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European Equities: U.S Retail Sales and the FED in Focus
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Market reaction to Russian news of withdrawing troops delivered the majors a boost on Tuesday. Geopolitics will remain a key driver today.
In this article:
Economic Calendar
Wednesday, 16th February
Eurozone Industrial Production (MoM) (Dec)
Friday, 17th February
French CPI (MoM) (Jan) Final
French HICP (MoM) (Jan) Final
The Majors
It was a bullish day for the European majors on Tuesday. The DAX rallied by 1.98%, with the EuroStoxx600 and the CAC40 rising by 1.43% and 1.86% respectively.
A busy economic calendar took a back seat on Tuesday as the markets continued to monitor news reports on Russia and the Ukraine. News of Russia withdrawing troops from the Ukraine border delivered support for riskier assets.
The Stats
It was a busy morning on the Eurozone economic calendar. Key stats included 2nd estimate GDP numbers for the Eurozone and ZEW Economic Sentiment figures for Germany and the Eurozone.
ZEW Economic Sentiment Delivers Mixed Messages
For February, Germany’s ZEW Economic Sentiment Index rose from 51.7 to 54.3, supported by a modest improvement in sentiment towards current conditions. By contrast, the Eurozone’s ZEW Economic Sentiment Index slipped from 49.4 to 48.6.
Eurozone Economy Grows by 0.3% in Q4
Year-on-year, the Eurozone economy expanded by 4.6%, which was in line with 1st estimate figures. The economy had grown by 3.9% in the previous quarter. Quarter-on-quarter, the economy grew by 0.3%, which was also in line with prelim figures. In the previous quarter, the economy had expanded by 2.2%. The numbers were in line with the ECB’s sentiment on growth at the turn of the year.
Other stats on the Day
Trade data was market negative. In December, the Eurozone’s trade deficit widened from €1.5bn to €3.6bn.
From the U.S
In January, the annual rate of wholesale inflation softened from 9.8% to 9.7%. Economists had forecast an annual rate of 9.1%. Month-on-month, the producer price index increased by 1.0% after having risen by 0.4% in December.
The core producer price index increased by 0.8%, month-on-month, following a 0.6% rise in December.
The Market Movers
For the DAX: It was a bullish day for the auto sector on Tuesday. Continental rallied by 4.42%, with BMW and Volkswagen gaining 2.53% and 3.01% respectively. Daimler rose by a more modest 1.44%.
It was also a bullish day for the banks. Deutsche Bank and Commerzbank ended the day up by 0.88% and by 1.53% respectively.
From the CAC, it was a bullish day for the banks. BNP Paribas and Soc Gen rose by 2.88% and by 2.09% respectively, with Credit Agricole ending the with a 0.75% gain.
The French auto sector also had a bullish session. Stellantis NV and Renault ended the day up by 4.11% and by 5.45% respectively.
Air France-KLM bounced back with a 4.07% gain, with Airbus SE ending the day up by 1.81%.
On the VIX Index
A 3-day winning streak came to an end for the VIX on the Tuesday.
Reversing a 3.55% fall from Monday, the VIX slid by 9.28% to end the day at 25.70.
The NASDAQ rallied by 2.53%, with the Dow and the S&P500 seeing gains of 1.22% and 1.58% respectively.
The Day Ahead
It’s a quieter day ahead for the European markets. Early in the session, Eurozone industrial production figures are due out early in the European session.
Late in the European session, retail sales figures from the U.S will also provide direction.
Away from the economic calendar, geopolitics will remain a key area of focus as the markets monitor news from the U.S and Russia.
Going into the European open, market reaction to inflation figures from China will set the tone. Through the session, however, we can also expect some market apprehension ahead of FOMC meetings minutes due out after the European close.
The Futures
In the futures markets, at the time of writing, the Dow Mini was down by 46 points.
For a look at all of today’s economic events, check out our economic calendar.
About the Author
Bob Masonauthor
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.
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