European Equities: Stats, the ECB’s Economic Bulletin and EU Economic Forecasts Are in FocusExpect the ECB, the EU, and stats out of Germany to provide direction later in the day. News updates on the coronavirus will also be in focus, however.
Thursday, 6th February 2020
German Factory Orders (MoM) (Dec)
ECB Economic Bulletin
EU Economic Forecasts
Friday, 7th February 2020
German Industrial Production (MoM) (Dec)
German Trade Balance (Dec)
French Non-Farm Payrolls (QoQ) (Q4)
It was another particularly bullish day on Wednesday, with the DAX30 rallying by 1.48% to lead the way. The CAC40 and EuroStoxx600 saw more modest gains of 0.85% and 1.23% respectively.
An ever-rising number of coronavirus cases did little to dampen the demand for riskier assets.
News from China that a research team had found a possible treatment for the coronavirus supported the moves on the day.
While economic data out of the Eurozone was not impressive, it was on an upward trend, which limited the drag on the majors.
On the earnings front, BNP Paribas, Infineon Technologies and Siemens were in focus mid-week.
It was a busy day on the Eurozone economic calendar on Wednesday. Key stats included service sector PMIs out of Italy and Spain and Eurozone retail sales figures for December.
Finalized service sector PMIs for France, Germany, and the Eurozone were also in focus.
For the Eurozone, the Composite PMI rose from a December and prelim 50.9 to a 5-month high 51.3.
- Upward momentum continued to come from the services economy, though service sector growth slowed in January.
- The rate of decline in manufacturing sector growth did ease at the turn of the year, however.
- All nations covered by the survey reported an expansion in private sector output.
- Ireland topped the table, with an 11-month high 54.7. Spain was a distant second with a 3-month low 51.5.
- Germany avoided the bottom of the table, with a 5-month high 51.2, while Italy sat at the bottom with a 3-month high 50.4.
Eurozone retail sales figures failed to pressure the majors on the day, despite sales sliding by 1.6% in December, following a 0.8% fall in November. While down month-on-month, sales were up by 1.3% compared with December 2018. The average retail trade for 2019, compared with 2018, rose by 2.2%.
Later in the day, the market’s preferred ISM Non-Manufacturing PMI provided support, with the PMI rising from 54.9 to 55.5.
ADP nonfarm employment change figures also impressed, with 291k jobs added in January, coming in well ahead of a forecast of 156k.
The Market Movers
For the DAX: It was a bullish day for the auto sector. Continental led the way rallying by 4.11%, with Daimler up by 3.89%. BMW and Volkswagen saw more modest gains of 2.10% and 2.09% respectively.
It was also a bullish day for the banks. Commerzbank rose by 1.75%, with Deutsche Bank ending the day up by 1.21%.
Deutsche Lufthansa also found support, rallying by 3.86%. Elsewhere, Infineon Technologies led the way, however, surging by 9.94%.
Infineon Tech’s gains came off the back of its latest earnings release. Earnings were in line with expectations and the firm confirmed its forecasts.
Siemens found support, rising by 1.06%. The gains came in spite of a reported fall in profits.
From the CAC, it was a bullish day for the banks. BNP Paribas rose by 0.65%, while Credit Agricole and Soc Gen rallied by 3.82% and 2.21% respectively.
BNP Paribas delivered better than expected earnings results while cutting its profit forecast, which led to a more modest gain on the day.
It was also a bullish day for the French auto sector. Peugeot rose by 1.98, while Renault saw a more modest 0.39% gain.
Air France-KLM rallied by 3.96% off the back of a 3.70% gain on Tuesday.
On the VIX Index
Another equity market rally led to a 3rd consecutive day in the red for the VIX, which fell by 5.61%. Following on from a 10.68% slide on Tuesday, the VIX ended the day at 15.2.
Positive economic data from the U.S coupled with news of a new drug to treat the coronavirus drove the equity markets northwards on the day.
The downside in the VIX came in spite of the WHO reporting the number of cases jumping to just short of 25,000.
The Day Ahead
It’s a busy day on the Eurozone economic calendar. On the economic data front, German factory order numbers for December are due out.
From the ECB, the economic bulletin will also influence ahead of the EU’s economic forecasts that are due out early this afternoon.
Later in the day, US 4th quarter nonfarm productivity and unit labor cost figures are due out along with the weekly jobless claims figures.
Barring a material jump in initial jobless claims, however, the stats should have a muted impact on the European majors today.
On the earnings front, Soc Gen is due to release its earnings results later today.
In the futures markets, at the time of writing, the DAX was up by 35.5 points, with the Dow up by 61 points.