European Equities: Earnings, Stats and the Phase 1 Trade Agreement are in Focus

It’s a busy day ahead for the majors. Economic data from the Eurozone and the U.S, corporate earnings, and trade are in focus.
Bob Mason
Smart city and global network concept. IoT(Internet of Things). ICT(Information Communication Technology).

Economic Calendar:

Wednesday, 15th January 2020

French CPI (MoM) (Dec) Final

French HICP (MoM) (Dec) Final

Spanish CPI (YoY) (Dec) Final

Spanish HICP (YoY) (Dec) Final

Eurozone Industrial Production (MoM) (Nov)

Eurozone Trade Balance (Nov)

Thursday, 16th January 2020

German CPI (MoM) (Dec) Final

ECB Monetary Policy Meeting Minutes

Friday, 17th January 2020

Italian CPI (MoM) (Dec) Final

Eurozone Core CPI (YoY) (Dec) Final

Eurozone CPI (YoY) (Dec) Final

The Majors

It was a relatively choppy day for the majors on Tuesday, with the EuroStoxx600 rising by 0.29% to lead the way.

The CAC40 and DAX30 saw modest gains of 0.08% and 0.04% respectively, as the majors recovered from negative territory late on.

A lack of stats through the European session left the majors struggling for direction ahead of today’s signing of the phase 1 trade agreement.

There had been some concern over whether the U.S would actually sign the agreement. Concerns eased, however, after the U.S removed China from its list of currency manipulators.

While the phase 1 agreement is market positive, news of tariffs likely to remain until after the Presidential Election was negative on Tuesday.

The Stats

It was a quiet day on the Eurozone economic calendar on Tuesday, with no material stats to provide the European majors with direction.

From the U.S, inflation figures had a muted impact on the majors late in the day.

The Market Movers

For the DAX: It was another mixed day for the auto sector. Continental bucked the trend on Tuesday, rising by 1.14%. BMW, Daimler, and Volkswagen fell by 0.72%, 1.08% and by 0.15% respectively.

It was a bullish day for the banks, however, with Commerzbank and Deutsche Bank rising by 0.18% and by 1.45% respectively.

From the CAC, it was also a bullish day for the banks. BNP Paribas gained 0.46%, with Credit Agricole ending the day up by 0.51%. Soc Gen closed out the day flat for the 2nd day in a row.

For the French auto sector, it was another bearish day. Peugeot and Renault fell by 0.92% and by 0.39% respectively.

On the VIX Index

It was back into the green for the VIX, which rose by 0.57% on Tuesday. Partially reversing a 1.91% fall from Monday, the VIX ended the day at 12.4.

On the day, the S&P500 pulled back from a new record high to close out the day in the red.

Market reaction to the news that tariffs will remain until after November’s Presidential Election weighed on risk appetite late in the day.

The details of the phase 1 agreement were also released raising concerns over whether China will adhere to some of the provisions.

The Day Ahead

It’s a busier day on the Eurozone economic calendar, with industrial production and trade figures due out of the Eurozone.

We would expect the Eurozone’s industrial production figures to have a greater impact on the day. Forecasts are market negative.

Finalized inflation figures out of France and Spain will likely have a muted impact on the majors.

From the U.S, wholesale inflation and the NY Empire State Manufacturing Index figures are also due out.

While we would expect the manufacturing numbers to influence, the market focus will be on the phase 1 trade agreement.

On the corporate earnings front, Bank of America and Goldman Sachs will release earnings results later today.

In the early hours of this morning, the markets responded to conditions within the agreement that allows the U.S to block sales to Huawei. This coupled with the prospect of tariffs remaining in place until after November could test China’s willingness to stick to the script.

The Huawei news sent the Asian majors and the futures markets into the red early this morning.

In the futures markets, at the time of writing, the DAX30 was down by 18 points, while the Dow was up by 57 points.

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