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European Equities: Private Sector PMIs and U.S Stimulus Talks in Focus
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It's a busy day ahead, with private sector PMIs for December in focus. News from Capitol Hill and any updates on Brexit will also influence.
Economic Calendar:
Wednesday, 16th December
French Manufacturing PMI (Dec) Prelim
French Services PMI (Dec) Prelim
German Manufacturing PMI (Dec) Prelim
German Services PMI (Dec) Prelim
Eurozone Manufacturing PMI (Dec) Prelim
Eurozone Markit Composite PMI (Dec) Prelim
Eurozone Services PMI (Dec) Prelim
Eurozone Wages (YoY) (Q3) Prelim
Eurozone Trade Balance (Oct)
Thursday, 17th December
Eurozone Core CPI (YoY) (Nov) Final
Eurozone CPI (YoY) (Nov) Final
Eurozone CPI (MoM) (Nov) Final
Friday, 18th December
German PPI (MoM) (Nov)
German IFO Business Climate Index (Dec)
The Majors
It was a bullish day for the European majors on Tuesday, with the DAX30 rising by 1.06% to lead the way. The CAC40 and the EuroStoxx600 saw more modest gains of 0.04% and 0.25% respectively.
Progress on the COVID-19 vaccine front offset negative sentiment towards a reintroduction of containment measures.
Following news of Germany set for another lockdown, news hit the wires on Tuesday of a likely partial lockdown in Italy.
Hopes of the EMA approving the BioNTech/Pfizer Inc. and Moderna Inc. vaccines in mid-January muted the impact of the lockdown news.
The Stats
It was a relatively quiet day on the Eurozone economic calendar. Finalized November inflation figures for France and Italy were in focus through the early part of the European session.
The stats had a muted impact on the majors, however, with the finalized numbers in line with prelim figures.
In France, consumer prices rose by 0.2% after having stalled in October. The Harmonized Index for consumer price also rose by 0.2%, after having stalled in October.
In Italy, consumer prices, consumer prices fell by 0.1% in November, partially reversing a 0.2% rise in October.
From the U.S
It was a busier day on the economic calendar. Key stats included NY Empire State Manufacturing figures for December and industrial production figures for November.
In December, the NY Empire State Manufacturing Index fell from 6.3 to 4.9. Economists had forecast a rise to 6.8.
Industrial production rose by 0.4% in November, following a 1.1% jump in October. Economists had forecast a 0.5% rise.
Other stats included import and export price figures for November that had a muted impact on the majors.
The Market Movers
For the DAX: It was a bullish day for the auto sector on Tuesday. Volkswagen surged by 7.43%, with Continental and Daimler rallying by 3.83% and by 3.03% respectively. BMW saw a more modest 2.77% gain on the day.
It was also a bullish day for the banks. Deutsche Bank rose by 2.01%, with Commerzbank ending the day up by 3.08%.
From the CAC, it was a bullish day for the banks. BNP Paribas rose by 2.46%, with Credit Agricole and Soc Gen gaining 1.81% and 1.91% respectively.
It was also a bullish day for the French auto sector. Peugeot and Renault ended the day with gains of 2.42% and 2.97% respectively.
Air France-KLM rose by a modest 0.86%, while Airbus SE slipped by 0.74%.
On the VIX Index
A run of 4 consecutive days in the green came to an end for the VIX on Tuesday. Reversing a 6.05% gain from Monday, the VIX fell by 7.40% to end the day at 22.89.
Hopes of a government stimulus package drove demand for riskier assets on the day, with COVID-19 vaccine news supporting.
The Dow rose by 1.13%, with the NASDAQ and S&P500 gaining 1.25% and 1.29% respectively.
The Day Ahead
It’s a particularly busy day ahead on the economic calendar. Prelim December private sector PMIs are due out of France, Germany, and the Eurozone.
Expect plenty of influence from the numbers, with manufacturing sector activity likely to need to cushion a slump in service sector activity.
From the U.S, November retail sales and prelim private sector PMIs for December will also provide direction late in the session.
Expect the retail sales and service sector PMI to have the greatest impact on the day.
After the European close, the FED will deliver its last policy decision of the year. While the markets expect the FED to leave interest rates unchanged, the promise of lower for longer is likely. There may also be some optimism towards the commencement of vaccinations in the U.S.
Other areas of focus will include the FOMC Economic projections, interest rate projections, and the press conference.
Away from the economic calendar, Brexit and COVID-19 news updates, and any chatter from Capitol Hill will need continued monitoring.
The Futures
In the futures markets, at the time of writing, the Dow Mini was down by 9 points.
For a look at all of today’s economic events, check out our economic calendar.
About the Author
Bob Masonauthor
With over 28 years of experience in the financial industry, Bob has worked with various global rating agencies and multinational banks. Currently he is covering currencies, commodities, alternative asset classes and global equities, focusing mostly on European and Asian markets.
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