European Equities: It’s Risk-on Ahead of the European Open…With economic data on the lighter side and the U.S markets closed, the momentum looks to provide support going into the European open.
Monday, 20th January 2020
German PPI m/m (Dec)
ECB President Lagarde Speaks
Tuesday, 21st January 2020
German ZEW Current Conditions (Jan)
German ZEW Economic Sentiment (Jan)
Eurozone ZEW Economic Sentiment (Jan)
Thursday, 23rd January 2020
ECB Monetary Policy Decision and Press Conference
Eurozone Consumer Confidence Prelim
Friday, 24th January 2020
French Manufacturing PMI (Jan) Prelim
French Services PMI (Jan) Prelim
German Manufacturing PMI (Jan) Prelim
German Services PMI (Jan) Prelim
German IFO Business Climate Index
Eurozone Manufacturing PMI (Jan) Prelim
Eurozone Markit Composite PMI (Jan) Prelim
Eurozone Services PMI (Jan) Prelim
ECB President Lagarde Speaks
It was a positive end to the week for the European majors, with the CAC40 rallying by 1.02% to lead the way on Friday. The EuroStoxx600 and DAX30 saw more modest gains of 0.96% and 0.72% respectively.
Support for the broader markets came from economic data from China and positive sentiment following Wednesday’s signing of the phase 1 trade agreement.
At the end of the week, the USMCA was also passed by the Senate, sending the pact off to the Oval Office.
With China, Canada and Mexico sitting with agreements, concerns are that Trump will now direct focus towards the EU… There’s certainly some incentive for the U.S President to draw attention away from the impeachment trial now underway on Capitol Hill.
It was a quiet day on the Eurozone economic calendar on Friday, with Italy and the Eurozone’s finalized inflation figures for December in focus.
The stats had a muted impact on the majors, however, as sentiment towards trade provided direction later in the session.
Going into the European session, economic data out of China had provided support.
While the Chinese economy saw the slowest growth in 30-years in 2019, 4th quarter numbers and December industrial production figures provided support.
The economy grew by 6% in the 4th quarter, year-on-year, which was at the same pace as in the 3rd and in line with forecasts. Quarter-on-quarter, the economy grew by 1.5%, which was also at the same pace as in the 3rd and in line with forecast.
Industrial production surged by 6.9% in December, coming in well ahead of a forecast of 5.9% and November’s 6.2%. Retail sales and fixed asset investment also beat forecasts at the end of the year.
From the U.S, while the stats were skewed to the negative, consumer sentiment remained at elevated levels according to prelim figures for Jan.
The Market Movers
For the DAX: It was a mixed day for the auto sector. Volkswagen bucked the trend once more, rising by 0.88%. Continental led the way down, falling by 0.55%. BMW and Daimler saw more modest losses of 0.42% and 0.49% respectively.
It was a bearish day for the banks, however, with Commerzbank and Deutsche Bank falling by 3.31% and by 0.60% respectively.
From the CAC, it was a bullish day for the banks. BNP Paribas rose by 0.32%, with Credit Agricole and Soc Gen rising by 0.74% and by 0.13% respectively.
For the French auto sector, it was a bearish day, however, with Peugeot and Renault falling by 0.63% and by 0.70% respectively.
On the VIX Index
It was 2nd consecutive day in the red for the VIX, which fell by 1.79% on Friday. Following on from a 0.81% loss on Thursday, the VIX ended the day at 12.1.
The downside came as the U.S majors rallied to record highs, supported by positive sentiment towards trade terms for the U.S.
The Day Ahead
It’s another quiet start to the week on the Eurozone economic calendar. Economic data is limited to German wholesale inflation figures for December.
We expect the numbers to have a muted impact on the majors, with trading volumes likely to be on the lighter side later in the day.
While there are no stats due out of the U.S, with the markets closed, the PBoC left Loan Prime Rates unchanged this morning. The hold had limited impact, however, with risk sentiment on a stronger footing at the start of the week.
In the futures markets, at the time of writing, the DAX was up by 28.5 points.