European Equities: A Busy Economic Calendar and U.S Stimulus News in Focus

The Majors

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.

4^th 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 1^st quarter.

The Stats

It was another busy day on the economic calendar. Key stats included 1^st 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 4^th quarter, the Italian economy contracted by 2.0%, following a 16% rebound in the 3^rd 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 3^rd quarter, the economy had contracted by 5.1%.

In the 4^th quarter, the Eurozone economy contracted by 0.7%, following the 3^rd 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 3^rd quarter, the economy had contracted by 4.3%.

According to Eurostat,

• According to the 1^st 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 2^nd 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.