FXEMPIRE
All

European Equities: Economic Data and Brexit in Focus

Weak stats from the Eurozone and Brexit jitters are negatives for the majors going into the European session… Stats will need to impress to support.
Bob Mason
Europe (and euro) economic crisis concept.

Economic Calendar:

Tuesday, 17th December 2019

  • Eurozone Trade Balance (Oct)

Wednesday, 18th December 2019

  • German PPI (MoM) (Nov)
  • German Ifo Business Climate Index (Dec)
  • Eurozone Core CPI (YoY) (Nov) Final
  • Eurozone CPI (YoY) (Nov) Final
  • Eurozone CPI (MoM) (Nov) Final

Friday, 20th December 2019

  • GfK German Consumer Climate (Jan)
  • French Consumer Spending (MoM) (Nov)
  • Eurozone Consumer Confidence (Dec) Prelim

The Majors

It was a bullish start to the week for the European majors, with a 4th consecutive day in the green leading to a record high for the EuroStoxx600.

On the day, the EuroStoxx600 jumped by 1.39%, with the CAC40 and DAX30 gaining 1.23% and 0.94% respectively.

The markets were able to brush aside the negative stats from the Eurozone, with sentiment towards the U.S – China trade war providing support.

As anticipated, the markets were forgiving of weaker manufacturing PMI numbers, with a phase 1 trade agreement expected to deliver a recovery in the sector.

The Stats

It was a busy day on the Eurozone economic calendar on Monday. Key stats included December prelim private sector PMI figures and 3rd quarter wage growth from the Eurozone.

The PMIs

The French Composite PMI slipped from 52.1 to 52.0, which was in line with forecasts.

  • French Manufacturing PMI (Dec) Prelim fell from 51.7 to 51.3, which was worse than a forecast of 51.5.
  • French Services PMI (Dec) Prelim rose from 52.2 to 52.4, coming in ahead of a forecast of 52.1.

The German Composite PMI held steady at 49.4, falling short of a forecast of 49.9.

  • German Manufacturing PMI (Dec) Prelim slid from 44.1 to 43.4, which was worse than a forecasted rise to 44.5.
  • German Services PMI (Dec) Prelim increased from 51.7 to 52.0, which was in line with forecasts.

The Eurozone Markit Composite PMI rose from 50.6 to 50.8 in December, according to prelim figures. According to the Markit Survey,

  • The Eurozone Manufacturing PMI decreased from 46.9 to 45.9 in December, while the Eurozone Services PMI rose from 51.9 to 52.4.
  • Service sector activity hit a 4-month high, while the manufacturing output index fell to an 86-month low.
  • A failure to see a pickup in economic activity in the 4th quarter left the rise in output at its slowest pace since 2013.
  • Employment growth slowed to a five-year low.
  • There was a rise in new orders in December, a first since August, though the increase was only marginal.
  • Backlogs fell for a 10th consecutive month, with depleting work-in-hand leading to further overcapacity.
  • While up from recent lows, optimism continued to sit at one of the lowest levels seen since 2013.

For the ECB, a further deterioration in manufacturing sector activity, weak new orders and the weakest pace of hiring in 5-years will be a major concern.

From the Eurozone, wages grew by 2.6% in the 3rd quarter, year-on-year, following a 2.8% increase in the 2nd quarter.

According to Eurostat,

  • Hourly labor costs rose by 2.9% in industry, by 2.3% in construction, by 2.5% in services and by 2.6% in non-business economy.
  • Luxembourg reported the lowest increase in hourly labor costs, with wages growing by just 0.3%.

From the U.S

According to the prelim survey, the Composite PMI came in at 52.2, rising from a November 52.0.

  • The Manufacturing PMI fell from 52.6 to 52.5 in December, while the services PMI rose from 51.6 to 52.2.

Earlier in the day, economic data out of China had given the markets reason to be bullish. China’s industrial production rose by 6.2%, year-on-year, coming in ahead of a forecasted 5% and October 4.7%. Retail sales were also on the rise, jumping by 8.0% in November, following a 7.2% rise in October, year-on-year. Economists had forecast a 7.6% increase.

The Market Movers

For the DAX: It was a mixed day for the auto sector. Volkswagen and BMW fell by 0.84% and by 0.09% respectively. Continental and Daimler rose by 0.30% and by 0.59% respectively.

It was a bullish day for the banks, however. Commerzbank rose by 2.52%, with Deutsche Bank rallying by 2.91%.

From the CAC, it was also a bullish day for the banks. BNP Paribas and Soc Gen led the way, rallying by 2.21% and by 1.53% respectively. Credit Agricole saw a more modest gain of 0.73%.

The French Auto sector also found support, with Peugeot and Renault rising by 0.14% and by 1.38% respectively on Monday.

On the VIX Index

The VIX saw red for a 5th consecutive day, falling by 3.88% on Monday. Following on from a 9.4% decline on Friday, the VIX ended the day at 12.1.

Economic data from the Eurozone had a muted impact, with a pickup in service sector activity in the U.S providing support to the U.S majors.

The upbeat sentiment, following news of the phase 1 trade agreement between the U.S and China, also continued to pressure the VIX on the day.

The Day Ahead

It’s a quiet day ahead on the Eurozone economic calendar. October trade data from the Eurozone will provide direction in the early part of the day.

While trade data from Germany last week impressed, forecasts are for the trade surplus to narrow. An unexpected widening would be a boost for the European majors.

From the U.S, housing sector numbers, industrial production, and JOLTS job openings will also be in focus later in the day.

On the geopolitical front, we’ve got Brexit back in the driving seat. The big question is whether ‘The Establishment’ will be willing to give Boris an easy ride. It would certainly send the wrong message to other member states that had previously threatened referendums…

In the futures markets, at the time of writing, the DAX30 was down by 16 points, with the Dow down by 22 points.

Don't miss a thing!
Discover what's moving the markets. Sign up for a daily update delivered to your inbox

Latest Articles

See All

Expand Your Knowledge

See All
IMPORTANT DISCLAIMERS
The content provided on the website includes general news and publications, our personal analysis and opinions, and contents provided by third parties, which are intended for educational and research purposes only. It does not constitute, and should not be read as, any recommendation or advice to take any action whatsoever, including to make any investment or buy any product. When making any financial decision, you should perform your own due diligence checks, apply your own discretion and consult your competent advisors. The content of the website is not personally directed to you, and we does not take into account your financial situation or needs.The information contained in this website is not necessarily provided in real-time nor is it necessarily accurate. Prices provided herein may be provided by market makers and not by exchanges.Any trading or other financial decision you make shall be at your full responsibility, and you must not rely on any information provided through the website. FX Empire does not provide any warranty regarding any of the information contained in the website, and shall bear no responsibility for any trading losses you might incur as a result of using any information contained in the website.The website may include advertisements and other promotional contents, and FX Empire may receive compensation from third parties in connection with the content. FX Empire does not endorse any third party or recommends using any third party's services, and does not assume responsibility for your use of any such third party's website or services.FX Empire and its employees, officers, subsidiaries and associates, are not liable nor shall they be held liable for any loss or damage resulting from your use of the website or reliance on the information provided on this website.
RISK DISCLAIMER
This website includes information about cryptocurrencies, contracts for difference (CFDs) and other financial instruments, and about brokers, exchanges and other entities trading in such instruments. Both cryptocurrencies and CFDs are complex instruments and come with a high risk of losing money. You should carefully consider whether you understand how these instruments work and whether you can afford to take the high risk of losing your money.FX Empire encourages you to perform your own research before making any investment decision, and to avoid investing in any financial instrument which you do not fully understand how it works and what are the risks involved.
FOLLOW US