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Bob Mason
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Economic Calendar:

Tuesday, 22nd November

German GDP (Q3) Final

German IFO Business Climate Index (Nov)

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ECB President Lagarde Speaks

Wednesday, 23rd November

ECB Financial Stability Review

France Jobseekers Total

Thursday, 24th November

GfK German Consumer Climate (Dec)

ECB Publishes Account of Monetary Policy Meeting  

Friday, 25th November

French Consumer Spending (MoM) (Oct)

French CPI (MoM) (Nov) Prelim

French GDP (QoQ) (Q3) Final

French HICP (MoM) (Nov) Prelim

Eurozone Consumer Confidence Final

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The Majors

It was a relatively bearish start to the week for the European majors on Monday. The EuroStoxx600 fell by 0.20%, with the DAX30 and the CAC40 seeing losses of 0.08% and 0.07% respectively.

Concerns over further lockdown measures to contain the COVID-19 pandemic weighed, as new COVID-19 cases continued to spike.

While November’s prelim private sector PMIs had failed to send the majors into the red early in the session, further economic stress is anticipated.

The combination of disappointing PMI numbers and the continued rise in new COVID-19 cases did the damage. Earlier in the day, clinical trial data from AstraZeneca had also failed to impress, with a 90% efficacy rate coming up short of those of Pfizer Inc. and Moderna Inc.

Talk from Pfizer Inc. of a vaccine being available in the U.S by mid-December had provided support early in the session, however.

The Stats

It was a busy day on the Eurozone economic calendar. Prelim November private sector PMI numbers for France, Germany, and the Eurozone were in focus.

France’s manufacturing PMI slipped from 51.0 to 49.1, with the Services PMI falling from 46.5 to 38.0. Both PMIs fell to 6-month lows in November, according to prelim figures.

From Germany, the Manufacturing PMI fell from a 30-month high 58.0 to 57.9. The Services PMI fell from 49.5 to a 6-month low 46.2.

For the Eurozone, the Manufacturing PMI fell from a 26-month high 54.8 to 53.6, with the Services PMI declining from 46.9 to a 6-month low 41.3.

As a result of the deeper contraction in the services sector, the Eurozone’s Composite PMI fell from 50.0 to a 6-month low of 45.1.

According to the Eurozone’s prelim October Survey,

  • Business activity fell sharply as countries reintroduced more aggressive measures to contain the COVID-19 pandemic.
  • Service sector activity was hardest hit, with the rate of decline in sector output the most marked since May.
  • Manufacturers saw the slowest rate of increase in new orders over the past 5-months. For service sector firms, new business collapsed by levels not seen since May.
  • By member state, Germany bucked the wider downturn trend.
  • For France, by contrast, the composite fell by the steepest rate since May.
  • Employment fell across the Eurozone for a 9-consecutive month, though employment in Germany rose for the 1st time since February.

From the U.S

November’s prelim private sector PMIs were also in focus late in the European session.

The Manufacturing PMI rose from 53.4 to 56.7, with the services PMI increasing from 56.9 to 57.7. As a result, the composite PMI rose from 56.3 to 57.9.

According to November’s prelim survey,

  • The services PMI hit a 68-month high, with the manufacturing PMI hitting a 74-month high.
  • Firms reported a marked increase in new orders, with the rate of increase the fastest since Jun-18.
  • Domestic demand drove the surge in new orders, with new export business only seeing marginal increases.
  • Labor market conditions also improved, with the rise in employment the steepest since records began in 2009.
  • Optimism hit its highest level since 2014, supported by an end to election uncertainty and hopes of a COVID-19 vaccine.

The Market Movers

For the DAX: It was another mixed day for the auto sector on Monday. Continental rose by 2.27% to lead the way, with BMW and Daimler seeing gains of 0.47% and 1.32% respectively. Volkswagen fell by 0.69%, however, to buck the trend on the day.

It was a bullish day for the banks. Deutsche Bank rose by 3.82%, with Commerzbank rallying by 5.54%.

From the CAC, it was a bullish day for the banks. BNP Paribas and Soc Gen rose by 1.32% and by 2.41% respectively. Credit Agricole jumped by 4.07%, however, to lead the way.

It was a mixed day for the French auto sector. Peugeot fell by 0.54%, while Renault ended the day up by 4.28%.

Air France-KLM rallied by 5.37%, while Airbus SE saw a more modest 1.69% gain.

On the VIX Index

It was back into the red for the VIX on Monday. Reversing a 2.55% gain from Friday, the VIX fell by 4.39% to end the day at 22.66.

Talk of Pfizer Inc. delivering a vaccine by mid-December and upbeat private sector PMI numbers from the U.S delivered support.

The upside came in spite of a continued rise in new COVID-19 cases and the latest round of containment measures.

On Monday, the Dow rose by 1.12%, with the NASDAQ and S&P500 seeing gains of 0.22% and 0.56% respectively.

The Day Ahead

It’s a relatively busy day ahead on the Eurozone economic calendar. Finalized 3rd quarter GDP and IFO Business Climate figures for November are due out of Germany.

With the Eurozone economy at the mercy of the COVID-19 2nd wave, the business climate figure will likely have the greatest impact.

On the monetary policy front, ECB President Draghi is also scheduled to speak late in the session. Any forward guidance on monetary policy will influence.

From the U.S, consumer confidence for November will also provide direction late in the day.

Away from the economic calendar, COVID-19 news updates and any chatter from Capitol Hill will need monitoring.

The Futures

In the futures markets, at the time of writing, the Dow was up by 16 points.

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

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