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Economic Calendar:

Monday, 8th February

German Industrial Production (MoM) (Dec)

ECB President Lagarde Speaks

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Tuesday, 9th February

German Trade Balance (Dec)

Italy Industrial Production m/m (Dec)

Wednesday, 10th February

German CPI (MoM) (Jan) Final

French Industrial Production m/m (Dec)

ECB President Lagarde Speaks

Friday, 12th February

Spanish CPI (YoY) (Jan) Final

Spanish HICP (YoY) (Jan) Final

Eurozone Industrial Production (MoM) (Dec)

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The Majors

It was a mixed end to the week for the European majors on Friday, with the DAX30 and EuroStoxx600 failing to make it 5 in a row.

The CAC40 rose by 0.90%, with the EuroStoxx600 ending the day flat. It was a bearish end to the week for the DAX30, which gave up early gains to end the day with a 0.03% loss.

Disappointing economic data from Germany and the U.S weighed on the DAX30 and the EuroStoxx600 in particular.

Downward pressure was modest, however, with expectations of fiscal support limiting the downside.

The Stats

It was a quieter day on the economic calendar. Key stats included German factory orders for December and French nonfarm payrolls for the 4th quarter.

In December, German factory orders slid by 1.9%, partially reversing a 2.7% rise from November. Economists had forecast a more modest 1.0% decline.

According to Destatis,

  • Manufacturers of intermediate goods saw a 0.8% increase in new orders month-on-month.
  • Consumer goods producers recorded a 6.4% jump in new orders.
  • Manufacturers of capital goods, however, reported a 4.6% slide in new orders, month-on-month.
  • In 2020, new orders in the manufacturing sector were 7.2% lower than in the year prior.
  • Compared with the same month a year earlier, orders were up by 6.7%.
  • New orders were 2.6% higher than in February 2020, the month prior to the introduction of COVID-19 restrictions.

From France, nonfarm payroll figures also disappointed, though less unexpected as a result of extended lockdown measures.

In the 4th quarter, nonfarm payrolls fell by 0.2%, partially reversing a 1.6% rise from the 3rd quarter.

From the U.S

Official labor market figures weighed on the European majors late in the European session.

In January, nonfarm payrolls rose by 49k, falling just shy of a conservative 50k estimate. More alarmingly, however, was December’s downward revision to a 227k decline.

While the unemployment rate slipped from 6.7% to 6.3% in January, the participation rate did also fall from 61.5% to 61.4%.

The Market Movers

For the DAX: It was another mixed day for the auto sector on Friday. Continental and Daimler rose by 0.57% and by 1.35% respectively. BMW and Volkswagen saw further red, however, falling by 0.58% and 1.18% respectively.

It was another bearish day for the banks. Deutsche Bank fell by 1.57%, with Commerzbank declining by 0.21%.

From the CAC, it was another bullish day for the banks. Soc Gen rallied by 3.06%, with BNP Paribas and Credit Agricole gaining 2.61% and 1.82% respectively.

It was also a bullish day for the French auto sector. Stellantis NV rose by 2.09%, with Renault rallying by 5.23%.

Air France-KLM eked out a 0.04% gain, with Airbus SE rising by 0.34% on the day.

On the VIX Index

It was a 5th consecutive day in the red for the VIX on Friday. Following on from an 4.98% fall on Thursday, the VIX fell by 4.13% to end the day at 20.87.

The Dow and the S&P500 rose by 0.30% and by 0.39% respectively, with NASDAQ gaining by 0.57%.

For the U.S equity markets, Friday’s gains delivered a 5th consecutive day in the green for both the Dow and the S&P500.

While economic data from the U.S disappointed on Friday, hope of a speedy stimulus fueled economic recovery provided support.

The Day Ahead

It’s a relatively quiet day ahead on the European economic calendar. German industrial manufacturing figures for December are due out later today.

Following the DAX’s delayed reaction to Friday’s factory orders, we could see further pressure should the numbers disappoint.

Once more, however, the German government’s promise of further COVID-19 relief aid should limit any downside.

From the U.S, there are no material stats to consider, leaving the majors in the hands of chatter from Capitol Hill. Progress towards Biden’s $1.9tn relief package will be key.

On the monetary policy front, ECB President Lagarde is scheduled to speak after the European close. Expect any forward guidance or views on the economic outlook to provide direction ahead of the open on Tuesday.

From Italy, expect updates on Draghi’s progress towards forming a new government to also draw attention.

The Futures

In the futures markets, at the time of writing, the Dow Mini was up by 115 points, with the DAX30 up by 104 points.

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

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