European Equities: A Quiet Economic Calendar Leaves COVID-19 and ECB Policy Chatter in Focus

The Majors

It was a bullish day for the European majors on Thursday.

The EuroStoxx600 and CAC40 rose by 0.42% and by 0.48% respectively, with the DAX30 ending the day up by 0.25%.

Disappointing economic data from Germany pegged back the DAX30 on the day, with COVID-19 news also a drag on the day.

A continued rise in new COVID-19 cases across Europe has led to more restrictions, with more lockdown measures a continued threat following Austria’s lockdown last week.

On the monetary policy front, however, ECB sentiment towards inflation and policy provided the major with support.

The Stats

Following November’s prelim private sector PMIs and German business sentiment numbers, GDP and consumer sentiment figures from Germany were in focus this morning.

The German Economy

In the 3^rd quarter, the German economy expanded by 1.7% quarter-on-quarter, according to 2^nd estimate figures. This was down from a prelim 1.8% and a 2^nd quarter 2.0%.

According to Destatis,

• Household final consumption expenditure rose by 6.2% on the previous quarter.
• General government final consumption fell by 2.2%, however.
• Gross fixed capital formation in machinery and equipment declined by 3.7% and in construction by 2.3%.
• Foreign trade also decreased in the quarter, with exports of goods and services down 1.0% on the 2^nd quarter of 2021. Imports fell by a more modest 0.6%.
• Year-on-year, the economy expanded by 2.5%. In the 2^nd quarter, the economy had expanded by 10.4%.

German Consumer Sentiment

Consumer sentiment figures also disappointed, with the GfK consumer climate index falling from +1.0 to -1.6. Economists had forecast a decline to -0.5.

According to the November survey,

• Consumer confidence took a marked hit in November, with both economic and income expectations in decline.
• While the economic outlook of consumers slid by 15.6 points to 31 points, the indicator was still 31 points up from the same month a year earlier.
• The income expectations indicator fell by 10.4 points to 12.9.
• Falling to a 9-month low was the propensity to buy indicator, which declined by 9.7 points to 9.7. A lower value was last recorded in Feb-2021 at 7.4%.

ECB Monetary Policy Meeting Minutes

Inflation remained a hot topic for the ECB, with the minutes revealing plenty of uncertainty ahead.

Salient points from the ECB’s monetary policy stance and policy considerations included:

• Accommodative monetary policy stance remained appropriate to support the convergence of inflation to the 2% target over the medium term.
• Monetary policy had to be patient in the light of elevated uncertainty, in order to support a self-sustained re-anchoring of inflation expectations at the target.
• It was conjectured that there had been no fundamental changes in the underlying causes of the low growth and low inflation environment prevailing prior to the pandemic.
• Members concurred that the current and near-term increase in inflation was driven largely by temporary factors that would fade in the medium term.

From the U.S

There were no major stats to consider, with the U.S markets closed for Thanksgiving.

The Market Movers

For the DAX: It was a bearish day for the auto sector on Thursday. BMW slid by 1.34% to lead the way down, with Continental falling by 1.04%. Volkswagen and Daimler ended the day with relatively modest losses of 0.10% and 0.05% respectively.

It was a mixed day for the banks. Deutsche Bank rose by 0.66%, while Commerzbank fell by 0.58%.

From the CAC, it was a mixed day for the banks. Credit Agricole slipped by 0.36%, while BNP Paribas and Soc Gen saw gains of 0.32% and 0.24% respectively.

The French auto sector also had a mixed session. Stellantis NV fell by 0.59%, while Renault ended the day up by 0.03%.

Air France-KLM rallied by 2.51%, however, with Airbus SE rising by 0.22%.

On the VIX Index

The U.S markets were closed on Thursday.

On Wednesday, the VIX had fallen by 4.13%, reversing a 1.10% gains from Tuesday to end the day at 18.58.

The Day Ahead

It’s a quiet day ahead on the Eurozone’s economic calendar. There are no material stats from the Eurozone to provide the majors with direction. The lack of major stats will put greater emphasis on French consumer confidence and Italian business confidence figures due out today.

On the monetary policy front, central bank chatter could move the dial, with ECB President Lagarde and ECB members Schnabel and Panetta scheduled to speak later in the day.

With the U.S markets on a shortened session for the Thanksgiving holidays, there are also no U.S stats to consider later in the day.

Away from the economic calendar, however, COVID-19 news and commodity prices will draw interest, however.

The Futures

In the futures markets, at the time of writing, the Dow Mini was flat.

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