Thursday, 20th January
German PPI (MoM) (Dec)
Eurozone Core CPI (YoY) (Dec) Final
Eurozone CPI (YoY) (Dec) Final
Eurozone CPI (MoM) (Dec) Final
It was a bullish day for the European majors on Wednesday. The CAC40 rose by 0.55%, with the DAX and the EuroStoxx600 ending the day with gains of 0.24% and 0.23% respectively.
Economic data was on the lighter side on the day, with key stats limited to finalized inflation figures from Germany. The lack of stats left the majors under pressure, with market angst over FED monetary policy remaining a key driver.
The upside on the day came in spite of the U.S equity markets continuing their decline amidst rising U.S Treasury yields.
In December, German consumer prices rose by 0.5%, which was in line with prelim figures. Consumer prices had fallen by 0.2% in the month of November.
According to Destatis,
- In December, the annual rate of inflation picked up from 5.2% to 5.3%, which was in line with forecasts.
- The annual average rate of inflation was 3.1% compared with 2020, which was also in line with forecasts.
Reasons for High Inflation Rate in 2021 on 2020
- A temporary reduction of value added tax rates in the 2nd half of 2020 and a sharp decline in mineral oil product prices in the previous year reportedly had an upward effect.
- More and more crisis-related effects, such as delivery bottlenecks and marked price increase at upstream stages in the economic process.
Prices of Energy Products up on an Annual Average in 2021
- The prices of energy products were up by 10.4% in 2021 year-on-year.
- In 2020, prices of energy products had fallen by 4.8%.
Other Contributory Factors
- Food prices rose 3.2% in 2021 compared with 2020.
- Prices of goods increased by 4.3%, while service prices increased by just 2.1%.
From the U.S
Stats were limited to housing sector numbers that had a muted impact on the majors.
The Market Movers
For the DAX: It was another mixed day for the auto sector on Wednesday. Volkswagen rose by 0.62% to buck the trend. Continental and BMW fell by 1.51% and by 1.09% respectively, with Daimler ending the day down by 0.19%.
It was also a mixed day for the banks. Deutsche Bank fell by 1.19%, while Commerzbank ended the day up by 0.41%.
From the CAC, it was a bearish day for the banks. Soc Gen slid by 1.89%, with Credit Agricole and BNP Paribas seeing losses of 0.94% and 0.92% respectively.
The French auto sector had a bullish session, however. Stellantis NV and Renault ended the day up by 0.23% and 0.50% respectively.
Air France-KLM slid by 3.44%, with Airbus SE declining by 0.66%.
On the VIX Index
It was a second consecutive day in the green for the VIX on Wednesday.
Following an 18.76% surge on Tuesday, the VIX rose by 4.65% to end the day at 23.85.
The NASDAQ slid by 1.15%, with the Dow and the S&P500 seeing losses of 0.96% and 0.97% respectively.
The Day Ahead
It’s a relatively busy day ahead on the Eurozone’s economic calendar. Finalized Eurozone inflation figures for December are due out along with German wholesale inflation figures. With inflation a key area of focus, expect the numbers to draw attention.
Later in the day, U.S weekly jobless claims and Philly FED Manufacturing numbers for January will also provide direction.
In the futures markets, at the time of writing, the Dow Mini was up by 42 points.
For a look at all of today’s economic events, check out our economic calendar.