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Bob Mason
Growing Euro notes arrows over the flag of European Union.

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 bullish day for the European majors on Tuesday. The DAX30 rallied by 1.66%, with the CAC40 and the EuroStoxx600 rising by 0.93 and by 0.63% respectively.

There were no stats to provide the European majors with direction on the day. The lack of stats left the markets in the hands of corporate earnings and the IMF on the day.

Impressive earnings results from UBS and upward revisions to the IMF’s 2020 and 2021 growth forecasts supported the majors.

According to the IMF Outlook Update, the U.S economy is forecast to growth by 5.1% in 2021, which was revised up from a projection of 3.1% in October. For 2020, the IMF estimates a contraction of 3.4%, revised up from a 4.3% contraction forecast back in October.

Germany is projected to see growth of 3.5% in 2021 (previous 4.2%), with France’s economy to expand by 5.5% (previous 6.0%).

For 2020 estimates, Germany’s economy is estimated to have contacted by 5.4%, an upward revision from an projected 6% contraction in October.

While still dire reading, France’s economy is estimated to have contracted by 9.0% in 2020. In October the IMF had projected a contraction of 9.8%.

The upside for the majors came in spite of EU member states rolling out containment measures to limit the spread of new COVID-19 strains.

The Stats

It was a particularly quiet day on the economic calendar. There were no material stats from the Eurozone to provide the European majors with direction.

From the U.S

It was a relatively quiet day on the U.S economic calendar.

In January, the CB Consumer Confidence Index rose from 87.1 to 89.3, coming in ahead of a forecasted increase to 89.0. The Present Situation Index fell from 87.2 to 84.4, while the expectations Index increased from 87.0 to 92.5.

The Market Movers

For the DAX: It was a bullish day for the auto sector on Tuesday. BMW and Continental rose by 2.22% and by 1.92%, with Daimler and Volkswagen gaining 1.79% and 1.63% respectively.

It was also a bullish day for the banks. Deutsche Bank rose by 1.34%, with Commerzbank rallying by 2.80%.

From the CAC, it was a bullish day for the banks. BNP Paribas and Credit Agricole rose by 1.84% and by 1.83% respectively, with Soc Gen rallying by 2.37%.

It was also a bullish day for the French auto sector. Stellantis NV and Renault saw gains of 1.84% and 3.25% respectively.

Air France-KLM reversed Monday’s 3.28% loss with a 4.24% gain, while Airbus SE ending the day up by just 0.49%.

On the VIX Index

It was back into the red for the VIX on Tuesday, ending a run of 2 consecutive days in the green. Partially reversing a 5.84% gain from Monday, the VIX fell by 0.73% to end the day at 23.02.

The modest loss on the day came in spite of the S&P500 ending the day in the red on Tuesday.

The Dow and the NASDAQ both fell by 0.07%, with the S&P500 declining by 0.15%.

The Day Ahead

It’s a relatively quiet day ahead on the economic calendar. February consumer confidence figures for Germany are due out later this morning.

Following disappointing business sentiment figures, a marked decline in confidence would be another negative for the DAX30.

From the U.S, durable goods and core durable goods orders will also be in focus late in the session.

Away from the economic calendar, expect corporate earnings, COVID-19 news, and chatter from Capitol Hill to also provide direction.

The Futures

In the futures markets, at the time of writing, the Dow Mini was up by 9 points, while the DAX was down by 14 points.

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

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