It could be a testy day ahead for the majors. Economic indicators will need to deliver today to log a 5th consecutive day in the green...
German Industrial Production (MoM) (Dec)
German Trade Balance (Dec)
French Non-Farm Payrolls (QoQ) (Q4)
It was a 4th consecutive day in the green for the European majors on Thursday, with the CAC40 rising by 0.88% to lead the way.
The DAX30 and EUroStoxx600 saw more modest gains of 0.72% and 0.44% respectively.
There was certainly no support from economic data from the Eurozone on the day.
While the numbers didn’t provide support, news of China announcing tariff cuts provided support on Thursday.
The tariff cuts are scheduled to take place on 14th February, with tariffs on 1,717 U.S goods due to be cut. Next week, the cuts will range from cuts from 10% to 5%, and from 5% to 2.5%.
While China’s manufacturing sector sees output slide as a result of the spread of the coronavirus, the announcement meets part of the phase 1 agreement signed late last year.
China may well struggle, however, to meet the demand on agri purchases near-term. How Trump responds will likely be the next consideration for the majors in the days or even weeks ahead.
It was a relatively busy day on the Eurozone economic calendar on Thursday. Key stats included Germany factory order numbers for December.
The ECB Economic Bulletin was also in focus through the European session.
According to Destatis, factory orders slid by 2.1% in December, following a 1.3% decline in November.
According to the ECB’s January Economic Bulletin, the ECB noted that the current monetary policy was supporting favorable financial conditions.
Other positive comments for the EUR included:
For the DAX: It was a mixed day for the auto sector. Daimler bucked the trend on Thursday, rising by 0.17%. BMW (-0.39%), Continental (-0.04%), and Volkswagen (-0.48%) saw red, however.
It was also a bullish day for the banks. Commerzbank rose by 3.39%, while Deutsche Bank surged by 14.33%.
The jump in Deutsche Bank came off the back of news of Capital Group taking a 3% stake.
Deutsche Lufthansa slipped by 0.17%, while Infineon Technologies consolidated Wednesday’s 9.94% bounce with a 0.14% gain.
From the CAC, it was a bullish day for the banks. BNP Paribas rose by 1.61%, with Credit Agricole and Soc Gen gaining 2.07% and 1.02% respectively.
It was also a bullish day for the French auto sector. Peugeot rose by 1.53, while Renault saw a rallied by 3.28%.
Air France-KLM eked out a 0.15% gain on the day.
Yet another day in the green for the equity markets led to a 4th consecutive day in the red for the VIX, which fell by 1.25% on Thursday. Following on from a 5.61% slide on Wednesday, the VIX ended the day at 15.0.
The VIX continued to come under pressure, with the market catalyst on Thursday coming from the news of China’s planned tariff cuts on 14th February.
It’s a relatively busy day on the Eurozone economic calendar. Economic data due out of the Eurozone includes December trade and industrial production figures.
Expect greater sensitivity to today’s numbers, as the latest rally runs out of steam.
Ahead of the European open, January trade data out of China will set the tone.
In the futures markets, at the time of writing, the DAX was down by 30.5 points, with the Dow down by 93 points.
With over 20 years of experience in the finance industry, Bob has been managing regional teams across Europe and Asia and focusing on analytics across both corporate and financial institutions. Currently he is covering developments relating to the financial markets, including currencies, commodities, alternative asset classes, and global equities.