European Equities: A Busy Economic Calendar and U.S Stimulus News in FocusIt’s another busy day ahead on the economic calendar, with service sector PMIs and inflation figures in focus. News from Capitol Hill will also influence.
Wednesday, 3rd February
Spanish Services PMI (Jan)
Italian Services PMI (Jan)
75% of retail CFD investors lose money
French Services PMI (Jan) Final
German Services PMI (Jan) Final
Eurozone Markit Composite PMI (Jan) Final
Eurozone Services PMI (Jan) Final
Italian CPI (MoM) (Jan) Prelim
Eurozone CPI (YoY) (Jan) Prelim
Eurozone Core CPI (YoY) (Jan) Prelim
Eurozone CPI m/m (Jan) Prelim
Thursday, 4th February
IHS Markit Construction PMI (Jan)
ECB Economic Bulletin
Eurozone Retail Sales (MoM) (Dec)
Friday, 5th February
German Factory Orders (MoM) (Dec)
French Non-Farm Payrolls (QoQ) (Q4)
It was another bullish day for the European majors that continued to claw back the losses from last week.
The CAC40 rallied by 1.86% to lead the way, with the DAX30 and EuroStoxx600 gaining 1.56% and 1.29% respectively.
4th quarter GDP figures for Italy and the Eurozone failed to reverse gains made ahead of the data releases on the day.
Hopes of progress towards U.S President Joe Biden’s $1.9tn supported demand for riskier assets.
While Italy and the Eurozone’s GDP numbers came in ahead of forecasts, extended lockdown measures paint a gloomier picture for the 1st quarter.
It was another busy day on the economic calendar. Key stats included 1st estimate GDP numbers for the Eurozone and Italy, and inflation figures for France.
According to prelim figures, French consumer prices rose by 0.2% in the month of January, following on from a 0.2% rise in December. The annual rate of inflation picked up to 0.6% after having stalled in December.
The Harmonized Index for Consumer Prices also reflected a pickup in inflationary pressures. In January, the HICP rose by 0.3%, following a 0.2% rise in December. Year-on-year, the HICP increased by 0.8% after having stalled in December.
In the 4th quarter, the Italian economy contracted by 2.0%, following a 16% rebound in the 3rd quarter. Economists had forecast a 2.2% contraction.
Year-on-year, the economy contracted by 6.6% versus a forecasted 6.7% contraction. In the 3rd quarter, the economy had contracted by 5.1%.
In the 4th quarter, the Eurozone economy contracted by 0.7%, following the 3rd quarter’s 12.4% rebound. Economists had forecast a contraction of 1.0%.
Year-on-year, the economy contracted by 5.1%, which was better than a forecasted 5.4% contraction. In the 3rd quarter, the economy had contracted by 4.3%.
According to Eurostat,
- According to the 1st estimate of annual growth for 2020, GDP fell by 6.8%.
- By member state, Austria (-4.3%) recorded the highest quarter-on-quarter decrease, followed by Italy (-2.0%), and France (-1.3%).
From the U.S
There were no material stats from the U.S to provide the European majors with direction. The lack of stats left Capitol Hill in focus late in the session.
The Market Movers
For the DAX: It was a bullish day for the auto sector on Monday. Continental and Volkswagen rallied by 3.52% and by 3.41% respectively to lead the way. BMW and Daimler weren’t far behind with gains of 2.07% and 2.29% respectively.
It was also bullish day for the banks. Deutsche Bank rose by 1.14%, with Commerzbank rallying by 3.22%.
From the CAC, it was another bullish day for the banks. Soc Gen and BNP Paribas rallied by 3.54% and by 3.55%. respectively, with Credit Agricole gaining 2.94%.
It was also a bullish day for the French auto sector. Stellantis NV and Renault ended the day with solid gains of 2.92% and 2.70% respectively.
Air France-KLM rose by 2.47%, with Airbus SE jumping by 6.59% on the day.
On the VIX Index
It was a 2nd consecutive day in the red for the VIX on Tuesday. Following on from an 8.61% fall on Monday, the VIX slid by 15.48% to end the day at 25.56.
The Dow and the NASDAQ rose by 1.57% and by 1.56% respectively, with S&P500 gaining by 1.39%.
Hopes of progress towards Joe Biden’s $1.9trn supported riskier assets, with the U.S President having been scheduled to meet with Republicans.
Upbeat earnings results also supported the continued recovery from last week’s losses.
The Day Ahead
It’s a busy day ahead on the European economic calendar. Italian and Spanish service PMI figures are due out in the early part of the session.
Finalized service and composite PMIs are also due out for France, Germany, and the Eurozone.
Barring marked revision to prelim figures, expect Italy services PMI and the Eurozone’s composite to be the key drivers.
Later in the day, prelim January inflation figures for Italy and the Eurozone are also due out. We don’t expect the inflation figures to have a lasting impact on the majors, however.
From the U.S, ADP nonfarm employment change and ISM Non-Manufacturing PMI figures will also provide direction late in the session.
Away from the economic calendar, news updates from stimulus talks on Capitol Hill will also draw attention.
In the futures markets, at the time of writing, the Dow Mini was down by 9 points.
For a look at all of today’s economic events, check out our economic calendar.