European Equities: U.S Economic Data and Omicron in Focus

The Majors

It was a bullish day for the European majors on Tuesday. The EuroStoxx600 rose by 1.39%, with the CAC40 and the DAX30 gaining 1.38% and 1.36% respectively.

Consumer sentiment figures from Germany and for the Eurozone failed to weigh on the European majors. Rising consumer prices and the reintroduction of COVID-19 restrictions led to a slide in consumer confidence.

From the U.S, there were no major stats on the day to provide direction late in the session, leaving the U.S majors to provide direction.

While the continued spread of the Omicron strain remained market negative, news from Moderna was market positive. Moderna’s booster was reported to materially boost protection against Omicron. The vaccine manufacturer also noted that a double dose of the booster delivers significantly more protection.

The Stats

Going into the European session, German consumer sentiment was in focus. Late in the session, Eurozone consumer confidence also drew interest.

German Consumer Sentiment

For January, the GfK Consumer Climate Index slid from a revised -1.8 to -6.8. Economists had forecast a more modest decline to -2.7.

According to the December Survey,

• Both economic and income expectations fell significantly along with the propensity to buy.
• Since the propensity to save increased, the GfK forecasted the marked decline in sentiment for January.
• High COVID-19 cases due to the 4^th wave of the pandemic resulting in further restrictions and significantly increased prices weighed on sentiment.

The sub-Components

• The economic outlook indicator slid by 13.9 points to 17.1.
• Income expectations dropped by 6 points to 6.9 points. Over the last 3-months, the income expectations indicator has lost more than 30 points…
• Propensity to buy fell by 8.9 points to 0.8 points. This was the lowest value since Jan-2021, when it stood at zero.

Eurozone Consumer Confidence

According to the EU Commission, the flash consumer confidence indicator for the Eurozone fell from -6.8 points to -8.3 points. Economists had forecast a decline to -8.0.

From the U.S

It was another quiet day on the economic calendar, with no U.S stats to provide the majors with direction.

The Market Movers

For the DAX: It was a bullish day for the auto sector on Tuesday. Daimler and Continental led the way, gaining 2.28% and 2.23% respectively, with BMW rising by 2.15%. Volkswagen ended the day up by a more modest 1.42%.

It was also a bullish day for the banks. Deutsche Bank and Commerzbank rallied by 2.57% and by 3.78% respectively.

From the CAC, it was a bullish day for the banks. Soc Gen and Credit Agricole rose by 2.66% and by 2.34% respectively, with BNP Paribas rallying by 4.32%.

The French auto sector also found strong support. Stellantis NV and Renault ended the day up by 3.15% and by 3.35% respectively.

Air France-KLM and Airbus SE were amongst the front runners, rallying by 4.48% and by 4.64% respectively.

On the VIX Index

It was back into the red for the  VIX on Tuesday, ending a 3-day winning streak.

Reversing a 6.03% gain from Monday, the VIX fell by 8.13% to end the day at 21.01.

The NASDAQ rallied by 2.40%, with the Dow and the S&P500 rising by 1.60% and by 1.78% respectively.

The Day Ahead

It’s a particularly quiet day ahead on the Eurozone’s economic calendar. There are no major stats to provide the European majors with direction.

From the U.S, final estimate 3^rd quarter GDP and consumer confidence figures will draw interest. Barring any revisions to the GDP numbers, the consumer confidence numbers for December will likely have a greater impact.

Away from the economic calendar, COVID-19 news updates will remain key.

The Futures

In the futures markets, at the time of writing, the Dow Mini was up by 14 points.

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