European Equities: Eurozone GDP and Member State Inflation in Focus

The Majors

It was a bearish end to the week for the European majors on Friday. The CAC40 fell by 0.82%, with the DAX and the EuroStoxx600 ending the day down by 1.32% and by 1.02% respectively. The losses came in spite of a bounce back across the U.S equity markets on Friday.

Disappointing GDP numbers from Germany and economic data from the U.S weighed on the majors. Market angst over the prospects of an imminent move by the FED also weighed, with U.S inflationary pressures picking up further in December. Autos continued to lose ground, with the sector taking a hit as the markets considered the impact of inflation on spending and the economic outlook.

The Stats

Member state GDP numbers for the 4^th quarter were in focus early in the European open.

The French Economy

In the 4^th quarter, the economy expanded by 0.7% following a 3.1% expansion in the previous quarter. Economists had forecast 0.5% growth.

According to Insee.Fr,

• Final domestic demand (excl. inventories) contributed 0.5 points, supported by both household consumption expenditure (+0.4%) and gross fixed capital formation (+0.5%).
• Trade terms weighed, however, with imports up 3.6%, while exports rose by 3.2%, resulting in a negative contribution to GDP (-0.2 points).
• The contribution of inventory changes to GDP growth was positive (0.4 points).

The German Economy

According to Destatis, the German economy contracted by 0.7% in the 4^th quarter, after having expanded by 0.7% in the previous quarter. Economists had forecast a 0.3% contraction. Year-on-year, the economy grew by 1.4%, falling short of a forecast of 1.8%. In the 3^rd quarter, the economy had also expanded by 1.4% year-on-year.

Other stats

French consumer spending and Spanish GDP numbers had a muted impact on the majors.

In December, French consumer spending increased by just 0.2%, which was in line with forecasts. Spending had risen by 0.9% in November.

For the 4^th quarter, Spain’s economy expanded by 2.00% quarter-on-quarter, easing from 2.6% growth in the previous quarter. Economists had forecast 1.4% growth.

From the U.S

Inflation and personal spending figures were market negative.

In December, the Core PCE Price Index rose by 5.8% year-on-year, which was up from 5.7% in the month prior. Personal spending disappointed, however, falling by 0.6%. In November, personal spending had risen by 0.4%.

The Market Movers

For the DAX: It was a bearish day for the auto sector on Friday. Continental led the way, sliding by 2.65%, with BMW and Daimler ending the day down by 1.70% and by 1.80% respectively. Volkswagen fell by a more modest 1.43%.

It was also a bearish day for the banks. Deutsche Bank slipped by 0.07%, with Commerzbank declining by 1.67%.

From the CAC, it was a bearish day for the banks. BNP Paribas slid by 2.67%, with Credit Agricole and Soc Gen seeing losses of 1.04% and 1.02% respectively.

The French auto sector had a bearish session. Stellantis NV slid by 2.70%, with Renault ending the day down by 2.43%.

Things were not much better for Air France-KLM and Airbus SE which saw losses of 1.83% and 2.66% respectively.

On the VIX Index

It was a 2^nd consecutive day in the red for the VIX on the Friday, marking just the 2^nd decline in 9 sessions.

Following a 4.60% loss on Thursday, the VIX slid by 9.28% to end the day at 27.66.

The NASDAQ rallied by 3.13%, with the Dow and the S&P500 seeing gains of 1.65% and 2.43% respectively.