by 0.14%.

From the CAC, it was a bearish day for the banks. BNP Paribas fell by 1.55%, with Credit Agricole and Soc Gen sliding by 2.24% and by 2.39% respectively.

It was a mixed day for the French auto sector. Peugeot ended the day flat, while Renault fell by 1.30%.

Air France-KLM fell by 0.72%, while Airbus SE ended the day with a modest 0.12% gain.

On the VIX Index

It was back into the red for the VIX on Tuesday. Reversing a 4.69% gain from Friday, the VIX fell by 4.52% to end the day at 23.24. On Monday, the U.S markets had been closed.

The NASDAQ rallied by 1.53%, with the Dow and the S&P500 rising by 0.0.38% and by 0.81% respectively.

Support for more fiscal stimulus delivered support to the U.S markets after the Monday holiday.

Former FED Chair Yellen, nominee for Treasury Secretary talked of support for a sizeable fiscal stimulus package.

Coupled with the incoming administration’s plans to drive vaccinations, hopes of a speedier economic recovery drove the main indexes to fresh record highs.

VIX 200121 Daily Chart

The Day Ahead

It’s a quiet day on the economic calendar. Inflation figures from Germany and the Eurozone are due out later today.

We don’t expect the numbers to have any material impact on the European majors, however.

It’s Inauguration Day, so expect Biden’s immediate plans upon taking office to be the main area of focus.

Yellen’s support for further economic stimulus should deliver some comfort going into the open.

COVID-19 news will also continue to influence, however.

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.

European Equities: Economic Sentiment Figures and COVID-19 in Focus

Economic Calendar:

Tuesday, 19th January

German CPI (MoM) (Dec) Final

German ZEW Current Conditions (Jan)

German ZEW Economic Sentiment (Jan)

Eurozone ZEW Economic Sentiment (Jan)

Wednesday, 20th January

German PPI (MoM) (Dec)

Eurozone Core CPI (YoY) (Dec) Final

Eurozone CPI (MoM) (Dec) Final

Eurozone CPI (YoY) (Dec) Final

Thursday, 21st January

ECB Interest Rate Decision (Jan)

ECB Press Conference

Friday, 22nd January

French Manufacturing PMI (Jan) Prelim

French Services PMI (Jan) Prelim

German Manufacturing PMI (Jan) Prelim

German Services PMI (Jan) Prelim

Eurozone Manufacturing PMI (Jan) Prelim

Eurozone Markit Composite PMI (Jan) Prelim

Eurozone Services PMI (Jan) Prelim

The Majors

It was a relatively bullish start to the week for the European majors on Monday. The DAX30 rose by 0.44%, with the EuroStoxx600 and CAC40 seeing gains of 0.20% and 0.10% respectively.

Economic data from China had failed to support the majors going into the open in spite of solid GDP numbers for Q4.

Concerns over the Eurozone’s economic outlook had overshadowed the numbers. A continued rise in new COVID-10 cases and vaccination supply issues tested support.

Ultimately, however, luxury, bank, and auto stocks were amongst the front runners, delivering the upside on the day.

While concerns over the economic outlook were evident, China’s continued economic recovery provided some optimism on the day.

The Stats

It was a quiet day on the economic calendar. Economic data was limited to finalized December inflation figures for Italy.

In December, consumer prices rose by 0.2%, coming up short of a prelim 0.3% rise while reversing a 0.1% decline from November.

From the U.S

There were no material from the U.S to provide directions, with the U.S markets closed on Monday.

The Market Movers

For the DAX: It was a bullish day for the auto sector on Monday. Continental and Daimler rose by 1.02% and by 0.95% respectively.  BMW and Volkswagen saw more modest gains of 0.32% and 0.08% respectively.

It was also a bullish day for the banks. Deutsche Bank rose by 0.60%, with Commerzbank rallying by 1.98%.

From the CAC, it was a bullish day for the banks. Credit Agricole ended the day up by 1.03%, with BNP Paribas and Soc Gen rising by 0.83% and by 0.38% respectively.

It was a mixed day for the French auto sector, however. Peugeot ended the day flat, while Renault rose by 1.64%.

Air France-KLM and Airbus SE fell by 1.06% and by 1.47% respectively.

Carrefour led the day down, however, sliding by 6.92% following the French government’s intervention in the Couche-Tard takeover bid.

On the VIX Index

The U.S markets were closed on Monday.

The Day Ahead

It’s a relatively quiet day ahead on the economic calendar. Germany and the Eurozone’s ZEW Economic Sentiment figures for January are in focus in the early part of the day.

Expect Germany’s sentiment figures to have the greatest influence on the European majors.

Finalized December inflation figures for Germany are also due out but will likely have a muted impact on the majors.

From the U.S, there are no material stats to provide direction late in the European session.

The lack of stats from the U.S will leave COVID-19 news updates as a key driver later in the day.

The Futures

In the futures markets, at the time of writing, the Dow Mini was up by 47 points.

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

European Equities: China 4th Quarter GDP Numbers and COVID-19 News in Focus

Economic Calendar:

Monday, 18th January

Italian CPI (MoM) (Dec) Final

Tuesday, 19th January

German CPI (MoM) (Dec) Final

German ZEW Current Conditions (Jan)

German ZEW Economic Sentiment (Jan)

Eurozone ZEW Economic Sentiment (Jan)

Wednesday, 20th January

German PPI (MoM) (Dec)

Eurozone Core CPI (YoY) (Dec) Final

Eurozone CPI (MoM) (Dec) Final

Eurozone CPI (YoY) (Dec) Final

Thursday, 21st January

ECB Interest Rate Decision (Jan)

ECB Press Conference

Friday, 22nd January

French Manufacturing PMI (Jan) Prelim

French Services PMI (Jan) Prelim

German Manufacturing PMI (Jan) Prelim

German Services PMI (Jan) Prelim

Eurozone Manufacturing PMI (Jan) Prelim

Eurozone Markit Composite PMI (Jan) Prelim

Eurozone Services PMI (Jan) Prelim

The Majors

It was a bearish end to the week for the European majors on Friday, with the DAX30 sliding by 1.44% to lead the way down. The CAC40 and the EuroStoxx600 weren’t far behind, with losses of 1.22% and 1.01% respectively.

A continued spike in new COVID-19 cases and low vaccination rates across the Eurozone weighed on the European majors.

In the week, there was also a jump in new COVID-19 cases in China that added to the market angst late in the week.

For the EU, fewer doses from Pfizer Inc. and EMA’s pending review of the AstraZeneca vaccine means that vaccination rates will likely remain low in the month.

This is then expected to lead to a delay in the easing of lockdown measures and to any start of any sustainable economic recovery.

The Stats

It was a quiet day on the economic calendar. Finalized December inflation figures for France and Spain had a muted impact on the majors.

A narrowing of the Eurozone’s trade surplus from €30.0bn to €25.8bn in November reflected the effects of the pandemic on global trade terms.

According to Eurostat,

  • Compared with November 2019, exports of goods fell by 1.0% to €196.7bn.
  • Imports from the rest of the world slid by 4.2% compared with November 2019.
  • This led to a widening of the trade surplus from a November 2019 €20.2bn to a November 2020 surplus of €25.8bn.
  • Intra-euro areas trade fell by 1.3% to €165.4bn compared with November 2019.

From the U.S

It was a busy day on the economic calendar. Retail sales and consumer sentiment figures were in focus. Manufacturing, industrial production, and inventory numbers were also in focus but had a muted impact on the markets.

In December, retail sales fell by 0.7%, following a 1.4% slide in November. Economists had forecast a more modest 0.2% decline. Core retail sales fell by a heavier 1.4%, following a 1.3% decline in November. Economists had forecast a 0.1% fall.

Consumer sentiment waned in January, according to prelim figures. The Michigan Consumer Sentiment Index fell from 80.7 to 79.2.

The Market Movers

For the DAX: It was a mixed day for the auto sector on Friday. Volkswagen rose by 0.42% to buck the trend on the day. Continental and Daimler slid by 3.14% and by 3.08% respectively, while BMW saw more modest loss of 0.86%.

It was also a bearish day for the banks. Deutsche Bank slid by 3.35%, with Commerzbank falling by 1.32%.

From the CAC, it was a bearish day for the banks. BNP Paribas fell by 1.54%, with Credit Agricole and Soc Gen sliding by 2.35% and by 2.41% respectively.

It was also a bearish day for the French auto sector. Peugeot and Renault slid by 4.21% and by 3.84% respectively.

Air France-KLM bucked the general trend, rising by 0.32%, while Airbus SE ended the day with a modest 0.75% loss.

On the VIX Index

It was a 2nd consecutive day in the green for the VIX  on Friday, marking just the 4th daily gain in 12 sessions. Following a 4.68% gain from Thursday, the VIX rose by 4.69% to end the day at 24.34.

The NASDAQ and the S&P500 fell by 0.87% and by 0.72% respectively, with the Dow declining by 0.57%.

Another set of disappointing economic data and jump in COVID-19 related deaths and low vaccination rates weighed.

The markets also responded to the final details of the next U.S stimulus package, the anticipation of which had driven the majors to fresh record highs.

VIX 180121 Daily Chart

The Day Ahead

It’s quiet day ahead on the economic calendar. Finalized December inflation figures for Italy are due out early in the session.

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

With the U.S markets closed, the lack of distraction will likely leave the EUR in the hands of COVID-19 news updates.

Ahead of the European session, 4th quarter GDP figures and December industrial production and retail sales figures from China will set the tone.

The Futures

In the futures markets, at the time of writing, the Dow Mini was down by 25 points, with the DAX down by 20 points.

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

European Equities: A Week in Review – 15/01/21

The Majors

It was a bearish week for the European majors, which partially reversed gains from the first week of the year.

The DAX30 and CAC40 slid by 1.86% and by 1.67% respectively, with EuroStoxx600 falling by 0.81%.

For the EuroStoxx600, a run of 4 consecutive weekly gains came to an end.

Concerns over the effect of extended lockdown measures in Eurozone tempered market optimism towards the economic recovery.

Low vaccination rates and a continued surge in new COVID-19 cases suggested that any economic recovery would be on hold near-term.

While economic data from China had provided support to the European majors, data from the U.S added to the bearish sentiment.

The Stats

It was a relatively quiet week on the economic calendar.

Industrial and trade data for the Eurozone were in focus along with full year GDP numbers for Germany.

The German economy contracted by 5.0% in 2020, following 0.6% growth in 2019. Not only did the contraction bring to an end a run of 10 consecutive years of growth but also ended a run of 14 continuous years of upward trend in employment. In 2020, employment fell by 1.1%.

From the Eurozone, industrial production rose by 2.5% in November, following a 2.3% increase in October.

The Eurozone’s trade surplus narrowed from €30.0bn to €25.8bn in November, however, reflecting the impact of the COVID-19 pandemic on trade terms late in the year.

Finalized December inflation figures for France and Spain released at the end of the week had a muted impact on the majors, however.

On the monetary policy front, the ECB monetary policy meeting minutes provided few surprises.

ECB President Lagarde was optimistic towards the economic outlook mid-week, however. The ECB President stood by the ECB’s current growth forecast for 2021, noting that forecasts had been made with a 1st quarter lockdown factored in.

From the U.S

Economic data was also on the busier side.

Key stats included JOLTs job openings, inflation, jobless claims, retail sales, and consumer sentiment figures.

While the annual rate of core inflation held steady at 1.6% in December, jobless claims figures disappointed at the start of the year.

In the week ending 8th January, initial jobless claims had jumped from a previous week 784k to 965k.

In December, core retail sales slid by 1.4%, with retail sales falling by 0.7%. Both were worse than forecasted. In November, core retail sales had fallen by 1.3%, with retail sales down by 1.4%.

January prelim consumer sentiment also disappointed, with a decline from 80.7 to 79.2.

Other stats from the U.S included industrial production, NY Empire State Manufacturing, and business inventory numbers. These stats had a muted impact on the European majors on Friday, however.

A pickup in industrial production in December failed to impress.

On the monetary policy front, FED Chair Powell assured the markets that there are no plans to hike rates anytime soon. Also positive for the majors was Powell’s view that the FED would not begin tapering its bond purchases.

From elsewhere, economic data from China also supported.

While inflationary pressures picked up at the end of the year, it was December trade figures that impressed in the week.

China recorded a 19.1% jump in exports following a 21.1% surge in November. Imports rose by a more modest but still sizeable 6.5%, suggesting a positive outlook for demand.

The Market Movers

From the DAX, it was a mixed week for the auto sector. Volkswagen rallied by 3.02% to buck the trend. Daimler slid by 2.83%, with BMW and Continental falling by a further 1.85% and by 1.47% respectively.

It was a bullish week for the banking sector, however. Deutsche Bank rose by 1.05%, with Commerzbank rallying 3.66%.

From the CAC, it was a bearish week for the banks. Credit Agricole slid by 4.59%, with BNP Paribas and Soc Gen falling by 1.86% and by 2.53% respectively.

It was also a bearish week for the French auto sector. Peugeot fell by 1.04%, with Renault tumbling by 7.01%.

Air France-KLM reversed last week’s 5.02% slide, rising by 4.46%, with Airbus ending the week up by 2.72%

On the VIX Index

It was back into the green for the VIX. In the week ending 15th January, the VIX rising by 12.89%. Reversing a 5.23% fall from the previous week, the VIX ended the week at 24.34.

For the week, NASDAQ and S&P500 slid by 1.54% and by 1.48% respectively, with the Dow falling by 0.91%.

Disappointing economic data and market reaction to the Biden stimulus package left the majors in the red for the week.

A continued rise in new COVID-19 cases and low vaccination rates in the U.S added to the market angst in the week.

VIX 160121 Weekly Chart

The Week Ahead

It’s a particularly busy week ahead on the economic calendar. Key stats include December ZEW Economic Sentiment figures for Germany and the Eurozone and member state January prelim private sector PMIs.

PMIs for France, Germany, and the Eurozone are due out on Friday. Expect Germany’s manufacturing and the Eurozone’s composite to draw greatest interest.

With lockdown measures in place across France and Germany at the end of the year, the markets will be looking to assess the damage. Service sector activity will likely take the brunt of it at the turn of the year.

On the monetary policy front, the ECB is in action on Thursday, though no moves are anticipated following Lagarde’s view on the economy.

From the U.S, weekly jobless claims figures on Thursday and private sector PMI figures on Friday will also influence.

Out of China, expect 4th quarter GDP figures and December industrial production, retail sales, and employment figures to set the tone on Monday.

Away from the economic calendar, COVID-19 news and chatter from Capitol Hill will continue to remain in focus. Inauguration Day is just around the corner and the markets will be looking for Biden’s near-term goals.

European Equities: Economic Data, U.S Stimulus, and Corporate Earnings in Focus

Economic Calendar:

Friday, 15th January

French CPI (MoM) (Dec) Final

French HICP (MoM) (Dec) Final

Spanish CPI (YoY) (Dec) Final

Spanish HICP (YoY) (Dec) Final

Eurozone Trade Balance (Nov)

The Majors

It was another bullish day for the European majors on Thursday, with the EuroStoxx600 rising by 0.72% to lead the way. The CAC40 and the DAX30 weren’t far behind, with gains of 0.33% and 0.35% respectively.

Concerns over a continued surge in new COVID-19 cases across the EU and beyond took a back seat on the day.

Impressive trade data from China and the hope of a sizeable U.S stimulus package supported the European majors. In December, China reported a 19.1% surge in exports, with imports rising by 6.5%.

While the EuroStoxx600 rose for a 3rd consecutive day, political uncertainty in Italy and extended lockdown measures limited the upside, however.

The Stats

It was a quiet day on the economic calendar. 4th quarter GDP numbers from Germany were in focus in the early part of the session.

In 2020, the German economy contracted by 5%, following growth of just 0.6% from 2019 with interest.

According to Destatis,

  • The contraction in 2020 brought to an end a 10-year period of economic growth for Germany.
  • Compared with the Global Financial Crisis slump of 5.7%, the contraction was only marginally less severe.
  • All economic sectors felt the impact of the COVID-19 pandemic.
  • In industry excluding construction contracted by 9.7% compared with 2019.
  • Household consumption fell by 6.0%, while government final consumption expenditure rose by 3.4%.
  • Gross fixed capital formation fell by 3.5%, with gross fixed capital formation in machinery and equipment sliding by 12.5%.
  • A continuous 14-year upward trend in employment also came to an end in 2020, with employment falling by 1.1%.

On the monetary policy front, the ECB monetary policy meeting minutes provided few surprises, however.

From the U.S

It was a quieter day on the economic calendar. The weekly jobless claims figures were in focus late in the session.

Import and export price figures for December were also released but had a muted impact on the European majors.

In the week ending 8th January, initial jobless claims jumped from 784k to 965k. Economists had forecast an increase to 795k.

The Market Movers

For the DAX: It was a bullish day for the auto sector on Thursday. Volkswagen rallied by 3.92% to lead the way, with Continental rising by 1.76%. BMW and Daimler saw more modest gains of 1.17% and 1.35% respectively.

It was also a bullish day for the banks. Deutsche Bank rallied by 3.59%, with Commerzbank rising by 1.95%.

From the CAC, it was another mixed day for the banks. BNP Paribas and Soc Gen rose by 0.23% and by 0.63%, while Credit Agricole slid by 1.74%.

It was also a mixed day for the French auto sector. Peugeot rose by 2.42%, while Renault fell by 1.07%.

Air France-KLM rallied by 3.01%, with Airbus SE seeing a 4.65% gain on the day.

On the VIX Index

It was back into the green for the VIX  on Thursday, to mark just the 3rd daily gain in 11 sessions. Reversing a 4.80% gain from Wednesday, the VIX rose by 4.68% to end the day at 23.25.

The NASDAQ and the Dow slipped by 0.12% and by 0.22% respectively, with the S&P500 falling by 0.38%.

Disappointing labor market figures pinned the U.S majors back on Thursday. Expectations of a $1.9tn spending package, however, limited the downside on the day.

Also on the day, FED Chair Powell reassured the markets that there would be no rate hike any time soon or any tapering of its bond purchases.

VIX 150121 Daily Chart

The Day Ahead

It’s relatively busy day ahead on the economic calendar. Key stats include Eurozone trade data and finalized inflation figures from France and Spain.

Expect finalized December inflation figures to have a muted impact on the majors.

From the U.S, retail sales, industrial production, and consumer sentiment figures will influence late in the session.

Away from the economic calendar, COVID-19 news and vaccination rates and Italian politics will remain in focus along with chatter from Capitol Hill.

Corporate earnings will also garner interest later today, with Citigroup, JPMorgan Chase, and Wells Fargo scheduled to release earnings.

The Futures

In the futures markets, at the time of writing, the Dow Mini was down by 26 points, with the DAX down by 24 points.

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

European Equities: ECB Policy Meeting Minutes, U.S Stats, and COVID-19 in Focus

Economic Calendar:

Thursday, 14th January

ECB Monetary Policy Meeting Minutes

Friday, 15th January

French CPI (MoM) (Dec) Final

French HICP (MoM) (Dec) Final

Spanish CPI (YoY) (Dec) Final

Spanish HICP (YoY) (Dec) Final

Eurozone Trade Balance (Nov)

The Majors

It was a relatively bullish day for the European majors on Wednesday. The CAC40 rose by 0.21%, with the DAX30 and the EuroStoxx600 both gaining 0.11%.

Concerns over a continued surge in new COVID-19 cases across the EU and beyond pegged the majors back mid-week.

A continued rise and low vaccination rate across the EU, in particularly, raised the threat of an extended lockdown period.

An extended lockdown period would further delay any economic recovery. The negative sentiment weighed on bank stocks, as well as the auto sector and travel stocks.

In spite of the doom and gloom, Carrefour delivered the upside for the CAC40, with a 13.42% jump on the day. News of a possible takeover by Alimentation Couche-Tard led to the breakout.

The Stats

It was a relatively quiet day on the economic calendar. Industrial production figures for the Eurozone were out in the early part of the European session.

In November, industrial production rose by 2.5%, month-on-month, following a 2.3% increase in October.

According to Eurostat,

  • Production of capital goods rose by 7.0% and intermediate goods by 1.5%.
  • By contrast, production of durable consumer goods fell by 1.2%, non-durable consumer goods by 1.7%, and energy by 3.9%.
  • Ireland registered a 52.8% surge in production to lead the way, with Greece recording a 6.3% rise in production.
  • Portugal and Belgium saw production fall by 5.1% and by 3.5% to lead the way down, however.
  • Year-on-year, industrial production fell by 0.6%.

On the monetary policy front, ECB President Lagarde was also in focus mid-week. Lagarde stated that the ECB will be paying close attention to the FX impact on prices. The ECB President was careful to point out, however, that the ECB will monitor and not target FX movements.

From the U.S

It was a busier day on the economic calendar. December inflation figures were in focus.

Core consumer prices rose by 0.1% in December, month-on-month, following a 0.2% increase in November. The annual rate of core inflation held steady at 1.6% in December.

Month-on-month, consumer prices rose by 0.4%, following a 0.2% increase in November.

The stats were in line with economic forecasts.

The Market Movers

For the DAX: It was a bearish day for the auto sector on Wednesday. BMW and Daimler fell by 1.32% and by 1.38% respectively. Continental and Volkswagen saw relatively modest losses of 0.50% and 0.28% respectively.

It was also a bearish day for the banks. Deutsche Bank and Commerzbank ended the day down by 0.46% and by 0.49% respectively.

From the CAC, it was a mixed day for the banks. BNP Paribas and Credit Agricole fell by 0.69% and by 0.52% respectively, while Soc Gen rose by 0.07%.

It was a bearish day for the French auto sector, however. Peugeot fell by 0.62%, with Renault sliding by 2.93%.

Air France-KLM fell by 0.81%, with Airbus SE ending the day down by 0.94%.

On the VIX Index

It was a 2nd consecutive day in the red for the VIX on Wednesday, marking an 8th day in the red from 10 sessions. Following on from a 3.11% decline on Tuesday, the VIX fell by 4.8% to end the day at 22.21.

The NASDAQ and the S&P500 rose by 0.43% and by 0.23% respectively, while the Dow slipped by 0.03%.

VIX 140121 Daily Chart

The Day Ahead

It’s another relatively quiet day ahead on the economic calendar. Full-year GDP figures are due out of Germany.

The markets are expecting dire numbers, however, which should limit the impact on the majors. On Wednesday, ECB President stood by the ECB forecasts for 2020 and 2021.

Later in the day, the ECB Monetary Policy meeting minutes will draw some attention.

From the U.S, the weekly jobless claims figures will provide direction later in the session.

Ahead of the European session, trade data from China will set the tone.

Away from the economic calendar, COVID-19 news and vaccination rates will remain a key driver along with chatter from Capitol Hill.

From Italy, another government coalition in crisis will also be a concern amidst the COVID-19 pandemic.

The Futures

In the futures markets, at the time of writing, the Dow Mini was up by 77 points, with the DAX up by 38 points.

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

European Equities: Eurozone Industrial Production and COVID-19 in Focus

Economic Calendar:

Wednesday, 13th January

ECB President Lagarde Speaks

Eurozone Industrial Production (MoM) (Nov)

Thursday, 14th January

ECB Monetary Policy Meeting Minutes

Friday, 15th January

French CPI (MoM) (Dec) Final

French HICP (MoM) (Dec) Final

Spanish CPI (YoY) (Dec) Final

Spanish HICP (YoY) (Dec) Final

Eurozone Trade Balance (Nov)

The Majors

It was a mixed day for the European majors on Tuesday, with the DAX30 and CAC40 falling by 0.08% and by 0.20% respectively. The EuroStoxx600 recovered from early losses to the back day up by 0.05%.

Concerns over the continued rise in new COVID-19 cases and low vaccination rates across the Eurozone pinned back the majors.

Hopes of an economic recovery were evident, however, with autos, banks, and travel stocks amongst the front runners.

The Stats

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

From the U.S

It was a quiet day on the economic calendar. JOLTs job openings for November were in focus late in the European session.

In November, JOLTs job openings fell from 6.632m to 6.527m. With the U.S struggling to bring the COVID-19 pandemic under control, however, the numbers had a muted impact on the European majors.

The Market Movers

For the DAX: It was a bullish day for the auto sector on Tuesday. Continental rallied by 3.19% to lead the way, with BMW and Daimler gaining 1.25% and 1.28% respectively. Volkswagen saw a more modest 0.10% rise on the day.

It was also a bullish day for the banks. Deutsche Bank rose by 1.00, with Commerzbank gaining 1.43%.

From the CAC, it was a bullish day for the banks. BNP Paribas and Soc Gen rose by 0.80% and by 0.57% respectively, with Credit Agricole gaining 1.28%.

It was also a bullish day for the French auto sector. Peugeot rallied by 3.13%, with Renault rising by 1.74%.

Air France-KLM rallied by 3.57%, with Airbus SE eking out a 0.20% gain.

On the VIX Index

It was back into the red for the VIX on Tuesday, marking a 7th day in the red from 9 sessions. Partially reversing an 11.69% gain from Monday, the VIX fell by 3.11% to end the day at 23.33.

With economic data limited to JOLTs job openings, the U.S equity markets avoided another day in the red. Support came in spite of lingering concerns over the continued rise in new COVID-19 cases.

While hopes of significant stimulus remained positive for riskier assets, there was also some apprehension ahead of earnings season.

The NASDAQ rose by 0.28%, with the Dow and the S&P500 ending the day with gains of 0.19% and by 0.04% respectively.

VIX 130121 Daily Chart

The Day Ahead

It’s a relatively quiet day ahead on the economic calendar. Industrial production figures for the Eurozone are due out in the early part of the session.

Following impressive figures from Germany last week and a pickup in Manufacturing sector activity, the numbers should have a limited impact on the majors.

From the U.S, inflation figures for December are due out. Barring particularly dire numbers, however, the stats should also have limited impact on the majors.

Progress towards Eurozone-wide vaccinations and hopes of more fiscal stimulus support from the U.S should leave the markets in forgiving mood.

On the monetary policy front, however, ECB President Lagarde could move the dial in a scheduled speech early in the session.

The Futures

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

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

European Equities: Futures Point Northwards with no Economic Data to Influence

Economic Calendar:

Wednesday, 13th January

ECB President Lagarde Speaks

Eurozone Industrial Production (MoM) (Nov)

Thursday, 14th January

ECB Monetary Policy Meeting Minutes

Friday, 15th January

French CPI (MoM) (Dec) Final

French HICP (MoM) (Dec) Final

Spanish CPI (YoY) (Dec) Final

Spanish HICP (YoY) (Dec) Final

Eurozone Trade Balance (Nov)

The Majors

It was a bearish start to the week for the European majors, with the DAX30 falling by 0.80% to lead the way down. The CAC40 and EuroStoxx600 weren’t far behind, with losses of 0.78% and 0.67% respectively.

A lack of economic data left COVID-19 in focus.

Across the EU, low vaccination rates and a spike in new COVID-19 cases, in spite of containment measures, weighed.

In China, reports of a spike in new COVID-19 cases added to the market angst on the day.

The Stats

It was a particularly quiet day on the economic calendar. There were no material stats to provide the majors with direction at the start of the week.

From the U.S

It was also a particularly quiet day on the economic calendar, with no material stats to influence following last week’s data dump.

The Market Movers

For the DAX: It was a bearish day for the auto sector on Monday. BMW and Continental slid by 2.06% and by 2.64% respectively. Daimler and Volkswagen saw more modest losses of 0.95% and 1.10% respectively.

It was a bullish day for the banks, however. Deutsche Bank rose by 0.42%, with Commerzbank rallying by 2.12%.

From the CAC, it was a bearish day for the banks. BNP Paribas fell by 0.67%, with Credit Agricole and Soc Gen declining by 1.36% and by 1.35% respectively.

It was also a bearish day for the French auto sector. Peugeot and Renault ended the day with losses of 1.59% and 1.02% respectively.

Air France-KLM fell by 1.52%, with Airbus SE ending the day down by 0.36%.

On the VIX Index

A run of 4 consecutive days in the red came to an end for the VIX on Monday, marking just a 2nd day in the green from 8 sessions. Reversing a 3.62% fall from Friday, the VIX rose by 11.69% to end the day at 24.08.

Market reaction to the continued rise in COVID-19 cases and low vaccination rates weighed on riskier assets at the start of the week.

The NASDAQ slid by 1.25%, with the Dow and the S&P500 falling by 0.29% and by 0.66% respectively.

VIX 120121 Daily Chart

The Day Ahead

It’s another quiet busy day ahead on the economic calendar, with no material stats due out of the Eurozone to provide direction.

From the U.S, JOLTs job openings are due out. Barring particularly dire numbers, however, the numbers will likely have a muted impact on the European majors.

The markets are in forgiving mood on the data front, with COVID-19 vaccines and fiscal stimulus expected to reboot the economy.

The lack of stats will, therefore, leave the majors in the hands of Capitol Hill and COVID-19 vaccine news.

The Futures

In the futures markets, at the time of writing, the Dow Mini was up by 43 points, with the DAX up by 51 points.

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

European Equities: Capitol Hill and U.S Stimulus and COVID-19 in Focus

Economic Calendar:

Monday, 11th January

ECB President Lagarde Speaks

Wednesday, 13th January

ECB President Lagarde Speaks

Eurozone Industrial Production (MoM) (Nov)

Thursday, 14th January

ECB Monetary Policy Meeting Minutes

Friday, 15th January

French CPI (MoM) (Dec) Final

French HICP (MoM) (Dec) Final

Spanish CPI (YoY) (Dec) Final

Spanish HICP (YoY) (Dec) Final

Eurozone Trade Balance (Nov)

The Majors

It was a bullish end to the week for the European majors on Friday. The CAC40 and EuroStoxx600 rose by 0.66% and by 0.65% respectively, with the DAX30 gaining 0.58%.

Economic data from Germany coupled with hopes of further U.S stimulus supported demand for riskier assets.

While Germany’s trade surplus narrowed, both imports and exports rose by more than expected in November.

Coupled with a rise in factory orders and industrial production and a pickup in manufacturing sector activity, the stats painted a positive outlook.

From the U.S, disappointing economic data had a muted impact on the majors.

The Stats

It was a relatively busy day on the economic calendar. German industrial production and trade figures, together with French consumer spending were in focus.

In November, industrial production rose by 0.9%, following a 3.4% jump in October. Economists had forecast a 0.7% increase.

According to Destatis,

  • Production in industry excluding energy and construction rose by 1.2%.
  • Within industry, the production of intermediate goods increased by 2.4%, with the production of capital goods up by 1.3%.
  • The production of consumer goods fell by 1.7%.
  • Outside of industry, energy production was down by 3.9%, while the production in construction increased by 1.4%.
  • Compared with February 2020, production in November was 3.8% lower.

Germany’s trade surplus narrowed from €18.2bn to €16.4bn in November.

According to Destatis,

  • Exports were up 2.2%, and imports 4.7% on October 2020.
  • Germany exported goods to the value of €111.7bn and imported goods to the value of €94.6bn compared with Nov-19.
  • Compared with Nov-19, exports declined by 1.3%, and imports by 0.1%.
  • Exports to EU countries fell by 1.7%, while imports grew by 2.6%, compared with Nov-19.
  • To Euro area countries, exports fell by 2.2%, while imports from Euro countries rose by 0.5%.
  • Exports to non-EU countries fell by 0.9% compared with Nov-19, with imports sliding by 3.2%.
  • Compared with Nov-19, exports to the UK increased by 6.6%, while imports from the UK slid by 9.7%.

From France, consumer spending disappointed, with spending tumbling by 18.9%. In October, spending had risen by 3.9%.

According to Insee.fr,

  • Purchases of manufactured goods slumped by 30.1%.
  • Spending on textile-clothing more than halved. A 53% fall was attributed to a slump in spending on clothing & footwear.
  • Energy expenditure slid by 19.2%, with food consumption falling by a more modest 5.8%.
  • Compared with November 2019, household consumption expenditure on goods was 17.1% lower.

From the Eurozone, unemployment figures for the Eurozone provided support, with the unemployment rate falling from 8.4% to 8.3%.

According to Eurostat, the Eurozone’s unemployment rate had stood at 7.4% in November 2019.

From the U.S

It was a busy day on the economic calendar, with nonfarm payrolls in focus.

In December, nonfarm payrolls fell by 140K in December, partially reversing a 336k rise from November.

In spite of the decline, the unemployment rate held steady at 6.7%, with the participation rate holding steady at 61.5%.

A sharp pickup in hourly earnings was of little comfort at the end of the year. In December, average hourly earnings rose by 0.8%, following a 0.3% increase in November.

The Market Movers

For the DAX: It was a mixed day for the auto sector on Friday. BMW and Volkswagen fell by 1.11% and by 1.28% respectively, with Daimler declining by 0.31%. Continental bucked the trend, however, rising by 0.93%.

It was also a mixed day for the banks. Deutsche Bank rose by 0.17%, while Commerzbank slid by 4.24%.

From the CAC, it was a bearish day for the banks. BNP Paribas and Soc Gen slid by 2.21% and by 2.01% respectively, with Credit Agricole declining by 0.74%.

It was also a bearish day for the French auto sector. Peugeot fell by 2.17%, with Renault sliding by 4.00%.

Air France-KLM fell by 1.0%, while Airbus SE bucked the trend, rising by 0.54%.

On the VIX Index

It was a 4th consecutive day in the red the VIX on Friday, marking a 6th day in the red from 7 sessions. Following on from a 10.77% slide on Thursday, the VIX fell by 3.62% to end the day at 21.56.

The NASDAQ rallied by 1.03%, with the Dow and the S&P500 rising by 0.18% and by 0.55% respectively.

VIX 110121 Daily Chart

The Day Ahead

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

There are also no material stats due out of the U.S to provide the majors with direction late in the session.

The lack of stats will leave the majors in the hands of COVID-19 news and updates from Capitol Hill.

While the Democrats look to oust President Trump, any chatter on further stimulus would support the majors.

On the monetary policy front, ECB President Lagarde is also scheduled to speak. Expect any forward guidance ahead of the monetary policy meeting minutes on Thursday to also influence.

The Futures

In the futures markets, at the time of writing, the Dow Mini was down by 113 points, while the DAX was up by 11 points.

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

European Equities: A Week in Review – 08/01/21

The Majors

It was a bullish start to the year for the European majors. In the week ending 8th January, the EuroStoxx600 rallied by 3.04%. The CAC40 and the DAX30 weren’t far behind, with gains of 2.80% and 2.41% respectively.

Early in the week, the EU’s approval of the Moderna Inc. vaccine delivered support to the European majors.

Adding to the upside in the week was expectations of more U.S fiscal stimulus to support the U.S economic recovery.

A “Blue Wave” will now allow Joe Biden and the incoming U.S administration to deliver stimulus unhindered. The Democrats won the Georgia run offs, taking control of the Senate.

The upside in the week came in spite of Germany extending its lockdown period and France considering a reintroduction of containment measures.

For the markets, the combination of COVID-19 vaccinations and U.S stimulus expectations was good enough.

The Stats

It was a busy week on the economic calendar.

The private sector, French consumer spending, and the German economy were in the spotlight in the week.

The Private sector

In December, the manufacturing sector saw a pickup in activity, driven by Germany that saw its PMI hit a 34-month high 58.3. The Eurozone’s manufacturing PMI increased from 53.8 to 55.2 in December, down marginally from a prelim 55.5.

New export sales saw a marked increase at the end of the year. painting a rosier picture for 2021.

While the service sector continued to contract, the rate of contraction eased. The Eurozone’s services PMI rose from 41.7 to 46.4 in December, down from a prelim 47.3.

At composite level, the Eurozone’s PMI increased from 45.3 to 49.1, which was also down from a prelim 49.8.

Containment measures across the Eurozone continued to pin back service sector activity at the end of the year.

The German Economy

From Germany, trade. retail sales, unemployment, and factory order figures were also upbeat, supporting the majors.

In November, retail sales saw an unexpected 1.9% rise, following a 2.6% increase in October.

Unemployment figures also impressed, with unemployment falling by 37K in December, following a 40K slide in November.

Economists had forecasted retail sales to fall by 2% and for unemployment to rise by 10K.

Late in the week, factory orders jumped by 2.3% in November, versus a forecasted 1.2% decline. The upside came off the back of a 3.3% increase in October.

Industrial production figures also came in ahead of forecasts, with production up by 0.9%, following a 3.4% jump in October. Economists had forecast a 0.7% rise.

On the negative, however, was a narrowing in Germany’s trade surplus from €18.2bn to €16.4bn in November.

The narrowing resulted from a larger increase in imports than exports, rather than a slide in exports, however, suggesting strong demand.

Exports rose by 2.2%, with imports jumping by 4.7%.

The Rest

Also on the negative was French consumer spending figures. As a result of lockdown measures, spending tumbled by 18.9% in November. In the month prior, spending had risen by 3.9%.

Other stats in the week included December prelim inflation figures and retail sales and unemployment figures for the Eurozone.

These stats had a muted impact on the majors, however, as did the ECB’s Economic Bulletin.

From the U.S

Economic data was also on the busier side.

Private sector PMI and labor market numbers were the key drivers in the week.

In December, the ISM Manufacturing PMI rose from 57.6 to 60.7, with the Services PMI climbing from 55.9 to 57.2.

A 123k fall in nonfarm payrolls in December, according to the ADP failed to spook the markets ahead of the official government figures.

Jobless claims figures eased any major concerns over a further deterioration in labor market conditions. In the week ending 1st January, initial jobless claims slipped from 790k to 787k.

At the end of the week, nonfarm payrolls fell by 140K in December, partially reversing a 336k increase in November.

In spite of the fall, the unemployment rate held steady at 6.7%, with the participation rate holding steady at 61.5%.

Optimism towards the economic outlook, stemming from fiscal stimulus expectations and COVID-19 vaccinations muted the effects of the NFP figures.

On the monetary policy front, the FOMC meeting minutes had a muted impact on the majors, with U.S politics in the spotlight.

The Market Movers

From the DAX, it was a bearish week for the auto sector. Volkswagen slid by 3.63%, with BMW and Continental falling by 2.45% and by 1.77% respectively. Daimler saw a more modest 0.22% loss in the week.

It was a particularly bullish week for the banking sector, however. Deutsche Bank rallied by 6.48%, with Commerzbank gaining 3.80%.

From the CAC, it was a bullish week for the banks. BNP Paribas rallied by 5.06%, with Credit Agricole and Soc Gen rising by 3.39% and by 4.47% respectively.

It was a mixed week for the French auto sector, however. Peugeot fell by 1.30%, while Renault ended the week up by 2.46%.

Air France-KLM reversed a 5.28% gain with a 5.02% slide, while Airbus ended the week up by 0.36%

On the VIX Index

It was a 3rd week in the red from 4 for the VIX. In the week ending 8th January, the VIX fell by 5.23%. Reversing a 5.67% gain from the previous week, the VIX ended the week at 21.56.

For the week, NASDAQ rallied by 2.43%, with the Dow and S&P500 gaining 1.61% and 1.83% respectively.

The U.S majors hit record highs in the week, supported by expectations of substantial fiscal stimulus to support an economic recovery.

Mid-week, the Democrats won the Senate race, giving them control of both houses.

Following chaos on Capitol Hill on Wednesday, Biden was certified as the U.S President, with Trump stating that there would be an orderly handover on Inauguration Day.

VIX 080121 Weekly Chart

The Week Ahead

It’s a particularly quiet week ahead on the economic calendar. Key stats include November industrial production and trade data for the Eurozone.

Barring particularly dire trade figures, expect the industrial production figures to have the greatest influence.

Finalized December inflation figures for France and Spain are also due out but should have a muted impact on the majors.

From the U.S, inflation, the weekly jobless claims figures, retail sales and consumer sentiment figures will influence in the week.

Out of China, expect trade data to also provide direction.

Away from the economic calendar, COVID-19 news and chatter from Capitol Hill will continue to remain in focus.

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

Economic Calendar:

Friday, 8th January

German Industrial Production (MoM) (Nov)

German Trade Balance (Nov)

French Consumer Spending (MoM) (Nov)

Eurozone Unemployment Rate (Nov)

The Majors

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

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

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

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

The Stats

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

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

Germany

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

According to Destatis,

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

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

The Eurozone

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

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

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

From the U.S

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

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

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

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

The Market Movers

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

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

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

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

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

On the VIX Index

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

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

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

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

VIX 080121 Daily Chart

The Day Ahead

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

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

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

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

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

The Futures

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

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

Markets Surge Despite Unprecedented Violence at U.S. Capitol

In a news-filled day, the Dow Jones hit an all-time high on Wednesday (Jan. 6), despite unprecedented unrest taking place in Washington D.C.

News Recap

  • The Dow climbed 438 points or 1.4% and briefly rose more than 600 points earlier in the day. The S&P 500 also gained 0.6% and hit an intraday record, while the Nasdaq fell 0.6%. The small-cap Russell 2000 surged by nearly 4%.
  • The day began with investors focused on the Georgia U.S. Senate special election runoff . Democrat Raphael Warnock defeated incumbent Republican Kelly Loeffler, with other Democrat Jon Ossoff announced as the winner over incumbent Republican Sen. David Perdue later in the day.
  • With a Democrat sweep in Georgia, the party now has control of the Senate. Although it is a 50-50 split (with two independents) in the Senate, both Democrats win, they have full control because Vice President-elect Kamala Harris will serve as the tiebreaker vote.
  • Many believe that because President-elect Biden, a Democrat, has a House and Senate under Democrat control, he could more easily pass higher taxes and progressive policies that may hurt the market. On the other hand, others believe that this Democrat sweep could bring into effect a larger and quicker stimulus relief bill.
  • The real news of the day was what happened at the U.S. Capitol building. After President Trump (and his family) led a “Stop the Steal” rally in Washington, D.C. to protest Congress’ certification of Joe Biden as the next president, angry MAGA supporters did the unthinkable and stormed the Capitol.
  • Wednesday (Jan. 6) was the first time since 1814 that the Capitol building was physically breached by hostile actors.
  • The invasion of the Capitol occurred after Vice President Mike Pence rejected President Trump’s calls to block Joe Biden’s election confirmation. Shortly after, the Capitol went into full lockdown.
  • Later that night, the Capitol was secured and Congress reconvened to officially certify Biden as the president. The CBOE Volatility Index (VIX) moved higher due to the unrest at the Capitol.
  • Caterpillar (CAT) surged 5.5%, while big banks such as JPMorgan Chase (JPM) and Bank of America (BAC) gained 4.7% and 6.3%, respectively. Other names and sectors that could be aided by Biden’s agenda rose as well such as the Invesco Solar ETF (TAN) which boomed 8.4%.
  • Tech lagged on the day due to fears of higher taxes and higher stimulus potential. Facebook (FB) and Amazon (AMZN) each fell more than 2%, while Netflix (NFLX) dipped 3.9%.
  • The 10-year Treasury note yield topped 1% for the first time since March.

What a newsworthy day Wednesday (Jan. 6) was. What started as a day focused on Senate runoff elections with the balance of Senate power at stake, ended with President-elect Biden being officially confirmed as the next president. But in between? A mob took over the capitol building! Did you ever think you would read that sentence in your lifetime?

Love him or hate him, President Trump is an eccentric character to put it lightly. Scorned, and still convinced that he won the election, Trump and his bruised ego whipped his supporters into a frenzy during a “Stop the Steal” rally and encouraged them to march towards the Capitol and make their voices heard. Somehow the protest turned into a storming of the Capitol after Vice President Mike Pence refused to overturn the election. Pence was later ushered out of the Senate and the Capitol went into lockdown.

What’s truly shocking here is that the markets still went up! In fact, the Dow hit yet ANOTHER all-time high! Whether you like it or not, this has to give you some sort of faith in the resiliency of capitalism,

The results of the Georgia election can be credited for the market surge.

Although some sectors plummeted due to fears of higher taxes and stricter regulations, with full Democrat control of the Presidency, Senate, and House, there is clarity for one, and expectations of further spending and government stimulus.

Goldman Sachs expects another big stimulus package of around $600 billion . While this could be bad for the national debt and have long-term consequences, in the short-term, it could send the economy heating. Small-cap stocks surged as a result.

I still believe that there will be a short-term tug of war between good news and bad news. Many of these moves upwards or downwards are based on emotion and sentiment, and I believe there could be some serious volatility in the near-term. Although markets on Wednesday (Jan. 6) may have been overly excited from the “Blue Wave” thanks to Georgia, consider this: the Capitol was invaded and the pandemic is still wreaking havoc! Even though the markets gained and the 10-year treasury ticked above 1% for the first time since March, the VIX still rose which means that fear is on the rise.

There was no pullback to end 2020 as I anticipated, but I still believe that markets have overheated in the short-term, and that between now and the end of Q1 2020 a correction could happen.

Carl Icahn seemingly agrees with me, and told CNBC on Monday (Jan. 4) that “in my day I’ve seen a lot of wild rallies with a lot of mispriced stocks, but there is one thing they all have in common. Eventually they hit a wall and go into a major painful correction.”

National Securities’ chief market strategist Art Hogan also believes that we could see a 5%-8% pullback as early as this month.

I believe though that corrections are healthy and could be a good thing. Corrections happen way more often than people realize. Only twice in the last 38 years have we had years WITHOUT a correction (1995 and 2017). I believe we are overdue for one since there has not been one since the lows of March 2020. This is healthy market behavior and could be a very good buying opportunity for what I believe will be a great second half of the year.

While there will certainly be short-term bumps in the road, I love the outlook in the mid-term and long-term once vaccines become more widely available. The pandemic is awful right now, and these new infectious strains out of the U.K. and South Africa are quite concerning. But despite this, I believe the positive manufacturing data released on Tuesday (Jan. 5) is a step in the right direction, especially considering all the restrictions that most countries are living through.

The consensus is that 2021 could be a strong year for stocks. According to a CNBC survey which polled more than 100 chief investment officers and portfolio managers, two-thirds of respondents said the Dow Jones will most likely finish 2021 at 35,000, while five percent also said that the index could climb to 40,000.

Therefore, to sum it up:

While there is long-term optimism, there are short-term concerns. A short-term correction between now and Q1 2021 is very possible. But I do not believe, with conviction, that a correction above ~20% leading to a bear market will happen.

Can Small-caps Own 2021?

Small-caps are the comeback darlings of the week. Although I believed that the Russell 2000’s record-setting run since the start of November was coming to an end, it has rallied over 5% in the last two trading days. Thanks to a Democrat sweep in Georgia and hopes of further economic stimulus, small-cap stocks have climbed back towards record highs.

I love small-cap stocks in the long-term, especially as the world reopens. A Democrat-dominated Congress could help these stocks too. But I believe that in the short-term, the index, by any measurement, has simply overheated. Before Jan. 4, the RSI for the I WM Russell 2000 ETF was at an astronomical 74.54. I called a pullback happening in the short-term due to this RSI, and it happened. Well now the RSI is back above 72, and I believe that a bigger correction in the near-term could be imminent.

Stocks simply just don’t always go up in a straight line, and that’s what the Russell 2000 has essentially been between November and December.

What this also comes down to is that small-caps are more sensitive to the news – good or bad. I believe that vaccine gains have possibly been baked in by now. There could be another near-term pop due to hopes of further stimulus, but I believe that it’s likely possible that small-caps in the near-term could trade sideways before an eventual larger pullback.

I truthfully hope small-caps decline a minimum of 10% before jumping back in for long-term buying opportunities.

SELL and take Wednesday’s (Jan. 6) profits if you can- but do not fully exit positions .

If there is a pullback, this is a STRONG BUY for the long-term recovery.

Thank you for reading today’s free analysis. I encourage you to sign up for our daily newsletter – it’s absolutely free and if you don’t like it, you can unsubscribe with just 2 clicks. If you sign up today, you’ll also get 7 days of free access to the premium daily Stock Trading Alerts as well as our other Alerts. Sign up for the free newsletter today!

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

Thank you.

Matthew Levy, CFA
Stock Trading Strategist
Sunshine Profits: Effective Investment through Diligence & Care

* * * * *

All essays, research, and information found above represent analyses and opinions of Matthew Levy, CFA and Sunshine Profits’ associates only. As such, it may prove wrong and be subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Matthew Levy, CFA, and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Levy is not a Registered Securities Advisor. By reading Matthew Levy, CFA’s reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading, and speculation in any financial markets may involve high risk of loss. Matthew Levy, CFA, Sunshine Profits’ employees, and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.

 

European Equities: Economic Data, the Democratic Victory, and News from Capitol Hill in Focus

Economic Calendar:

Thursday, 7th January

German Factory Orders (MoM) (Nov)

German IHS Markit Construction PMI (Dec)

Italian CPI (MoM) (Dec)

Eurozone CPI (YoY) (Dec)

Eurozone Retail Sales (MoM) (Nov)

Friday, 8th January

German Industrial Production (MoM) (Nov)

German Trade Balance (Nov)

French Consumer Spending (MoM) (Nov)

Eurozone Unemployment Rate (Nov)

The Majors

It was a particularly bullish day for the European majors, which bounced back from Tuesday’s pullback.

The DAX30 rallied by 1.76% to lead the way, with the CAC40 and EuroStoxx600 gaining 1.39% and 1.36% respectively.

An EMA announcement of the recommendation for approval of the Moderna Inc. COVID-19 virus supported the majors. News of Germany extending its lockdown was muted by the vaccine news, in spite of France also facing the possibility of another lockdown.

From Capitol Hill, the Democrats looked set to take control of the Senate, raising the prospects of more fiscal stimulus, which also supported the upside.

The Stats

It was a busy day on the economic calendar, with the private sector PMI and inflation figures in focus.

Key stats included December service sector and composite PMI figures for Italy and Spain. Finalized PMIs from France, Germany, and the Eurozone were also in focus.

Italy’s services PMI rose from 39.4 to 39.7 in December, versus a forecasted rise to 45.3. In November, the PMI had tumbled from 46.7 to 39.4.

From Spain, the services PMI increased from 39.5 to 48.0, versus a forecasted rise to 45.0. In November, the services PMI had fallen from 41.4 to 39.5.

France’s services PMI came in at 49.1, which was down from a prelim 49.2, while up from a November 38.8.

In December, Germany’s PMI rose from 46.0 to 47.0, which was down from a prelim 47.7.

For the Eurozone, the services PMI came in at 46.4, which was down from a prelim 47.3. In November, the PMI had risen from 46.9 to 41.7.

According to the December survey,

  • The Composite PMI rose from 45.3 to 49.1 in December, revised down from a prelim 49.8.
  • Services remained a drag on private sector output, with activity falling for a 4th consecutive month.
  • Manufacturing sector activity, by contrast, expanded for a 6th consecutive month.
  • Ireland sat at the top of the table, with a 4-month high composite PMI of 53.4.
  • Germany ranked 2nd, with a 2-month high composite PMI of 52.0.
  • Italy sat at the bottom of the table, with a 2-month high composite of 43.0.

From the U.S

It was a busy day on the economic calendar, Finalized service and composite figures were in focus along with ADP nonfarm and factory order numbers late in the European session. The stats were skewed to the negative.

ADP nonfarm employment change figures were particularly disappointing. According to the ADP, nonfarm employment fell by 123K in December, partially reversing a 304k rise in November.

In December, the Services PMI came in at 54.8 which was down from a prelim 55.3 and a November 58.4. The composite PMI came in at 55.3 which was down from a prelim 55.7 and November’s 58.6.

On the positive, factory orders rose by 1.0% in November, following a 1.3% increase in October. Economists had forecast a 0.7% rise.

The Market Movers

For the DAX: It was a bearish day for the auto sector on Tuesday. Continental and Daimler slid by 1.41% and by 1.51% respectively, while BMW and Volkswagen saw relatively modest losses of 0.59% and 0.35% respectively.

It was a bullish day for the banks, however, supported the prospects of the Democratic control of the Senate. Deutsche Bank and Commerzbank rallied by 4.68% and by 5.63% respectively.

From the CAC, it was a bullish day for the banks. BNP Paribas and Credit Agricole saw gains of 5.52% and 4.05% respectively, with Soc Gen rallying by 6.83%.

It was another mixed day for the French auto sector, however. Peugeot slid by 2.68%, while Renault rose by 0.19%.

Air France-KLM found much-needed support, rallying by 3.44%, with Airbus SE ended the day up by 0.38%.

On the VIX Index

It was a 2nd consecutive day in the red the VIX on Wednesday, marking a 4th day in the red from 5 sessions. Following on from a 6.04% fall on Tuesday, the VIX fell by 1.07% to end the day at 25.07.

The Dow and the S&P500 rose by 1.44% and by 0.57% respectively, while the NASDAQ fell by 0.61%.

For the U.S, both the Dow and the S&P500 gave up some of their gains as protests over Trump’s election loss hit Capitol Hill.

The blue wave materialized, with the Democrats taking control of the Senate. Expectations of more fiscal stimulus drove demand for banks and industrials, while tech stocks struggled. Greater regulatory oversight for the tech sector is anticipated following the Democrat victory, which weighed on the NASDAQ.

VIX 070121 Daily Chart

The Day Ahead

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

Key stats include German factory orders and Eurozone retail sales figures for November.

German construction PMI and Italian and Eurozone inflation figures for December are also due out.

Barring particularly dire numbers, however, the stats are unlikely to provide the majors with direction.

From the U.S, trade data and the market’s preferred ISM services PMI figures are due out.

Expect the services PMI to have the greatest impact late in the European session.

Away from the economic calendar, the outcome of the Senate race and the violence on Capitol Hill will set the tone going into the open.

The Futures

In the futures markets, at the time of writing, the Dow Mini was up by 57 points.

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

European Equities: Service Sector PMIs, U.S Stats, and the Senate Race in Focus

Economic Calendar:

Wednesday, 6th January

Spanish Services PMI (Dec)

Italian Services PMI (Dec)

French Services PMI (Dec) Final

German Services PMI (Dec) Final

Eurozone Markit Composite PMI (Dec) Final

Eurozone Services PMI (Dec) Final

German CPI (MoM) (Dec)

Thursday, 7th January

German Factory Orders (MoM) (Nov)

German IHS Markit Construction PMI (Dec)

Italian CPI (MoM) (Dec)

Eurozone CPI (YoY) (Dec)

Eurozone Retail Sales (MoM) (Nov)

Friday, 8th January

German Industrial Production (MoM) (Nov)

German Trade Balance (Nov)

French Consumer Spending (MoM) (Nov)

Eurozone Unemployment Rate (Nov)

The Majors

It was a bearish day for the European majors on Tuesday, with the DAX30 falling by 0.55% to lead the way down. The CAC40 and the EuroStoxx600 saw relatively modest losses of 0.44% and 0.19% respectively.

Uncertainty ahead of the outcome to the Georgia runoff pegged the European majors back.

Concerns over the continued spike in new COVID-19 cases and the impact on the speed of the economic recovery also lingered.

COVID-19 vaccinations across Europe limited the downside, however, with the markets expecting the economy to rebound.

The Stats

It was a relatively busy day on the economic calendar, with the German economy in focus.

Key stats included November retail sales figures and December unemployment change numbers and unemployment rate.

In November, retail sales rose by 1.90%, month-on-month, following a 2.6% increase from October. Economists had forecast a 2% decline.

In December, unemployment decreased by 37k, following on from a 39k fall from November. The unemployment rate held steady at 6.1%. Economists had forecast a 10k rise in unemployment.

From the U.S

The market’s preferred ISM Manufacturing PMI figures were in focus late in the European session.

In December, the ISM Manufacturing PMI jumped from 57.5 to 60.7. Economists had forecast a fall to 56.5.

The Market Movers

For the DAX: It was a mixed day for the auto sector on Tuesday. Continental and Daimler rose by 0.17% and by 0.37% respectively, while BMW and Volkswagen fell by 0.88% and by 0.70% respectively.

It was a bullish day for the banks. Deutsche Bank rose by 1.44%, with Commerzbank rallying by 2.52%

From the CAC, it was a mixed day for the banks. BNP Paribas fell by 0.09%, while Credit Agricole and Soc Gen rose by 0.03% and by 0.11% respectively.

It was also a mixed day for the French auto sector. Peugeot slipped by 0.01%, while Renault rose by 0.81%.

Air France-KLM followed Monday’s 4.88% slide with a 0.88% decline, with Airbus SE ended the day down by 0.07%.

On the VIX Index

It was back in the red the VIX on Tuesday, marking a 3rd day in the red from 4 sessions. Partially reversing a 18.55% jump on Monday, the VIX fell by 6.04% to end the day at 25.34.

The NASDAQ and the S&P500 rose by 0.95% and by 0.71% respectively, with the Dow ending the day up by 0.55%.

VIX 060121 Daily Chart

The Day Ahead

It’s yet another busy day ahead on the economic calendar, with the Eurozone’s private sector back in focus.

December’s service sector and composite PMIs for Italy and Spain are due out later this morning. Finalized PMIs for France, Germany, and the Eurozone are also due out.

Barring any marked revisions from prelim figures, the focus will likely be on the Eurozone’s Composite PMI.

From the U.S, it’s also a busy day ahead on the economic calendar. ADP nonfarm employment change, factory orders, and the finalized Services PMI are due out late in the session.

The ADP figure will likely have the greatest influence on the European majors.

Away from the economic calendar, updates from Capitol Hill on the Georgia runoffs will continue to influence along with COVID-19 news.

The Futures

In the futures markets, at the time of writing, the Dow Mini was down by 20 points, while the DAX was up by 38 points.

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

European Equities: Economic Data, COVID-19, and the Georgia Runoff in Focus

Economic Calendar:

Tuesday, 5th January

German Retail Sales (MoM) (Nov)

German Unemployment Change (Dec)

German Unemployment Rate (Dec)

Wednesday, 6th January

Spanish Services PMI (Dec)

Italian Services PMI (Dec)

French Services PMI (Dec) Final

German Services PMI (Dec) Final

Eurozone Markit Composite PMI (Dec) Final

Eurozone Services PMI (Dec) Final

German CPI (MoM) (Dec)

Thursday, 7th January

German Factory Orders (MoM) (Nov)

German IHS Markit Construction PMI (Dec)

Italian CPI (MoM) (Dec)

Eurozone CPI (YoY) (Dec)

Eurozone Retail Sales (MoM) (Nov)

Friday, 8th January

German Industrial Production (MoM) (Nov)

German Trade Balance (Nov)

French Consumer Spending (MoM) (Nov)

Eurozone Unemployment Rate (Nov)

The Majors

It was a relatively bullish start to the year for the European majors on Monday. The CAC40 and the EuroStoxx600 saw gains of 0.68% and 0.67% respectively, while the DAX30 rose by just 0.06%.

A wrap up of the Brexit agreement and the continued vaccination across the EU supported the majors.

After the holiday season, it was the first full session for the markets to react to Britain leaving the EU with a deal.

Optimism towards a strong economic recovery also supported the European majors. The aggressive vaccination plans raised hopes of a speedier economic recovery.

Over the holidays, AstraZeneca had received approval by the UK’s MHRA. Expectations are for the EMA to eventually follow suit…

The upside on the day came in spite of the U.S rolling out tariffs on EU goods that include EU liquor and aircraft parts.

Stocks pared gains from the early part of the day, however, with the Georgia runoff and a spike in new COVID-19 cases in the U.S weighing.

The Stats

It was a particularly busy day on the economic calendar. December manufacturing PMI figures for Italy and Spain were in focus. Finalized PMI numbers for France, Germany, and the Eurozone also drew attention on the day.

In December, Italy’s Manufacturing PMI increased from 51.5 to 52.8, versus a forecasted rise to 53.7. In November, the PMI had fallen from 53.8 to 51.5.

Spain’s manufacturing PMI increased from 49.8 to 51.0, versus a forecasted rise to 52.8. In November, the PMI had fallen from 52.5 to 49.8.

For France, the manufacturing PMI came in at 51.1, which was in line with a prelim 51.1 and up from a November 49.6.

Germany’s manufacturing PMI came in at 58.3, which was down from a prelim 58.6, while up from a November 57.8.

The Eurozone PMI

The Eurozone’s finalized Manufacturing PMI came in at 55.2. This was down from a prelim 55.5, while up from a November 53.8. In November, the Manufacturing PMI had fallen from 54.8 to 53.8.

According to the December survey,

  • The Eurozone manufacturing PMI improved to its highest level since May 2018.
  • While all three sectors recorded a further improvement, some sectors performed better than others.
    • Investment goods producers recorded the strongest improvement, followed by intermediate goods.
    • By contrast, only marginal strengthening in operating conditions was seen amongst consumer goods producers.
  • New export orders increased markedly and to a greater extent than in November.
  • While capacity pressures remained, firms on average made further cuts to staffing levels, marking a 20th consecutive month of cuts.
  • In spite of this, optimism reached its highest level in nearly 3-years

By member state,

  • Germany ranked 1st, with a 34-month high 58.3, with the Netherlands coming in 2nd, with a 27-month high 58.2.
  • Ireland ranked 3rd with a 5-month high 57.2, while Greece sat at the bottom of the table with a 2-month high 46.9. Greece was the only member state that saw its manufacturing sector contract in December.

From the U.S

The finalized manufacturing PMI for December was also in focus.

In December, the Manufacturing PMI came in at 57.1, which was up from a prelim 56.5. In November, the PMI had risen from 53.4 to 56.7.

The Market Movers

For the DAX: It was a bearish day for the auto sector on Monday. Continental and Volkswagen slid by 3.51% and by 2.39% respectively. BMW and Daimler saw more modest losses of 0.60% and 1.54% respectively.

It was also a bearish day for the banks. Deutsche Bank fell by 2.00%, with Commerzbank declining by 0.72% on the day.

From the CAC, it was a bearish day for the banks, which gave up gains from earlier in the day. BNP Paribas and Credit Agricole fell by 0.22% and by 0.97% respectively, with Soc Gen sliding by 1.88%.

It was a mixed day for the French auto sector. Peugeot rose by 1.70%, while Renault ended the day flat.

Air France-KLM slid by 4.88%, while Airbus SE ended the day up by 0.12%.

On the VIX Index

It was back into the green after 2 consecutive days in the red for the VIX on Monday. Following a 0.09% decline on Thursday, the VIX jumped by 18.55%, to end the day at 26.97.

The NASDAQ and the S&P500 slid by 1.47% and by 1.48% respectively, with the Dow ending the day down by 1.25%.

A spike in new COVID-19 cases and market jitters ahead of the Georgia runoff left the majors in the red.

VIX 050121 Daily Chart

The Day Ahead

It’s another busy day ahead on the economic calendar, with the German economy in focus.

November retail sales figures are due out along with December unemployment change numbers and unemployment rate.

Expect the retail sales and unemployment change figures to draw the greatest interest.

From the U.S, the market’s preferred ISM Manufacturing PMI is also due out late in the European session.

Away from the economic calendar, updates from Capitol Hill will continue to influence along with COVID-19 news.

It’s the Georgia runoff, which will be the main event of the day across the Pond.

The Futures

In the futures markets, at the time of writing, the Dow Mini was down by 33 points.

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

European Equities: Private Sector PMIs and Capitol Hill in Focus

Economic Calendar:

Monday, 4th January

Spanish Manufacturing PMI (Dec)

Italian Manufacturing PMI (Dec)

French Manufacturing PMI (Dec) Final

German Manufacturing PMI (Dec) Final

Eurozone Manufacturing PMI (Dec) Final

Tuesday, 5th January

German Retail Sales (MoM) (Nov)

German Unemployment Change (Dec)

German Unemployment Rate (Dec)

Wednesday, 6th January

Spanish Services PMI (Dec)

Italian Services PMI (Dec)

French Services PMI (Dec) Final

German Services PMI (Dec) Final

Eurozone Markit Composite PMI (Dec) Final

Eurozone Services PMI (Dec) Final

German CPI (MoM) (Dec)

Thursday, 7th January

German Factory Orders (MoM) (Nov)

German IHS Markit Construction PMI (Dec)

Italian CPI (MoM) (Dec)

Eurozone CPI (YoY) (Dec)

Eurozone Retail Sales (MoM) (Nov)

Friday, 8th January

German Industrial Production (MoM) (Nov)

German Trade Balance (Nov)

French Consumer Spending (MoM) (Nov)

Eurozone Unemployment Rate (Nov)

The Majors

It was a bearish end to the year for the European majors on Thursday, with the CAC40 and the EuroStoxx600 falling by 0.86% and by 0.30% respectively.

The rollout of U.S tariffs on EU goods weighed on the European majors on the final trading day of the year.

Concerns over a Brexit and rising COVID-19 cases also dampened the mood on Thursday, while most European markets were closed.

The Stats

It was a particularly quiet day on the economic calendar. There were no material stats to provide the majors with direction in a shortened session.

From the U.S

Weekly jobless claims figures were in focus late in the day. The few European bourses that were open on the day had already closed ahead of the release, however.

In the week ending 25th December, initial jobless claims fell back from 806k to 787k. Economists had forecast a rise to 833k.

The Market Movers

The German markets were closed on Thursday.

From the CAC, it was a mixed day for the banks. BNP Paribas and Credit Agricole fell by 0.86% and by 0.43% respectively. The Soc Gen rose by 0.24%, however, to buck the trend on the day.

It was a bearish day for the French auto sector. Peugeot and Renault fell by 0.22% and by 0.51% respectively.

Air France-KLM declined by 0.78%, with Airbus SE sliding by 1.61%.

On the VIX Index

It was a 2nd consecutive day in the red for the VIX on Thursday. Following a 1.34% decline on Wednesday, the VIX slipped by 0.09%, to end the day at 22.75.

The Dow and the S&P500 rose by 0.65% and by 0.64% respectively, with the NASDAQ seeing a more modest 0.14% gain.

Better than expected jobless claims figures provided riskier assets with support on the final session of the year.

VIX 040121 Daily Chart

The Day Ahead

It’s a busy day ahead on the economic calendar, with prelim private sector PMI figures for December in focus later this morning.

Italy and Spain’s manufacturing PMI figures 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 Manufacturing PMIs to have the greatest impact.

From the U.S, finalized manufacturing PMI figures will also be in focus late in the European session.

Earlier this morning, China’s manufacturing PMI for December will set the tone.

Away from the economic calendar, updates from Capitol Hill will continue to influence along with COVID-19 news.

The Futures

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

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

European Equities: A Month in Review – December 2020

The Majors

It was another bullish month for the European majors in December, with COVID-19 vaccine news Brexit delivering further support.

The DAX30 rallied by 3.22% to lead the way, with the CAC40 and EuroStoxx600 gaining 0.60% and 2.48% respectively.

The gains were not as impressive as those seen in November, however, with lockdowns and a new strain of the virus testing investor sentiment.

After having seen 2 consecutive months in the red, however, a 2nd consecutive monthly gain consolidated November’s rebound.

Adding to support for the majors, was progress towards a U.S stimulus package.

A Brexit deal, a U.S stimulus package, with the promise of more, and COVID-19 vaccines delivered optimism towards next year.

On 30th December, the House of Commons voted 521 for and 73 against the Brexit Agreement ahead of Britain’s departure at 2300 GMT on 31st December. The House of Lords also passed the Bill.

Also on the political front, there was plenty of action in the wake of the U.S Presidential Election. In the end, departing President Trump failed to overturn the outcome, while managing to disrupt politics on Capitol Hill.

The Stats

It was a quieter month on the Eurozone economic calendar.

Key stats included prelim December private sector PMIs for France, Germany, and the Eurozone and consumer and business sentiment figures.

A pickup in manufacturing sector activity in Germany and a return to expansion in France’s manufacturing sector delivered support.

While the services sector continued to contract, the rate of contraction eased in both France and Germany.

As a result, the Eurozone’s Composite rose from 45.3 to 49.8 in December, according to prelim figures. The all-important manufacturing PMI increased from 53.8 to 55.5.

Containment measures across member states continued to weigh on service sector activity at the end of the year.

From Germany, the Ifo Business Climate Index increased from 90.9 to 92.1, with the ZEW Economic Sentiment Indicator rising from 39.0 to 55.0. Positive vaccine news delivered the upside for both in December.

A marginal fall in consumer confidence in Germany had a muted impact. The GfK Consumer Climate Index fell from -6.8 to -7.3. Lockdown measures across Germany weighed on the index for January.

From the U.S

Economic data delivered mixed results. Consumer confidence waned in December, with the CB Consumer Confidence Index falling from 96.1 to 88.6 in December.

Retail sales saw another decline in November, with core retail sales falling by 0.9%, following a 0.1% decline in October.

Prelim private sector PMI numbers for December also disappointed. The manufacturing PMI slipped from 56.7 to 56.5, with the Services PMI falling from 58.4 to 55.3.

While the jobless claims figures delivered mixed results throughout the month, the numbers remain skewed to the negative.

Initial jobless claims had fallen back to a low 712k in the week ending 27th November before jumping to 885k in the week ending 11th December. While easing back to 803k the following week, claims remained elevated amidst the 2nd wave of the pandemic.

Other key stats included core durable goods orders for November, which came up short of forecasts, and November’s nonfarm payrolls, which also disappointed.

In November, nonfarm payrolls rose by 245k, following a 638k increase in October.

From elsewhere, economic data from China continued to impress. Fixed asset investments, industrial production, and retail sales all saw a pickup in November.

On the trade front, the USD trade surplus widened from $58.44bn to $75.42bn, with exports surging by 21.1%.

At the end of the month, private sector PMIs for December reflected a slight easing in private sector activity but no by a significant margin. The NBS Manufacturing PMI fell from 52.1 to 51.9, with the Non-Manufacturing PMI falling from 56.4 to 55.7.

Monetary Policy

The ECB did test support for the majors by downwardly revising growth forecasts for 2021. Additionally, the ECB increased the PEP by €500bn. The downward revision came as EU member states reintroduced containment measures as a result of the 2nd wave of the pandemic.

From the FED, while the FED revised upwards economic forecasts, the promise of holding bond purchases and interest rates at current levels left a dovish tone.

In December, the FED left interest rates unchanged.

The Market Movers

For the DAX: It was a mixed month for the auto sector in December. Volkswagen rallied by 7.63%, with Continental and Daimler rising by 5.94% and by 2.08% respectively. BMW bucked the trend, however, falling by 0.96%.

It was also a mixed month for the banks. Deutsche Bank slid by 4.18%, while Commerzbank ended the month up by 7.14%.

From the CAC, it was another bullish month for the banking sector. Credit Agricole rallied by 6.72%, with BNP Paribas and Soc Gen ending the month with gains of 0.30% and 1.98% respectively.

It was a particularly bullish month for the auto sector. Peugeot jumped by 13.21%, with Renault gaining 7.23%.

Supported by COVID-19 vaccine news, Air France-KLM consolidated November’s 77.94% rebound with a 2.40% gain. Airbus SE followed November’s 40.17% surge with a 2.34% rise in December.

On the VIX Index

It was back into the green for the VIX in December to mark a 4th monthly gain in 5-months. Partially reversing a 45.9% slump from November, the VIX rose by 10.60% to end the month at 22.75.

COVID-19 vaccines and U.S politics, coupled with assured support from the FED delivered support for riskier assets in the month.

A continued rise in new COVID-19 cases supported the upside in the VIX.

In November, NASDAQ rallied by 5.65%, with the Dow and S&P500 ending the month up by 3.27% and by 3.71% respectively.

VIX 010121 Monthly Chart

The Month Ahead

We can expect another busy month ahead on the Eurozone economic calendar. Having taken a backseat of late, economic data will begin to have a greater impact on the markets once more.

Key through the month will be January private sector PMIs, retail sales, unemployment, and business and consumer confidence.

The markets will be looking for a continued recovery across the private sector and a pickup in consumer spending.

Both business and consumer confidence will need to improve to deliver support.

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

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

On the monetary policy front, the promise of continued support will also influence.

Away from the economic calendar, expect COVID-19 news and vaccination updates and chatter from Capitol Hill to also provide direction. The markets are expecting the Democrats to deliver more stimulus. There is also the Senate race to factor in.

European Equities: A Week in Review – 31/12/20

The Majors

It was a bullish final week of the year for the European majors. The CAC40 and the EuroStoxx600 rose by 0.53% and by 0.77% respectively, with the DAX30 gaining 0.97%.

A pullback on Thursday left the CAC40 and EuroStoxx600 with modest gains, while the German markets were closed on Thursday.

In a shortened week for the majors, COVID-19 vaccinations and the Brexit deal delivered support to the majors in the week.

With EU-wide vaccinations in progress and a no-Brexit withdrawal from the EU averted, optimism towards 2021 supported riskier assets.

U.S stimulus and expectation of more stimulus in the New Year added to the optimism towards the economic outlook for next year.

The upside was limited, however, with a continued rise in new COVID-19 cases and the new and more virulent strain of the virus a concern.

The Stats

It was a quiet week on the economic calendar. Key stats included French job seeker totals and prelim December inflation figures from Spain.

In France, job seekers rose from 3,549.7k to 3,586.3k in November. The markets were forgiving, however, with lockdown measures in November contributing to the uptick.

From Spain, deflationary pressures eased at the end of the year. Consumer prices fell by 0.5%, year-on-year, following a 0.8% decline in November. The Harmonized Index for Consumer prices fell by 0.6%, following a 0.8% decline in November

The stats ultimately had a muted impact on the majors, however.

From the U.S

Economic data was on the busier side. Key stats included November goods trade data and pending home sales and December’s Chicago PMI.

The stats were mixed, with the goods trade deficit widening and pending home sales sliding in November.

On the positive, however, was a pickup in the Chicago PMI from 58.2 to 59.5 in December.

On Thursday, the weekly jobless claims figures were out after the shortened European session.

The Market Movers

From the DAX, it was a bearish week for the auto sector. BMW slid by 1.62% to lead the way down, with Continental and Daimler falling by 0.53% and by 0.82% respectively. Volkswagen slipped by just 0.01% in the week.

It was also a bearish week for the banking sector. Commerzbank slid by 1.68%, with Deutsche Bank falling by 0.11%.

From the CAC, it was a bearish week for the banks. Credit Agricole slid by 1.90%, with BNP Paribas and Soc Gen falling by 1.58% and by 1.45% respectively.

It was also a bearish week for the French auto sector, however. Peugeot and Renault ended the week with losses of 1.63% and 2.30% respectively.

Air France-KLM rallied by 5.28%, following a 3.69% gain from the previous week, while Airbus ended the week down by 2.46%.

On the VIX Index

It was just a second weekly gain from 6-weeks for the VIX. In the week ending 31st December, the VIX rose by 5.67%. Reversing a 0.19% decline from the previous week, the VIX ended the week at 22.75.

For the week, Dow and S&P500 rose by 1.35% and by 1.43% respectively, with the NASDAQ gaining 0.65%.

VIX 010121 Weekly Chart

The Week Ahead

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

Key stats include private sector PMI numbers for December and German unemployment, retail sales, trade, and industrial production figures.

French consumer spending figures will also draw attention in the week.

Other stats include member state inflation and Eurozone retail sales and unemployment figures that should have a muted impact.

From the U.S, the market’s preferred ISM private sector PMIs, the weekly jobless claims, and nonfarm payrolls will influence.

Out of China, the Caixin Manufacturing PMI ahead of the European open on Monday will set the tone.

Away from the economic calendar, COVID-19 news and chatter from Capitol Hill will remain in focus.

European Equities: China Private Sector PMIs and Capitol Hill to Influence

The Majors

It was a bearish day for the European majors on Wednesday, with the EuroStoxx600 falling by 0.34% to lead the way down. The CAC40 and DAX30 weren’t far behind, with losses of 0.22% and 0.31% respectively.

With the year coming to an end for the DAX30, investors locked in profits going into the holidays.

The downside came in spite of AstraZeneca’s vaccine approval and positive sentiment towards Brexit and the economic outlook.

Pinning the majors back on the day was the continued upward trend in new COVID-19 cases and concerns over the new strain.

The Stats

It was a quiet day on the economic calendar. Prelim December inflation figures for Spain were in focus in the early part of the day.

Deflationary pressures eased in December. The Harmonized Index of Consumer Prices fell by 0.6%, year-on-year, in December, following a 0.8% decline in November. Economists had forecast a 0.7% decline.

Consumer prices fell by 0.5%, year-on-year, following a 0.8% decline in November.

From the U.S

It was a busier day on the economic data front. Goods trade data, pending home sales, and Chicago PMI figures were in focus late in the session.

In November, the goods trade deficit widened from $80.42bn to $84.82bn, with pending home sales sliding by 2.6%. In October, pending home sales had fallen by 0.9%.

On the positive, however, was a rise in Chicago’s PMI from 58.2 to 59.5. Economists had forecast a decline to 57.0.

The Market Movers

For the DAX: It was a mixed day for the auto sector on Wednesday. Volkswagen rose by 0.57% to buck the trend on the day. BMW fell by 0.81% to lead the way down, however, with Continental and Daimler seeing losses of 0.33% and 0.28% respectively.

It was also a mixed day for the banks. Deutsche Bank rose by 0.24%, while Commerzbank fell by 0.27% on the day.

From the CAC, it was a bearish day for the banks. Credit Agricole fell by 0.86%, with BNP Paribas and Soc Gen ending the day down by 0.78% and by 0.57% respectively.

It was also a bearish day for the French auto sector. Peugeot and Renault fell by 0.22% and by 0.86% respectively.

Air France-KLM fell by 1.68%, with Airbus SE ending the day with a 1.96% loss.

On the VIX Index

It was back into the red for the VIX on Wednesday, following 2 consecutive days in the green. The VIX fell by 1.34% on the day, partially reversing a 6.36% gain from Tuesday, to end the day at 22.77.

The Dow and the NASDAQ rose by 0.24% and by 0.15% respectively, with the S&P500 gaining 0.13% gain.

Positive sentiment towards an economic recovery delivered support for the majors as the year nears its end.

FED support, government stimulus, and COVID-19 vaccinations continued to drive market optimism for 2021. The upside on the day came in spite of rising COVID-19 cases and the new and more virulent strain of the virus.

VIX 311220 Daily Chart

The Day Ahead

It’s a quiet day ahead on the economic calendar, with German and Italian markets closed for the holidays.

The French markets are open but scheduled for an easy close.

While there are no stats due out of the Eurozone, expect the CAC40 to respond to private sector PMI numbers from China.

China’s NBS Manufacturing and Non-Manufacturing PMI numbers for December are due out ahead of the open.

From the U.S, initial jobless claims figures are due out after the close.

Away from the economic calendar, COVID-19 and any chatter from Capitol Hill will also provide direction.

The Futures

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

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