European Equities: U.S Inflation and Jobless Claims in Focus

The Majors

It was yet another bullish day for the European majors on Wednesday. The EuroStoxx600 rallied by 1.71%, with the CAC40 and the DAX gaining 1.46% and 1.57% respectively.

Economic data from Germany and the Eurozone took a back seat in spite of weak numbers. Dip buyers continued to jump back in following last Friday’s sell-off while waiting on inflation figures from the U.S on Thursday.

Corporate earnings results and movement across the U.S equity markets also delivered support on the day.

The Stats

It was a relatively quiet morning on the Eurozone economic calendar this morning. Key stats included German trade data for December and industrial production figures for Italy.

German Trade Data

In December, Germany’s trade surplus narrowed from €10.8bn to €6.8bn. Economists had forecast a trade surplus of €10.4bn.

According to Destatis,

• Month-on-month, exports rose by 0.9% to €117.0bn.
  • Compared with December 2020, exports increased 15.6%.
• Imports increased by 4.7% to €110.0bn.
  • Imports increased by 27.8% when compared with December 2020.

Trade with EU countries:

• Compared with December 2020, exports to the EU increased 23%, while imports from the EU rose by 23.5%.
• Goods exported to the euro area increased by .235%, while imports from the euro area fell by 27.9%.
• Exports of goods to non-EU countries increased by 8.0%, while imports from non-EU countries jumped by 32.5%, year-on-year.

Italian Industrial Production

In December, industrial production fell by 1.0%, partially reversing a 2.1% increase from November. Economists had forecast a 0.7% decline. Year-on-year, industrial production was up 4.4% after having been up by 6.6% in December. Economists had forecast a 5.0% increase.

From the U.S

There were no material stats for the markets to consider on the day.

The Market Movers

For the DAX: It was a bullish day for the auto sector on Wednesday. Volkswagen jumped by 6.12% on hopes of a Porsche IPO, with BMW and Daimler rallying by 3.80% and by 4.41% respectively. Continental ended the day up by a more modest 1.61%.

It was a mixed day for the banks, however. Deutsche Bank rose by 0.25%, while Commerzbank slipped by 0.10%.

From the CAC, it was a bullish day for the banks. BNP Paribas and Soc Gen saw gains of 1.08% and 1.51% respectively, with Credit Agricole ending the day up by 0.48%.

The French auto sector also had a bullish session. Stellantis NV rallied by 4.33%, with Renault rising by 2.67%.

Air France-KLM rallied by 3.35%, with Airbus SE ending the day up by 2.84%.

On the VIX Index

It was a 4^th consecutive day in the red for the VIX on the Wednesday.

Following a 6.21% fall on Tuesday, the VIX declined by 6.90% to end the day at 19.96.

The NASDAQ ended the day up by 2.08%, with the Dow and the S&P500 seeing gains of 0.86% and 1.45% respectively.

The Day Ahead

It’s a 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. Economic forecasts for the Eurozone are due out, however, which will provide direction.

Later in the day, U.S inflation figures for January will be key, along with weekly jobless claims. Another pickup in inflationary pressure would support a more aggressive rate path for the FED, which would be market negative.

The Futures

In the futures markets, at the time of writing, the Dow Mini was up by 2 points.

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