European Equities: German Industrial Production and Geopolitics in Focus
Monday, 7th February
German Industrial Production (MoM) (Dec)
Wednesday, 9th February
German Trade Balance (Dec)
Thursday, 10th February
EU Economic Forecasts
It was a particularly bearish end to the week for the European majors on Friday. The CAC40 slipped by 0.77%, with the DAX and the EuroStoxx600 sliding by 1.75% and by 1.38% respectively.
A hawkish ECB President Lagarde on Thursday and corporate earnings overshadowed upbeat economic data from Germany and the U.S on Friday.
Adding to the downside at the end of the week were market jitters over a possible Russian invasion of the Ukraine. Late in the week, news had hit the wires of the U.S sending troops into the region, increasing tensions between Russia and the U.S.
It was a relatively busy morning on the Eurozone economic calendar this morning. Key stats included German factory orders and Eurozone retail sales figures for December.
German Factory Orders
In December, German factory orders increased by 2.8% versus a forecasted 0.5% rise. Factory orders had jumped by 3.6% in November.
According to Destatis,
- Domestic orders surged by 11.7%, month-on-month, while foreign orders fell by 3.0%.
- New orders from the euro area declined by 4.2%, while new orders from other countries fell by 2.3%.
- Producers of intermediate goods reported a 4.1% increase in new orders, with capital goods producers seeing a 1.8% rise.
- Consumer goods orders led the way, however, jumping by 5.3%.
- Compared with December 2020, orders were 5.5% higher.
Eurozone Retail Sales
In December, retail sales slid by 3.0% in the Eurozone reversing a 1.0% increase from November. Economists had forecast a more modest 0.5% decline.
According to Eurostat,
- Non-food product sales slumped by 5.2%, while food, drinks, & tobacco sales slipped by 0.3%.
- Automotive fuel sales rose by a modest 0.1%.
- Member states with the largest falls in retail trade volume were the Netherlands (-9.2%), Spain (-5.7%), and Germany (-5.5%).
- By contrast, Latvia (+7.2%) and Slovenia (+2.1%) recorded the largest increases in retail sales in December.
From the U.S
Nonfarm payrolls increased by 467k in January, following an upwardly revised 510k jump in December. In spite of the increase, the U.S unemployment rate rose from 3.9% to 4.0% as a result of an increase in the participation rate from 61.9% to 62.2%.
The Market Movers
For the DAX: It was a bearish day for the auto sector on Friday. BMW slid by 4.37%, with Continental and Volkswagen seeing losses of 3.69% and 3.08% respectively. Daimler fell by a more modest 2.67% on the day.
It was a bullish day for the banks, however. Deutsche Bank and Commerzbank ended the day up by 2.40% and by 2.17% respectively.
From the CAC, it was a mixed day for the banks. Credit Agricole and Soc Gen fell by 1.19% and by 0.64% respectively, while BNP Paribas rose by 1.04%.
The French auto sector had a particularly bearish session. Stellantis NV tumbled by 5.25%, with Renault sliding by 3.98%.
Air France-KLM and Airbus SE saw losses of 1.28% and 1.18% respectively on the day.
On the VIX Index
A two-day winning streak came to an end for the VIX on the Friday.
Partially reversing a 10.23% rise on Thursday, the VIX fell by 4.64% to end the day at 23.22.
The Dow slipped by 0.06%, while the S&P500 and the NASDAQ saw gains of 0.52% and 1.58% respectively.
The Day Ahead
It’s a quiet day ahead on the Eurozone’s economic calendar. German industrial production figures for December are due out going into the European open. Following a string of upbeat stats from Germany, the markets will be looking for a pickup in industrial production at the end of the year.
From the U.S, there are no material stats due out to provide the majors with direction later in the day. Ahead of the European open China private sector PMIs will set the tone.
Away from the economic calendar, news updates on Russia and the Ukraine will need monitoring.
In the futures markets, at the time of writing, the Dow Mini was down by 36 points, while the DAX was up by 53 points.
For a look at all of today’s economic events, check out our economic calendar.