European Equities: U.S Stimulus and Brexit News Updates to Influence

by Warrior2

Brexit and U.S stimulus news updates will be the key drivers, while German industrial production figures will draw some interest early in the session.

Economic Calendar:

Monday, 7th December

German Industrial Production (MoM) (Oct)

Tuesday, 8th December

French Non-Farm Payrolls (QoQ) (Q3)Advertisement

German ZEW Current Conditions (Dec)

German ZEW Economic Sentiment (Dec)

Eurozone GDP (QoQ) (Q3) Final

Eurozone GDP (YoY) (Q3) Final

Eurozone ZEW Economic Sentiment (Dec)

Wednesday, 9th December

German Trade Balance (Oct)

Thursday, 10th December

Deposit Facility Rate (Dec)

ECB Marginal Lending Facility

ECB Interest Rate Decision (Dec)

Friday, 11th December

German CPI (MoM) (Nov) Final

Spanish CPI (YoY) (Nov) Final

Spanish HICP (YoY) (Nov) FinalAdvertisement

The Majors

It was a bullish end to the week for the European majors on Friday. The CAC40 and EuroStoxx600 rose by 0.62% and by 0.59% respectively, with the DAX30 gaining 0.35%.

Positive economic data from Germany had delivered support in the early part of the day before U.S data sent the majors into the red.

Late in the session, however, the majors reversed their losses, with lawmakers making progress towards a $908bn stimulus package.

Uncertainty over Brexit capped any upside on the day, however.

The Stats

It was a relatively quiet day on the Eurozone economic calendar. German factory orders and construction PMI figures were in focus.

In October, factory orders rose by 2.9% following a 1.1% increase in September. Economists had forecast a 1.5% rise.

According to Destatis,

  • Compared with pre-pandemic restrictions in February 2020, new orders were 0.80% higher.
  • The automotive industry rose by 1.0% in the month and was 6.0% above the pre-crisis level of February 2020.
  • Domestic orders increased by 2.4%, with foreign orders rising by 3.2% from the previous month.
  • New orders from the euro area went up by 0.5%, with new orders from other countries jumping by 4.8%.
  • Compared with the same month a year earlier, factory orders rose by 1.8%.

Construction figures were also skewed to the positive, though the sector failed to return to expansion. In November, Germany’s construction PMI rose from 45.2 to 45.6.

From the U.S

It was a particularly busy day on the economic data front.

Key stats included November nonfarm payroll figures and the unemployment rate.

While the unemployment rate fell from 6.9% to 6.7%, a 245k rise in nonfarm payrolls disappointed. Economists had forecast a 469k rise following a 638k increase in October. A fall in the participation rate from 61.7% to 61.5% contributed to the fall in the unemployment rate rather than improving labor market conditions.

November’s figures reinforced the need for further stimulus as labor market indicators continued to flash red.

Other stats included wage growth, trade data, and factory orders all of which had a muted impact on the markets.

The Market Movers

For the DAX: It was a mixed day for the auto sector on Friday. Daimler rallied by 2.21% to lead the way, with BMW and Continental gaining 1.74% and 1.48% respectively. Volkswagen bucked the trend, however, falling by 0.03%.

It was a bullish day for the banks. Deutsche Bank rose by 0.39%, with Commerzbank eking out a 0.11% gain.

From the CAC, it was a bullish day for the banks. BNP Paribas and Soc Gen rose by 1.93% and by 1.39% respectively, with Credit Agricole rallying by 4.00%.

It was also a bullish day for the French auto sector. Peugeot and Renault ended the day with gains of 3.40% and 2.98% respectively.

Air France-KLM bucked the trend, falling by 0.42%, while Airbus SE ended the day up by 1.31%.

On the VIX Index

A run of 3 consecutive days in the green ended for the VIX on Friday. Reversing a 0.52% gain from Thursday, the VIX fell by 2.30% to end the day at 21.28.

The downside for the VIX came as the U.S majors hit fresh record highs on hopes of a COVID-19 stimulus package.

The Dow and S&P500 rose by 1.03% and by 1.67% respectively, with NASDAQ gaining by 2.12%.

The Day Ahead

It’s a relatively quiet day ahead on the economic calendar. German industrial production figures for October are due out going into the European open.

With the market focus on Brexit and stimulus talks on Capitol Hill, the numbers are unlikely to have a lasting impact on the majors.

From the U.S, there are no material stats to influence late in the session.

Ahead of the open updates on Brexit negotiations and stimulus talks from the weekend will set the tone.

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