European Equities – German Industrial Production and Trade in Focus
Friday, 9th April
German Industrial Production (MoM) (Feb)
German Trade Balance (Feb)
It was a relatively bullish day for the European majors on Thursday, after Wednesday’s relatively bearish session.
The CAC40 and the EuroStoxx600 rose by 0.57% and by 0.58% respectively, with the DAX30 gaining by 0.17%.
It was fresh highs for the majors on Thursday, with the FOMC meeting minutes from late Wednesday delivering support.
Following the FOMC economic projections and FED Chair Powell’s testimonies, the minutes reaffirmed Powell’s assurances. Low for longer was good enough to drive the European majors to fresh record highs.
The ECB meeting minutes also affirmed the intent to ramp up bond purchases near-term to address rising yields.
It was a quiet day on the economic calendar on Thursday. The German economy was back in focus with factory orders in focus.
In February, factory orders increased by 1.2% month-on-month, which was in line with forecasts. In January, orders had risen by 1.4%.
According to Destatis,
- Domestic orders increased by 4.0%, while foreign orders slipped by 0.5% in the month.
- New orders from the euro area rose by 2.7%, while new orders from other countries slid by 2.3%.
- Manufacturers of intermediate goods saw new orders increase by 0.5%, with orders for capital goods rising by 2.1%.
- New orders for consumer goods fell by 1.9%, however.
- When compared with February 2020, new orders were up 5.6%.
On the monetary policy front, the ECB monetary policy meeting minutes were also in focus.
Salient points from the monetary policy considerations and policy options included:
- While the overall economic situation would improve throughout 2021, uncertainty in the euro area remained high.
- Persistently high rates of COVID-19 infection, the spread of virus mutations, and the speed of vaccination campaigns remain key issues.
- Looking beyond the short-term weakness, euro area economic activity was expected to gain momentum in the course of the year.
- Over the medium-term the recovery should be supported by favorable financial conditions, an expansionary fiscal stance, and a recovery in demand as containment measures were gradually lifted.
- Vis-à-vis managing rising government bond yields and borrowing costs, the ECB proposed that net purchases under the PEPP be increased significantly over the next quarter.
- The ECB should review the purchase pace on a quarterly basis.
- Additionally, the Governing Council reiterated that it stood ready to adjust all of its instruments to ensure inflation moved towards its aim in a sustained manner.
From the U.S
It was another quiet day on the economic calendar, with economic data limited to weekly jobless claim figures.
In the week ending 2nd April, initial jobless claims rose from a previous week 728k to 744k.
Economists had forecast a fall to 680k.
The Market Movers
For the DAX: It was a bearish day for the auto sector on Thursday. Continental and Daimler slid by 1.62% and by 1.47% respectively, with Volkswagen falling by 0.97%. BMW ended the day with a more modest 0.79% loss.
It was also a bearish day for the banks. Deutsche Bank and Commerzbank fell by 1.05% and by 1.88% respectively.
From the CAC, it was a mixed day for the banks. BNP Paribas and Soc Gen ended the day down by 0.55% and by 1.83% respectively. Credit Agricole found support, however, gaining 0.21%.
It was a particularly bearish day for the French auto sector, however. Stellantis NV fell by 2.30%, with Renault sliding by 3.47%.
Air France-KLM gave up some of Wednesday’s gains with a 3.17% loss, while Airbus SE eked out a 0.26% gain.
On the VIX Index
It was a 2nd consecutive day in the red for the VIX on Thursday.
Following on from a 5.3% slide on Wednesday, the VIX fell by 1.22% to end the day at 16.95.
The NASDAQ rose by 1.03%, with the Dow and the S&P500 gaining 0.17% and 0.42% respectively.
The Day Ahead
It’s a busier day ahead on the European economic calendar. German industrial production and trade figures for February are due out later today.
The markets will be looking for positive numbers and a pick up in overseas exports of goods to be aligned with the survey-based PMI numbers.
From the U.S, wholesale inflation figures for March will also draw attention late in the European session.
In the futures markets, at the time of writing, the Dow Mini was up by 59 points.
For a look at all of today’s economic events, check out our economic calendar.