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
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.
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%.
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.
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.