European Equities: U.S Consumer Sentiment in Focus

The Majors

It was a mixed day for the European majors on Thursday. The DAX rose by 0.05%, while the CAC40 and the EuroStoxx600 ended the day with losses of 0.41% and 0.23% respectively.

From the Eurozone, there were no major stats for the markets to consider during the European session. A lack of stats left EU economic forecasts in focus early in the session. Ultimately, however, the markets were cautious ahead of U.S inflation figures due out late in the European session.

The U.S inflation figures supported a more aggressive rate path for the year, with U.S inflationary pressures building further in January.

The Stats

There were no material stats from the Eurozone to provide the markets with direction. EU Economic Forecasts were in focus, however, providing some market optimism.

According to the Executive Summary,

• The EU entered the New Year on a weaker footing that previously expected.
• After a soft-patch, the economic expansion is set to pick up pace in the second quarter.
• The euro area economy is expected to grow by 4.0% in 2022 and by 2.7% in 2023.
• Forecasts assume that the impact of the current wave of the pandemic will be short-lived.
• Expectations are also for most of the supply bottlenecks to fade over the year.
• Compared with the Autumn forecasts, inflation projections have been revised up due to persistently high energy prices.
• Inflation in the euro area is projected to peak in Q1 of 2022 and remain above 3% until Q3.
• Forecasts are for inflation to return to below 2% by 2023.
• The balance of risks to the growth outlook is broadly even.
• Looking beyond short-term uncertainties, improving labor market conditions, large accumulated savings, favorable financing conditions, and the full deployment of the Recovery and Resilience Facility (RFF) are supportive of an extended expansionary phase.

From the U.S

Inflation and jobless claims were in focus.

In January, the U.S annual rate of inflation accelerated from 7.0% to 7.5%. The annual rate of inflation picked up from 5.5% to 6.0%.

Jobless claims were also Dollar positive. In the week ending 4^th February, initial jobless claims fell from 239k to 223k. Economists had forecast claims of 230k.

The Market Movers

For the DAX: It was a mixed day for the auto sector on Thursday. Continental rose by 1.66%, with Volkswagen ending the day up by 0.01%. BMW and Daimler fell by 0.60% and by 1.23% respectively, however.

It was a bullish day for the banks. Deutsche Bank and Commerzbank ended the day up by 0.36% and by 0.89% respectively.

From the CAC, it was a mixed day for the banks. BNP Paribas fell by 0.22%, while Soc Gen rallied by 3.24%. Credit Agricole ended the day up by 1.39%.

The French auto sector also had a mixed session. Stellantis NV fell by 2.12%, while Renault gained 1.12%.

Air France-KLM rose by 1.42%, with Airbus SE ending the day up by 0.68%.

On the VIX Index

A 4-day losing streak came to an end for the VIX on the Thursday.

Reversing a 6.90% loss from Wednesday, the VIX jumped by 19.79% to end the day at 23.91.

The NASDAQ ended the day down by 2.10%, with the Dow and the S&P500 seeing losses of 1.47% and 1.81% respectively.

The Day Ahead

It’s a particularly quiet day ahead on the Eurozone’s economic calendar. There are no material stats due out of the Eurozone to provide the markets with direction. The lack of stats will leave the majors in the hands of the U.S markets on the day.

Late in the European session, U.S consumer sentiment figures will draw interest, with little else for the markets to consider.

The Futures

In the futures markets, at the time of writing, the Dow Mini was up by 5.5 points.

For a look at all of today’s economic events, check out our economic calendar.