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Bob Mason
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Economic Calendar:

Tuesday, 2nd February

Eurozone GDP y/y (Q4) 1st Estimate

Eurozone GDP q/q (Q4) 1st Estimate

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Wednesday, 3rd February

Spanish Services PMI (Jan)

Italian Services PMI (Jan)

French Services PMI (Jan) Final

German Services PMI (Jan) Final

Eurozone Markit Composite PMI (Jan) Final

Eurozone Services PMI (Jan) Final

Italian CPI (MoM) (Jan) Prelim

Eurozone CPI (YoY) (Jan) Prelim

Eurozone Core CPI (YoY) (Jan) Prelim

Eurozone CPI m/m (Jan) Prelim

Thursday, 4th February

IHS Markit Construction PMI (Jan)

ECB Economic Bulletin

Eurozone Retail Sales (MoM) (Dec)

Friday, 5th February

German Factory Orders (MoM) (Dec)

French Non-Farm Payrolls (QoQ) (Q4)

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The Majors

It was a bullish start to the month for the European majors that looked to claw back some of the losses from last week.

The DAX30 rose by 1.41% to lead the way, with the CAC40 and EuroStoxx600 gaining 1.16% and 1.24Y% respectively.

Manufacturing PMI figures from the Eurozone provided support, while the markets brushed aside disappointing German retail sales figures.

With extended lockdown measures in place, consumption will likely remain under pressure through to March.

The good news for the Eurozone economy, however, was continued growth across the manufacturing sector.

Ahead of the European open, manufacturing PMI figures from China failed to spook the markets. This was in spite manufacturing sector business conditions improving at its weakest pace in 7-months.

The Stats

It was a busy day on the economic calendar.

Early in the day, German retail sales figures for December disappointed, with sales sliding by 9.6%. Economists had forecast a more modest 2.6% decline. In November, retail sales had risen by 1.1%.

On the employment front, the Eurozone’s unemployment rate held steady at 8.3% in December, which was in line with forecasts.

While holding steady in December, the number of unemployed was up by 1.516 million when compared with December 2019, according to Eurostat.

Manufacturing sector PMI figures provided support, however.

In January, the Eurozone’s finalized Manufacturing PMI came in at 54.8, an upward revision from a prelim 54.7. In December, the Manufacturing PMI had stood at 55.2.

According to the Markit Survey,

  • The Netherlands stood at the top of the PMI table, with a 28-month high 58.8.
  • Germany ranked 2nd with a 4-month low 57.1, with Italy 3rd with a 34-month high 55.1.
  • France ranked 6th behind Austria and Ireland, with a 6-month high 51.
  • Only Spain’s manufacturing sector contracted, with the PMI falling from 51.0 to 49.3 in January.

From the U.S

Manufacturing PMI figures were also in focus.

The market’s favored ISM Manufacturing PMI fell from 60.7 to 58.7, falling beyond a forecasted 60.0.

Finalized Market survey manufacturing PMI figures for January were positive for riskier assets, however.

The finalized PMI came in at 59.2, upwardly revised from a prelim 59.1. In December, the PMI had stood at 57.1.

The Market Movers

For the DAX: It was a relatively bullish day for the auto sector on Monday. Continental and Daimler rose by 0.87% and by 0.86% respectively. Volkswagen and BMW saw more modest gains of 0.09% and 0.19% respectively.

It was a mixed day for the banks, however. Deutsche Bank rose by 2.63%, while Commerzbank fell by 1.39%.

From the CAC, it was a bullish day for the banks. Credit Agricole gained 1.45%, with BNP Paribas and Soc Gen ending the day up by 1.01% and by 0.95% respectively.

It was a mixed day for the French auto sector. Stellantis NV rose by 0.67%, while Renault fell by 0.58%.

Air France-KLM and Airbus SE saw modest losses of 0.33% and by 0.11% respectively.

On the VIX Index

It was back into the red for the VIX on Monday. Partially reversing a 9.53% rise from Friday, the VIX fell by 8.61% to end the day at 30.24.

The Dow and the S&P500 rose by 0.76% and by 1.61% respectively, with NASDAQ rallying by 2.55%.

While economic data from the U.S was mixed on the day, tech and mining stocks were in recovery mode following last week’s sell-off.

Amazon.com jumped by 4.26%, with Alphabet Inc. and Microsoft Corp. rallying by 3.60% and by 3.32% respectively. Both Amazon.com and Alphabet Inc. are due to release earnings later today.

Silver was the story of the day, however, jumping by 9.3% that drove demand for mining stocks at the start of the month.

The Day Ahead

It’s a relatively busy day ahead on the European economic calendar. 1st estimate Eurozone GDP figures for the 4th quarter will be in focus later today.

With little else for the markets to consider, we can expect some sensitivity to today’s stats.

While Germany and Spain managed to avoid contractions in the 4th quarter, the Eurozone economy may be less fortunate. Economists have forecast a contraction of 1.2% for the quarter.

From the U.S, there are no material stats to provide direction later in the day, leaving the markets in the hands of chatter from Capitol Hill and corporate earnings.

Away from the economic calendar, COVID-19 news will also remain a key driver.

The Futures

In the futures markets, at the time of writing, the Dow Mini was up by 13 points.

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

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