European Equities: China 4th Quarter GDP Numbers to Set the Tone

Economic Calendar:

Friday, 17^th January 2020

Italian CPI (MoM) (Dec) Final

Eurozone Core CPI (YoY) (Dec) Final

Eurozone CPI (YoY) (Dec) Final

The Majors

It was another mixed day for the European majors on Thursday. The CAC40 and EuroStoxx600 rose by 0.14% and by 0.22% respectively, while the DAX30 slipped by 0.02%.

It was a record high for the EuroStoxx600, which found support from the U.S markets following the signing of the phase 1 trade agreement.

For the CAC40 and DAX30, it was a mixed day, however, with autos in the red once more, while bank stocks closed out mixed.

While the phase 1 trade agreement is in place, how much of an impact the agreement will have on global trade terms and the economy remains to be seen.

The Stats

It was a relatively quiet day on the Eurozone economic calendar on Thursday. Key stats included finalized December inflation figures out of Germany, which had a muted impact on the DAX30 and European majors.

Less material stats tested market resolve, however, with car registrations out of France, Germany, and Italy in focus.

Month-on-month, German car registrations slumped by 5.3% in December, with Italian car registrations sliding by 7%. Bucking the trend in December, French car registrations surged by 22.3%.

The French numbers failed to support auto stocks, however, which remained under pressure on the day.

From the U.S, positively skewed stats failed to materially influence.

The Market Movers

For the DAX: It was another bearish day for the auto sector. Continental and Volkswagen led the way down, falling by 1.28% and by 1.18% respectively.  BMW and Daimler saw more modest losses of 0.96% and 0.33% respectively.

 It was a bullish day for the banks, however, with Commerzbank and Deutsche Bank rising by 0.11% and by 1.35% respectively.

From the CAC, it was a mixed day for the banks. BNP Paribas and Soc Gen fell by 0.73% and by 1.10% respectively. Credit Agricole eked out a 0.08% gain.

Things were bearish for the French auto sector, however, in spite of the jump in car registrations. Peugeot and Renault fell by 0.20% and by 1.16% respectively.

On the VIX Index

It was back into the red for the VIX, which fell by 0.81% on Thursday. Reversing a 0.24% gain from Wednesday, the VIX ended the day at 12.3

The downside came as the U.S equity markets found support to close out the day at fresh record highs, with the S&P500 up by 0.84% on the day.

While there was some negativity surrounding the phase 1 trade agreement, it was the progress in trade talks that provided support to the majors. There had been some concern over tariffs remaining in place until the end of the year. The U.S Treasury Secretary Mnuchin spoke on Thursday saying that further tariff reductions would come in stages.

Economic data out of the U.S, a U.S favored trade agreement and corporate earnings ultimately weighed on the VIX on the day.

The Day Ahead

It’s a particularly quiet day on the Eurozone economic calendar, with finalized inflation figures for December due out of Italy and the Eurozone.

With economic data on the lighter side, we can expect numbers from the U.S to influence. Key stats due out of the U.S include industrial production, consumer sentiment, and JOLTs job openings.

Ahead of the European open, China’s 4^th quarter GDP and December industrial production figures will set the tone for the day.

In the futures markets, at the time of writing, the Dow was up by 8 points.