European Equities: A Quiet Economic Calendar Leaves Central Bank Chatter and COVID-19 in Focus
Wednesday, 8th December
French Non-Farm Payrolls (QoQ) (Q3)
Thursday, 9th December
German Trade Balance (Oct)
Friday, 10th December
German CPI (MoM) (Nov) Final
It was another bullish day for the European majors on Tuesday.
The DAX30 and EuroStoxx600 rose by 2.82% and by 2.46% respectively. Leading the way, however, was the CAC40 that ended the day up by 2.91%.
Upbeat industrial production figures from Germany and trade data from China delivered early support.
News from China of the PBoC curbing restrictions on the property sector added further support. The PBoC also cut the reserve requirement rate by 50 bps that was market positive.
Optimism that the Omicron strain would not derail the global economic recovery was key, however. The gains came in spite of economic sentiment in Germany waning in December.
German industrial production figures were in focus. ZEW Economic Sentiment also drew interest, however, along with Eurozone GDP numbers.
German Industrial Production
In October, industrial production increased by 2.8% versus a forecasted 0.8% rise. Production had fallen by 0.5% in September.
According to Destatis,
- Production in industry excluding energy and construction was up by 3.2%.
- Within industry, the production of capital goods rose by 8.2%.
- The production of motor vehicles, trailers, and semi-trailers was up by 12.6%.
- There was a 0.4% decline in the production of intermediate goods. The production of consumer goods fell by a modest 0.1%.
- Outside of industry, energy production rose 0.9% and production in construction up 1.2%.
- Compared with October 2020, industrial production was down by 0.6%.
For December, the ZEW Economic Sentiment Index for Germany fell from 31.7 to 29.9. Economists had forecast a decline to 25.1. For the Eurozone the Sentiment Index rose from 25.9 to 26.8. Economists had forecasted a fall to 23.2.
The Eurozone Economy
In the 3rd quarter, the Eurozone economy expanded by 2.2%. This was in line with previous estimates while up from 2.1% in the previous quarter. Year-on-year, the economy grew by 3.9%, which was up from a 2nd estimate 3.7%. The economy had grown by 14.4% in the previous quarter.
From the U.S
Economic data included trade data along with unit labor cost and nonfarm productivity figures. The stats had a muted impact on the majors, however.
In October, the U.S trade deficit narrowed from $81.40bn to $67.1bn. Economists had forecast a narrowing to $66.80bn.
The Market Movers
For the DAX: It was a particularly bullish day for the auto sector on Tuesday. Volkswagen led the way, surging by 8.01%, with BMW ending the day up by 2.63%. Continental and Daimler saw more modest gains of 0.81% and 1.12% respectively.
It was also a bullish day for the banks. Deutsche Bank and Commerzbank rose by 2.01% and by 0.48% respectively.
From the CAC, it was a bullish day for the banks. Soc Gen and Credit Agricole saw gains of 1.22% and 1.12% respectively, with BNP Paribas rising by 1.60%.
The French auto sector also had a bullish session. Stellantis NV rallied by 2.37%, with Renault ending the day up by 1.60%.
Air France-KLM rose by a modest 0.94%, with Airbus SE rallying by 2.96%.
On the VIX Index
It was a 2nd consecutive day in the red for the VIX on Tuesday.
Following an 11.38% fall on Monday, the VIX slid by 19.46% to end the day at 21.89.
The NASDAQ surged by 3.03%, with the Dow and the S&P500 seeing gains of 1.40% and 2.07% respectively.
The Day Ahead
On the economic data front, French nonfarm payrolls for the 3rd quarter will be in focus early in the session. We don’t expect any impact on the majors.
From the U.S, JOLT’s job openings will draw interest late in the session, however.
On the monetary policy, ECB President Lagarde and ECB member De Guindos are scheduled to speak. Expect any policy chatter or views on the Omicron strain and the economy to move the dial.
Away from the economic calendar, however, COVID-19 news updates will need continued monitoring.
In the futures markets, at the time of writing, the Dow Mini was up by 16 points.
For a look at all of today’s economic events, check out our economic calendar.