European Equities: Economic Data, Brexit, and Capitol Hill in FocusEconomic data from Germany, Brexit updates, and stimulus talks from Capitol Hill will provide the majors with direction on the day ahead.
Friday, 18th December
German PPI (MoM) (Nov)
German IFO Business Climate Index (Dec)
75% of retail CFD investors lose money
It was another bullish day for the European majors on Thursday, with the DAX30 rising by 0.75% to lead the way yet again. The CAC40 and the EuroStoxx600, once more, saw more modest gains of 0.03% and 0.30% respectively.
Following positive private sector PMI numbers on Wednesday, COVID-19 vaccine news delivered support on the day. Progress on Capitol Hill towards a stimulus package was also positive for the European majors on the day.
On the vaccine front, both France and Germany announced that vaccinations would likely commence in the final week of the year.
From Brexit talks, EU chief negotiator Barnier continued to paint a brighter picture on talks, while the UK remained more cautious.
It was a relatively quiet day on the economic calendar. Finalized November inflation figures for the Eurozone were in focus.
The numbers were in line with prelim figures, however, muting any impact on the majors.
In November, the annual rate of core inflation held steady at 0.2%, which was in line with prelim and forecasts. Month-on-month, consumer prices fell by 0.3%, reversing a 0.2% rise in October.
Year-on-year, consumer prices also fell by 0.3%, following a 0.3% decline in October.
From the U.S
It was a relatively busy day on the economic calendar. Key stats included Philly FED manufacturing production figures for December and weekly jobless claims figures.
Other stats included housing sector data that had a muted impact on the majors.
In the week ending 11th December, initial jobless claims came in at 885k. In the week prior, claims had stood at 862k.
For December, the Philly FED Manufacturing Index fell from 26.3 to 11.1. Economists had forecast a decline to 20.0.
The Market Movers
For the DAX: It was a bearish day for the auto sector on Thursday. Continental and Daimler fell by 0.77% and by 0.97% respectively. BMW and Volkswagen saw relatively modest losses of 0.67% and 0.66% respectively.
It was another relatively bullish day for the banks. Deutsche Bank rose by 1.48%, with Commerzbank eking out another 0.04% gain.
From the CAC, it was a mixed day for the banks. BNP Paribas and Soc Gen fell by 0.29% and by 0.26% respectively. Credit Agricole bucked the trend, however, with a 0.10% gain.
It was another mixed day for the French auto sector. Peugeot rose by 0.68%, while Renault fell by 0.26%.
Air France-KLM slid by 2.36%, with Airbus SE declining by 0.36%.
On the VIX Index
It was a 3rd consecutive day in the red for the VIX on Thursday. Following on from a 1.70% fall on Wednesday, the VIX fell by 2.53% to end the day at 21.93.
Disappointing economic data fuelled expectations of fiscal support, as initial jobless claims inched back towards 900k.
The main area of focus has been on Capitol Hill as lawmakers continue to make progress towards a $900bn stimulus package. Coupled with positive vaccine news and the commencement of Operation Warp Speed in the U.S, hopes remain of strong economic recovery.
The Dow rose by 0.49%, with the NASDAQ and S&P500 seeing gains of 0.58% and 0.84% respectively. All 3 closed record highs.
The Day Ahead
It’s a busier day ahead on the economic calendar. Germany is back in the spotlight. December’s IFO Business Climate Index and sub-index figures are due out along with wholesale inflation figures.
Expect the headline business sentiment figure to have the greatest impact on the DAX30.
From the U.S, current account figures for the 3rd quarter are due out that will likely have a muted impact on the majors.
Away from the economic calendar, Brexit, COVID-19 news, and chatter from Capitol Hill will also need monitoring. On Thursday, lawmakers had continued to make progress towards a stimulus package to support the U.S economy.
In the futures markets, at the time of writing, the Dow Mini was down by just 2 points.
For a look at all of today’s economic events, check out our economic calendar.