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Bob Mason
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Economic Calendar:

Wednesday, 27th January

GfK German Consumer Climate (Feb)

Thursday, 28th January

German CPI (MoM) (Jan) Prelim

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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)

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The Majors

It was a bearish start to the week for the European majors on Monday. The DAX30 and the CAC40 slid by 1.66% and by 1.57% respectively, with the EuroStoxx600 falling by 0.83%.

Disappointing business sentiment figures from Germany and EU vaccine woes weighed on the majors.

Vaccine supply issues coupled with the new strains of the coronavirus, and a continued rise in new cases were negatives for the markets. From France, talk of a 3rd lockdown weighed heavily on the CAC40.

Adding to the market angst was news of a U.S ban on entry for non-U.S citizens travelling from Brazil, South Africa, the UK, and a number of EU member states.

A ban was reintroduced in bid to prevent spread of the South African and UK strains of the virus.

The EuroStoxx600 saw a more modest loss on the day, finding support from corporate earnings results early in the session.

The Stats

It was a relatively busy day on the economic calendar. Germany’s IFO Business Climate Index and sub-index figures were in focus in the early part of the session.

In January, business sentiment waned in Germany, with the ifo Business Climate Index falling from 92.2 to 90.1. Economists had forecast a more modest decline to 91.8.

Looking at the sub-indexes:

The Business Expectations sub-index fell from 93.0 to 91.1, with the Current Assessment sub-index declining from 91.3 to 89.2.

Economists had forecast the Business Expectations sub-index to climb to 93.2 and the Current Assessment sub-index to fall to 90.6.

According to the January report,

  • After 8 consecutive monthly rises, the manufacturing index fell from 1.4 to -3.0 in January..
  • For the service sector, the business climate indicator fell from -0.4 to -4.4.
  • The trade business climate indicator took the biggest hit, however, tumbling from 0.3 to -17.2.

From the U.S

It was a particularly quiet day, with no material stats from the U.S to provide the majors with direction late in the European session.

The Market Movers

For the DAX: It was a particularly bearish day for the auto sector on Monday. Continental and Volkswagen slid by 3.83% and by 3.34%, with BMW and Daimler falling by 1.58% and 2.26% respectively.

It was also a bearish day for the banks. Deutsche Bank slid by 3.10%, with Commerzbank tumbling by 5.31%.

From the CAC, it was another bearish day for the banks. BNP Paribas and Credit Agricole slid by 4.31% and by 4.25% respectively, with Soc Gen declining by 4.43%.

It was also a bearish day for the French auto sector. Stellantis NV and Renault slid by 4.50% and by 4.26% respectively.

Air France-KLM fell by a 3.28% with Airbus SE ending the day with a heavier 4.46% loss.

On the VIX Index

It was a 2nd consecutive day in the green for the VIX on Monday. Following on from a 2.77% gain on Friday, the VIX rose by 5.84% to end the day at 23.19.

The NASDAQ and the S&P500 rose by 0.69% and by 0.36% respectively, while the Dow slipped by 0.12%.

With no material U.S stats to distract the markets, the focus remained on Capitol Hill and U.S stimulus.

Concern over U.S President Joe Biden being able to push through his stimulus plans pegged the majors back.

With stimulus a market focal point, a continued rise in new COVID-19 cases and deaths in the U.S also weighed on risk appetite.

The Day Ahead

It’s a particularly quiet day ahead on the economic calendar. There are no material stats due out of the Eurozone to provide the majors with direction.

From the U.S, consumer confidence figures for January will draw attention late in the session, however.

Away from the economic calendar, COVID-19 news, together with updates from Capitol Hill will also provide direction.

Italian politics will also need monitoring, with Italian Prime Minister Conte set to resign today.

With plenty of the markets to consider in terms of the economic outlook, corporate earnings will also influence.

The Futures

In the futures markets, at the time of writing, the Dow Mini was down by 24 points.

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

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