European Equities: Business Sentiment, COVID-19 Updates, and U.S Stimulus Chatter in FocusIt’s a relatively busy day ahead, with business sentiment figures for Germany in focus. Expect COVID-19 news updates and U.S stimulus talks to remain key drivers, however.
Monday, 25th January
ECB President Lagarde Speaks
German Ifo Business Climate Index (Jan)
75% of retail CFD investors lose money
Wednesday, 27th January
GfK German Consumer Climate (Feb)
Thursday, 28th January
German CPI (MoM) (Jan) Prelim
Friday, 29th January
French Consumer Spending (MoM) (Dec)
French GDP (QoQ) (Q4) 1st Estimate
Spanish GDP (QoQ) (Q4) 1st Estimate
Spanish CPI (YoY) (Jan) Prelim
German GDP (QoQ) (Q4)
German Unemployment Change (Jan)
German Unemployment Rate (Jan)
It was a bearish end to the week for the European majors on Friday. The CAC40 and the EuroStoxx600 fell by 0.56% and by 0.57% respectively, with the DAX30 ending the day with a 0.24% loss.
Economic data from the Eurozone and continued market reaction to Thursday’s ECB press conference weighed on the majors.
Prelim private sector PMI figures for France, Germany, and the Eurozone were in focus in the early part of the European session.
A more marked contraction across the services sector dragged the Eurozone’s private sector deeper into contraction in January.
Concerns over the economic recovery were fueled further by the disappointing PMI numbers.
The continued rise in new COVID-19 cases and containment measures has questioned the ECB’s economic outlook.
Low vaccination rates across the Eurozone suggest that containment measures would need to remain in place for longer.
It was a busy day on the economic calendar. Prelim private sector PMI figures for January provided direction in the early part of the session. The Eurozone’s composite PMI fell from 49.1 to 47.5 in January, according to prelim figures.
While France’s manufacturing sector saw a pickup in activity, Germany’s saw a modest slowdown.
The effect of lockdown measures across France and Germany were felt in the services sector, however.
France’s service PMI fell from 49.1 to 46.5, with Germany’s falling from 47.0 to 46.8.
From the U.S
January’s prelim private sector PMIs were also in focus late in the session. Better than expected figures failed to support a recovery late in the day, however.
In January, the U.S manufacturing PMI rose from 57.1 to 59.1, with the services PMI climbing from 54.8 to 57.5.
Low vaccination rates left the majors exposed to the latest spike in new COVID-19 cases, with a new wave in China also pressuring on riskier assets.
The Market Movers
For the DAX: It was a mixed day for the auto sector on Friday. Volkswagen rallied by 2.26% off the back of sales numbers for China, with BMW and Daimler rising by 0.49% and 0.07% respectively. Continental slid by 2.02%, however, to buck the trend on the day.
It was a bearish day for the banks. Deutsche Bank slid by 3.00%, with Commerzbank falling by 0.79%.
From the CAC, it was another bearish day for the banks. BNP Paribas and Credit Agricole fell by 2.83% and by 1.37% respectively, with Soc Gen sliding by 3.30%.
It was also a bearish day for the French auto sector. Stellantis NV slid by 3.18%, with Renault falling by 2.35%.
Air France-KLM fell by a further 2.47% with Airbus SE ending the day with a more modest 0.59% loss.
On the VIX Index
It was back into the green for the VIX that ended a run of 3 consecutive days in the red on Friday. Reversing a 1.20% fall from Thursday, the VIX rose by 2.77% to end the day at 21.91.
The NASDAQ eked out a 0.09% gain, while the Dow and the S&P500 fell by 0.57% and by 0.30% respectively.
Positive economic data from the U.S failed to support the majors. Corporate earnings and COVID-19 news pegged the majors back at the end of the week.
IBM and Intel hit reverse, with low vaccination rates and the emergence of new COVID-19 strains causing concern.
Anticipation of further fiscal stimulus limited the downside for the U.S indexes, however.
The Day Ahead
It’s a relatively busy day ahead on the economic calendar. January IFO business sentiment figures for Germany are due out later this morning.
Expect market sensitivity to the figures, as the Eurozone continues to struggle amidst the 2nd wave of the COVID-19 pandemic.
From the U.S, there are no major stats due out later in the session to provide the majors with direction.
Away from the economic calendar, COVID-19 news, together with updates from Capitol Hill will therefore remain key drivers.
In the futures markets, at the time of writing, the Dow Mini was up by 67 points.
For a look at all of today’s economic events, check out our economic calendar.