European Equities: Brexit and Economic Data from Germany in Focus

The Stats

It was a relatively busy day on the Eurozone economic calendar on Wednesday. Key stats included the German factory orders for November and finalized business and consumer confidence figures for the Eurozone.

According to Destatis, factory orders slid by 1.3% in November, reversing a revised 0.2% increase in October. Economists had forecast a 0.2% rise.

• Domestic orders increased by 1.6%, while foreign orders tumbled by 3.1% in November, month-on-month.
• New orders from the Euro area were down by 3.3%, with new orders from other countries falling by 2.8%.
• The manufacturers of intermediate goods reported a 0.2% increase in new orders.
• By contrast, the manufacturers of capital goods reported a 2.1% slide in new orders.
• Consumer goods saw new orders remain unchanged.
• Year-on-year, factory orders were down by 6.5%…

From the Eurozone

The Eurozone’s consumer confidence indicator came in at 8.1 according to finalized numbers, which was in line with prelim figures. In November, the indicator had stood at -7.2.

• The decline in consumer confidence in December was attributed to a decline in expectations concerning households’ financial conditions and the general economic situation.
• By contrast, households’ assessment of past financial conditions and their intentions to make major purchases remained broadly stable.

From the U.S

Economic data was limited to December’s ADP Nonfarm Employment Change figures… In December, the ADP reported that 202K jobs were added, following 67K increase in November. Economists had forecast a 156k increase.

The Market Movers

For the DAX: It was a bullish day for the auto sector. BMW and Continental led the way once more, rallying by 1.24% and by 2.24% respectively. Daimler and Volkswagen saw more modest gains of 0.93% and 0.65% respectively.

It was a particularly bullish day for the banks. Commerzbank rose by 2.14%, while Deutsche Bank rallied by 4.22% on the day.

From the CAC, it was a relatively bullish day for the banks. BNP Paribas and Credit Agricole rose by 0.46% and by 0.23% respectively, with Soc Gen ending the day up by 0.99%.

For the French auto sector, it was a bearish day, however, with Peugeot and Renault falling by 1.13% and by 0.41% respectively.

Airline stocks found support on Wednesday. On the DAX30, Deutsche Lufthansa rose by 1.40%, with Air France – KLM gaining by 0.49%. Easing tensions in the Middle East and a slide in crude oil prices provided support on the day.

On the VIX Index

It was in the red once more for the VIX, which fell by 2.47% on Wednesday. Following on from a 0.43% decline on Tuesday, the VIX ended the day at 13.5.

A choppy day in the markets saw the VIX hit an early high 15.2 before hitting reverse through the U.S session.

The U.S administration held back from responding to Iran’s missile strikes, with the U.S President delivering hope of better days ahead for Iran.

Crisis averted for now, though there remains uncertainty over Iran’s position following Trump’s speech. Will there be more or was the missile strike enough of a response to the Soleimani killing?

The Day Ahead

It’s a relatively busy day on the Eurozone economic calendar. Key stats include German industrial production and trade figures for November in the early part of the day.

Later this morning, the Eurozone’s November unemployment rate is also due out.

We would expect the numbers out of Germany to have the greatest impact on the day.

Outside of the numbers, geopolitics will also be in focus.

The UK Parliamentary vote on Boris Johnson’s Brexit Withdrawal Bill is due to take place later today, which will garner interest. Expectations are for the Bill to pass through smoothly…

Expect any chatter from Washington and Tehran to also influence on the day.

In the futures markets, at the time of writing, the DAX30 was up by 86 points, with the Dow up by 19 points.