A Quiet Economic Calendar Leaves Central Bank Chatter and U.S Stats in Focus

The Majors

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

The EuroStoxx600 rose by 0.17% to lead the way, with the CAC40 and the DAX30 gaining 0.02% and 0.06% respectively.

Inflation took center stage once more, with inflation figures from the Eurozone, the UK, and Canada affirming the relentless uptrend in prices.

In spite of the market angst over inflation, it was a new record high for the EuroStoxx600, which was on the rise for a 6^th session in a row.

The Stats

In October, the Eurozone’s annual rate of inflation accelerated from 3.4% to 4.1%, which was in line with prelim figures.

The Eurozone’s annual core rate of inflation picked up from 1.9% to 2.0%, which came up short of a prelim 2.1%.

According to Eurostat,

• The lowest annual rates of inflation were registered in Malta (1.4%), Portugal (1.8%), and Greece (2.8%).
• Lithuania (8.2%) and Estonia (6.8%) had the highest annual rates of inflation in October.
• The highest contribution to the annual rate of inflation came from energy (+2.21 percentage points).
• There were also contributions from:
  • Services (+0.86pp)
  • Non-energy industrial goods (+0.55pp)
  • Food, alcohol, & tobacco (+0.43pp).

ECB Financial Stability Review

Salient points from the ECB’s Financial Stability Review “Overview” included:

Near-term pandemic risks lessen, but vulnerabilities ahead build up.

• Improved economic conditions have reduced near-term tail risks to financial stability.
• Supply disruptions and rising energy prices pose risks to inflation and the economic recovery.
• Corporate default risk and bank losses are likely to be lower than feared earlier.
• Near-term debt sustainability concerns have been alleviated by favorable financial conditions.
• Further ahead, vulnerabilities from growing stretch in property and financial markets, risk-taking by non-banks, and elevated sovereign and corporate debt are building up.
• Tighter macroprudential policies can address vulnerabilities ahead, notably for property markets in some countries.
• Strengthening the regulatory framework for banks and non-banks, and managing climate risks, will enhance long-term resilience of the financial system.

From the U.S

Economic data was limited to housing sector data, which had a muted impact on the majors.

The Market Movers

For the DAX: It was a mixed day for the auto sector on Wednesday. Continental and Volkswagen fell by 0.66% and by 0.82% respectively. Daimler and BMW found support, however, rising by 0.38% and by 0.30% respectively.

It was a bullish day for the banks. Deutsche Bank and Commerzbank ended the day with gains of 1.69% and 1.23% respectively.

From the CAC, it was a mixed day for the banks. BNP Paribas and Soc Gen fell by 0.08% and by 0.17% respectively. Credit Agricole bucked the trend, rising by 0.49%.

It was a bearish day for the French auto sector, however. Stellantis NV and Renault ended the day down by 1.14% and by 0.39% respectively.

Air France-KLM fell by 1.68%, with Airbus SE declining by 0.49%.

On the VIX Index

It was back into the green for the  VIX on Wednesday.

Reversing a 0.73% fall from Tuesday, the VIX rose by 4.52% to end the day at 17.11.

The Dow fell by 0.58%, with the NASDAQ and the S&P500 seeing losses of 0.33% and 0.26% respectively.

The Day Ahead

It’s a particularly quiet day ahead on the Eurozone’s economic calendar. There are no material stats from the Eurozone to provide the European majors with direction.

From the U.S, Philly FED Manufacturing numbers and the weekly jobless claim figures will influence, however.

On the monetary policy front, expect central bank chatter to also draw interest, with any chatter on the economy and monetary policy to provide direction.

ECB members Panetta, Fernandez-Bollo, and Lane are scheduled to speak later today.

The Futures

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

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