European Equities: Service PMIs from the Eurozone and the U.S in Focus

The Majors

It was a relatively bullish day for the European majors on Tuesday.  The EuroStoxx600 and DAX30 both rose by 0.19% respectively, with the CAC40 ending the day up by 0.29%.

Disappointing economic data from the Eurozone failed to peg back the European majors that had kicked off the day in the red.

An easing in government bond yields continued to deliver support, with no major stats from the U.S to rock the boat.

Optimism of a speedy economic recovery remained the key driver, with economies supported by both fiscal and monetary policy and vaccination rollouts.

The Stats

It was a relatively busy day on the economic calendar on Tuesday. Retail sales and unemployment figures from Germany were in focus early in the session.

Later in the morning, prelim February inflation figures for the Eurozone also drew interest.

German Retail Sales and Unemployment

Month-on-month, retail sales fell by 4.5% in January, following an upwardly revised 9.1% slide in December. Economists had forecast a more modest 0.3% decline.

According to Destatis,

• Year-on-year, retail sales was down by 8.7% in January. In December, retail sales had risen by 2.8%.
• Compared with Feb-2020, the month prior to the COVID-19 outbreak, turnover was 5.8% lower.

In February, unemployment rose by 9k, partially reversing a 37k fall in January. In spite of the rise, the unemployment rate held steady at 6.0%.

Economists had forecast a 13k fall in unemployment and for the unemployment rate to hold steady at 6.0%.

Eurozone Inflation

The annual core rate of inflation softened from 1.4% to 1.1% in February, according to prelim figures. Economists had forecast for inflation to hold at 1.4%.

The annual rate of inflation held steady at 0.9%, however, which was in line with forecasts.

According to Eurostat,

• Food, alcohol & tobacco is expected to have the highest annual rate (1.4% compared with 1.5% in January).
• Services is forecasted to have an annual rate of 1.2% compared with 1.4% in January.
• Non-energy industrial goods are expected to see its annual rate soften from 1.5% to 1.0%.
• Energy remained a drag, with an expected annual rate of -1.7% compared with -4.2% in January.

From the U.S

There were no material stats to provide the European majors with direction later in the day.

The Market Movers

For the DAX: It was another mixed day for the auto sector on Tuesday. Daimler rallied by 2.34%, with BMW and Volkswagen seeing gains of 0.29% and 0.76% respectively. Continental saw red once more, however, falling by 0.89%.

It was also a mixed day for the banks. Deutsche Bank ended the day flat, while Commerzbank rose by a modest 0.33%.

From the CAC, it was a mixed day for the banks. BNP Paribas and Credit Agricole rose by 2.68% and by 1.66% respectively, while Soc Gen fell by 0.24%.

It was another bearish day for the French auto sector. Stellantis NV and Renault ended the day with losses of 0.06% and 0.57% respectively.

Air France-KLM fell by 0.96%, with Airbus SE ending the day down by 1.57%.

On the VIX Index

It was back into the green, following 2^nd consecutive day in the red, for the VIX on Tuesday. Partially reversing a 16.46% slide from Monday, the VIX rose by 3.21% to end the day at 24.10.

The NASDAQ slid by 1.69%, with the Dow and S&P500 falling by 0.46% and by 0.81% respectively.