It was a bullish start to the week for the European majors on Monday. Trepidation from Friday turned into hope on Monday as the markets responded to news from the weekend of plans to continue Brexit negotiations.
The DAX30 rose by 0.83% on the day, with the CAC40 and EuroStoxx600 ending the day up by 0.37% and by 0.44% respectively.
While Boris Johnson continued to talk of a likely no-deal Brexit, there was also news of progress on some of the key issues that remain.
A major stumbling block, however, is the policing of any Brexit deal, with Britain unwilling to be tied to EU laws and regulations.
Economic data from the Eurozone was on the lighter side, leaving the markets to focus on Brexit news in the early part of the day.
Later in the session, news of fresh lockdown plans in Germany failed to sink the DAX30, with support also coming from the U.S beginning vaccinations on Monday.
It was a relatively quiet day on the Eurozone economic calendar. October industrial production figures for the Eurozone were in focus in the early part of the session.
In October, industrial production rose by 2.1%, following an upwardly revised 0.1% gain from September. Economists had forecast a 2.0% rise.
According to Eurostat,
- The production of capital goods rose by 2.6%, intermediate goods by 2.1%, energy by 1.8%, and durable consumer goods by 1.5%.
- In October, the production of non-durable consumer goods remained unchanged, however.
- Belgium (+3.4%), Germany (+3.4%), and Slovenia (+3.1%) saw the largest increases in production.
- Greece (-3.0%) and Lithuania (-1.7%) recorded the largest decreases.
- Compared with October 2019, industrial production declined by 3.8%.
From the U.S
There were no material stats to provide direction late in the European session.
The Market Movers
For the DAX: It was a mixed day for the auto sector on Monday. BMW and Daimler found support, rising by 2.15% and 3.13% respectively. Volkswagen and Continental fell by 0.04% and by 0.50% respectively, however.
It was also a mixed day for the banks. Deutsche Bank fell by 0.46%, while Commerzbank rose by 1.06%.
Leading the way on the DAX30 was Delivery Hero SE, which rallied by 4.60%, with the upside coming from the news of the fresh lockdown measures.
From the CAC, it was a bullish day for the banks. BNP Paribas rose by 2.40%, with Credit Agricole and Soc Gen seeing gains of 1.80% and 1.88% respectively.
It was also a bullish day for the French auto sector. Peugeot and Renault ended the day up by 1.59% and by 1.85% respectively.
Air France-KLM and Airbus SE saw relatively modest losses of 0.77% and 0.15% respectively, however.
On the VIX Index
It was a 4th consecutive day in the green for the VIX on Monday. Following on from a 3.51% gain on Friday, the VIX rose by 6.05% to end the day at 24.72.
A continued spike in new COVID-19 cases and a marked increase in COVID-19 related deaths spooked the markets on Monday. With the markets having priced in the rollout of vaccines in the U.S, concerns over the possibility of further containment measures weighed on the majors.
The Dow and S&P500 fell by 0.62% and by 0.44% respectively, while the NASDAQ gained 0.50%.
The Day Ahead
It’s a relatively quiet day ahead on the economic calendar. Finalized inflation figures from France and Italy are due out later today.
The numbers are unlikely to have a material impact on the European majors, however.
From the U.S, NY Empire State Manufacturing figures for December and November industrial production figures will draw interest late in the session.
Ahead of the European open, industrial production, retail sales, and unemployment figures from China will set the tone.
Away from the economic calendar, COVID-19 news updates and any chatter from Capitol Hill will need monitoring.
In the futures markets, at the time of writing, the Dow Mini was up by 89.0 points.