European Equities: Futures Sink as Risk Aversion Sweeps Across the Global Financial Markets

The Stats

It was a relatively busy day on the Eurozone economic calendar on Tuesday. Key stats included the Eurozone’s prelim December inflation numbers and November retail sales figures.

According to Eurostat, the annual rate of inflation picked up from 1.0% to 1.3% in December, with the core annual rate of inflation holding steady at 1.3%. The figures were in line with forecasts.

• Food, alcohol & tobacco prices increased by 2.0%, compared with 1.9% in November.
• Prices for services rose by 1.8%, following a 1.9% increase in November, also contributing to the upside.
• There were also increases in prices for non-energy industrial goods (+0.4%), and energy (+0.2%).

Retail sales figures impressed on the day, with Eurozone retail sales rising by 1.0%, month-on-month, to reverse a 0.3% decline from October.

According to Eurostat,

• Sales of non-food products rose by 1.4%, with the sale of food, drinks & tobacco rising by 0.7%.
• Automotive fuel sales fell by 1.0%, however.
• By member state, Belgium and Latvia recorded the largest increases in sales, with increases of 2.7% and 2.6% respectively.
• Ireland reported the largest decline, falling by 0.9%.
• Year-on-year, retail sales rose by 2.2%.

From the U.S

The market’s preferred ISM Non-Manufacturing PMI figures provided support, with the PMI rising from 53.9 to 55.0 in December. Factory orders had limited influence, in spite of a 0.7% fall in November. Economists had forecast a 0.8% decline.

The Market Movers

For the DAX: It was another mixed day for the auto sector. BMW and Continental led the way, rising by 1.90% and by 1.20% respectively, with Daimler up by a more modest 0.52%. Volkswagen bucked the trend, falling by 0.68%.

It was a bullish day for the banks, however. Commerzbank rose by 1.73%, while Deutsche Bank rallied by 3.01% on the day.

From the CAC, it was a mixed day for the banks. BNP Paribas and Credit Agricole fell by 0.04% and by 0.23% respectively. Soc Gen bucked the trend on the day, rallying by 1.22%.

For the French auto sector, it was also a bullish day, with Peugeot rising by 0.95% and Renault rallying by 3.53%.

Airline stocks were mixed on Tuesday. On the DAX30, Deutsche Lufthansa fell by a further 0.26%, while Air France – KLM rose by 0.47%.

On the VIX Index

The VIX fell by 0.43% on Tuesday. Following on from a 1.21% decline on Monday, the VIX ended the day at 13.8.

A brief visit to a day high 14.5 was as good as it got as market fear of an all-out war between the U.S and Iran eased on the day.

Late in the day, however, there was some upside as the S&P500 fell further back late in the U.S session.

The Day Ahead

It’s a relatively busy day on the Eurozone economic calendar. Key stats include German factory orders for November and finalized business and consumer confidence figures for the Eurozone.

The numbers will need to be more than impressive to draw attention away from the Middle East, however.

In the early hours of this morning, Iran attacked bases in Iraq with U.S presence, weighing heavily on riskier assets.

In the futures markets, at the time of writing, the DAX30 was down by 253 points, with the Dow down by 412 points.