European Equities: ECB Policy Meeting Minutes, U.S Stats, and COVID-19 in Focus

A continued rise and low vaccination rate across the EU, in particularly, raised the threat of an extended lockdown period.

An extended lockdown period would further delay any economic recovery. The negative sentiment weighed on bank stocks, as well as the auto sector and travel stocks.

In spite of the doom and gloom, Carrefour delivered the upside for the CAC40, with a 13.42% jump on the day. News of a possible takeover by Alimentation Couche-Tard led to the breakout.

The Stats

It was a relatively quiet day on the economic calendar. Industrial production figures for the Eurozone were out in the early part of the European session.

In November, industrial production rose by 2.5%, month-on-month, following a 2.3% increase in October.

According to Eurostat,

• Production of capital goods rose by 7.0% and intermediate goods by 1.5%.
• By contrast, production of durable consumer goods fell by 1.2%, non-durable consumer goods by 1.7%, and energy by 3.9%.
• Ireland registered a 52.8% surge in production to lead the way, with Greece recording a 6.3% rise in production.
• Portugal and Belgium saw production fall by 5.1% and by 3.5% to lead the way down, however.
• Year-on-year, industrial production fell by 0.6%.

On the monetary policy front, ECB President Lagarde was also in focus mid-week. Lagarde stated that the ECB will be paying close attention to the FX impact on prices. The ECB President was careful to point out, however, that the ECB will monitor and not target FX movements.

From the U.S

It was a busier day on the economic calendar. December inflation figures were in focus.

Core consumer prices rose by 0.1% in December, month-on-month, following a 0.2% increase in November. The annual rate of core inflation held steady at 1.6% in December.

Month-on-month, consumer prices rose by 0.4%, following a 0.2% increase in November.

The stats were in line with economic forecasts.

The Market Movers

For the DAX: It was a bearish day for the auto sector on Wednesday. BMW and Daimler fell by 1.32% and by 1.38% respectively. Continental and Volkswagen saw relatively modest losses of 0.50% and 0.28% respectively.

It was also a bearish day for the banks. Deutsche Bank and Commerzbank ended the day down by 0.46% and by 0.49% respectively.

From the CAC, it was a mixed day for the banks. BNP Paribas and Credit Agricole fell by 0.69% and by 0.52% respectively, while Soc Gen rose by 0.07%.

It was a bearish day for the French auto sector, however. Peugeot fell by 0.62%, with Renault sliding by 2.93%.

Air France-KLM fell by 0.81%, with Airbus SE ending the day down by 0.94%.

On the VIX Index

It was a 2^nd consecutive day in the red for the VIX on Wednesday, marking an 8^th day in the red from 10 sessions. Following on from a 3.11% decline on Tuesday, the VIX fell by 4.8% to end the day at 22.21.

The NASDAQ and the S&P500 rose by 0.43% and by 0.23% respectively, while the Dow slipped by 0.03%.

The Day Ahead

It’s another relatively quiet day ahead on the economic calendar. Full-year GDP figures are due out of Germany.

The markets are expecting dire numbers, however, which should limit the impact on the majors. On Wednesday, ECB President stood by the ECB forecasts for 2020 and 2021.

Later in the day, the ECB Monetary Policy meeting minutes will draw some attention.

From the U.S, the weekly jobless claims figures will provide direction later in the session.

Ahead of the European session, trade data from China will set the tone.

Away from the economic calendar, COVID-19 news and vaccination rates will remain a key driver along with chatter from Capitol Hill.

From Italy, another government coalition in crisis will also be a concern amidst the COVID-19 pandemic.

The Futures

In the futures markets, at the time of writing, the Dow Mini was up by 77 points, with the DAX up by 38 points.

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