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Bob Mason
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The Majors

It was another day in the green for the European majors, with the DAX30 rallying by 1.31% to lead the way on Thursday.

The CAC40 and EuroStoxx600 also found support, rising by 0.19% and 0.31% respectively.

Easing market fears of a proxy war across the Middle East led the markets to switch focus to trade as the U.S and China prepare for phase 1 of the trade agreement.

The signing is next Wednesday and, with economic data out of the Eurozone on a more positive footing, hopes are for a turnaround in the Eurozone economy.

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The Stats

It was a relatively busy day on the Eurozone economic calendar on Thursday. Key stats included Germany’s November industrial production and trade figures and the Eurozone’s unemployment rate.

From Germany

Industrial production rose by 1.1% in November, month-on-month, and coming in ahead of a forecasted 0.7% increase. In October, production had fallen by 1.0%.

According to Destatis,

  • Production in industry excl. energy and construction rose by 1.0%.
  • Within industry, the production of capital goods increased by 2.4%, with the production of consumer goods rising by 0.5%.
  • The production of intermediate goods decreased by 0.5%, however.
  • Outside industry, energy production fell by 0.8%, while production in construction increased by 2.6%.
  • Year-on-year, industrial production was down by 2.6%.

Germany’s trade surplus narrowed from €20.4bn to €18.3bn in November. Economists had forecast a surplus of €20.0bn.

According to Destatis,

  • Exports fell by 2.3% to €112.9bn, while imports fell by just 0.5% to €94.6bn.
  • Year-on-year, exports fell by 2.9%, with imports falling by 1.6%.
  • In November, Germany exported goods to the value of €66.5bn to EU Member States, whilst importing goods to the value of €53.9bn.
  • Goods to the value of €41.8bn (-2.3%) were exported to the Euro area, with imports from within the Euro area falling by 2.3% to €34.2bn.
  • Germany exported goods to the value of €24.7bn (-2.7%) to EU countries outside of the Eurozone. Imports from these countries increased by 0.2% to €19.7bn.
  • Exports to countries outside of the EU fell by 3.5% to €46.4bn, while imports fell by 1.8% to €40.7bn.

From the Eurozone

The Eurozone’s unemployment rate held steady at 7.5% in November, which was in line with forecasts. According to Eurostat,

  • Germany had the lowest unemployment rate at 3.1%, while Greece (16.8%) and Spain (14.1%) had the highest unemployment rates.
  • Year-on-year, the largest decreases in the unemployment rate were recorded in Greece (18.8% to 16.8%) and Estonia (5.3% to 4.2%).
  • By contrast, Luxembourg (5.4% to 5.5%), Slovenia (4.4% to 4.6%), Cyprus (7.5% to 7.7%), and Lithuania (5.8% to 6.4%) saw increases in unemployment rates.

From the U.S

Economic data was limited to the weekly jobless claims figures that had a muted impact on the majors.

The Market Movers

For the DAX: It was a mixed day for the auto sector. BMW struggled on Thursday, falling by 0.73%. It was bullish for the rest, however, with Volkswagen and Continental rallying by 2.28% and 2.18% to lead the way. Daimler saw a more modest gain of 0.69%.

It was a relatively bullish day for the banks, with Commerzbank and Deutsche Bank rising by 0.39% and 0.09% respectively.

From the CAC, it was a mixed day for the banks. BNP Paribas fell by 0.72%, while Credit Agricole and Soc Gen ending the day up by 0.08% and by 0.05% respectively.

For the French auto sector, it was a bearish day, once more, with Peugeot and Renault falling by 0.24% and by 1.31% respectively.

Airline stocks found further support on Thursday. On the DAX30, Deutsche Lufthansa rallied by 2.69% to lead the 30, with Air France – KLM surging by 4.03%.

On the VIX Index

It was a 4th consecutive day in the red for the VIX, which fell by 6.77% on Thursday. Following on from a 2.47% decline on Wednesday, the VIX ended the day at 12.5.

There was little upside on the day as market jitters over the Middle East eased further. The U.S majors hit record highs on the day, with the S&P500 gaining 0.67% to leave the VIX in the red.

Positive sentiment towards trade and the economic outlook could see the VIX under more pressure should there be no further market shocks…

The Day Ahead

It’s a quiet day on the Eurozone economic calendar, with no material stats scheduled for release on the day.

The lack of stats will leave the focus on U.S labor market figures due out later in the day, Brexit chatter and any news from Washington or Tehran.

In the futures markets, at the time of writing, the DAX30 and the Dow were both up by 60 points.

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