European Equities: German Factory Orders and U.S Nonfarms in Focus

In January, Germany’s IHS Markit Construction PMI fell from 47.1 to 46.6

Of greater significance, however, were Eurozone retail sales figures for December.

Retail sales rose by 2.0%, in December, partially reversing a 5.7% decline from November.

According to Eurostat,

• Automotive fuel sales jumped by 5.1%, with food, drinks, & tobacco sales climbing by 1.9%.
• Non-food product sales rose by 1.5%, supported by a 12.4% surge in prices for clothing & footwear.

By member state,

• France (+22.3%), Belgium (+15.9%), and Ireland (+11.4%) saw the largest increases in sales.
• The Netherlands (-10.9%) and Germany (-9.6%) recorded the largest declines.

From the ECB, the Economic Bulletin also drew interest on the day.

Salient points from the Bulletin included:

• Having increased by close to 14% in Q3, consumer spending weaned in Q4 as a result of containment measures.
• Short-term labor market indicators have continued to improve, but are still signaling contractionary developments.
• The 2^nd wave of the pandemic points to downside risks to investment in Q1 2021.
• Following a bounce in euro area trade in Q3, growth in trade has moderated.
• Looking forward, the roll-out of vaccines allows for greater confidence in the resolution of the health crisis.

From the U.S

Weekly jobless claims figures for the week ending 29^th January and factory orders for December were in focus.

In the week ending 29^th January, initial jobless claims eased back from 812k to 779k. Economists had forecast a rise to 830k.

Factory orders were also upbeat, with orders rising by a further 1.1% in December. In November, orders had increased by 1.3%.

The Market Movers

For the DAX: It was a mixed day for the auto sector on Thursday. Continental and Daimler rose by 1.56% and by 2.91% respectively. BMW and Volkswagen saw red, however, with losses of 1.86% and 0.80% respectively.

It was bearish day for the banks. Deutsche Bank fell by 1.03%, with Commerzbank declining by 0.11%.

From the CAC, it was a bullish day for the banks. Soc Gen rallied by 2.49%, with BNP Paribas and Credit Agricole gaining 1.40% and 0.83% respectively.

It was also a bullish day for the French auto sector. Stellantis NV and Renault ended the day with gains of 0.63% and 1.75% respectively.

Air France-KLM rose by 0.60%, with Airbus SE rallying by 3.66% on the day.

On the VIX Index

It was a 4^th consecutive day in the red for the VIX on Thursday. Following on from an 10.37% slide on Wednesday, the VIX fell by 4.98% to end the day at 21.77.

The Dow and the S&P500 rose by 1.08% and by 1.09% respectively, with NASDAQ gaining by 1.23%.

The Day Ahead

It’s another relatively quiet day ahead on the European economic calendar. German factory order figures for December are due out later today.

4^th quarter nonfarm payroll figures from France are also due out but will likely have a muted impact on the majors.

Late in the session, U.S nonfarm payrolls and December’s unemployment rate will influence, however.

Away from the economic calendar, expect chatter from Capitol Hill to also influence going into the weekend.

The Futures

In the futures markets, at the time of writing, the Dow Mini was up by 13 points, with the DAX30 up by 6 points.

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