Economic data from the Eurozone and the U.S, corporate earnings, and U.S stimulus news will be key drivers. COVID-19 news updates will continue to influence, however.
Friday, 15th January
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It was another bullish day for the European majors on Thursday, with the EuroStoxx600 rising by 0.72% to lead the way. The CAC40 and the DAX30 weren’t far behind, with gains of 0.33% and 0.35% respectively.
Concerns over a continued surge in new COVID-19 cases across the EU and beyond took a back seat on the day.
Impressive trade data from China and the hope of a sizeable U.S stimulus package supported the European majors. In December, China reported a 19.1% surge in exports, with imports rising by 6.5%.
While the EuroStoxx600 rose for a 3rd consecutive day, political uncertainty in Italy and extended lockdown measures limited the upside, however.
It was a quiet day on the economic calendar. 4th quarter GDP numbers from Germany were in focus in the early part of the session.
In 2020, the German economy contracted by 5%, following growth of just 0.6% from 2019 with interest.
According to Destatis,
- The contraction in 2020 brought to an end a 10-year period of economic growth for Germany.
- Compared with the Global Financial Crisis slump of 5.7%, the contraction was only marginally less severe.
- All economic sectors felt the impact of the COVID-19 pandemic.
- In industry excluding construction contracted by 9.7% compared with 2019.
- Household consumption fell by 6.0%, while government final consumption expenditure rose by 3.4%.
- Gross fixed capital formation fell by 3.5%, with gross fixed capital formation in machinery and equipment sliding by 12.5%.
- A continuous 14-year upward trend in employment also came to an end in 2020, with employment falling by 1.1%.
On the monetary policy front, the ECB monetary policy meeting minutes provided few surprises, however.
From the U.S
It was a quieter day on the economic calendar. The weekly jobless claims figures were in focus late in the session.
Import and export price figures for December were also released but had a muted impact on the European majors.
In the week ending 8th January, initial jobless claims jumped from 784k to 965k. Economists had forecast an increase to 795k.
The Market Movers
For the DAX: It was a bullish day for the auto sector on Thursday. Volkswagen rallied by 3.92% to lead the way, with Continental rising by 1.76%. BMW and Daimler saw more modest gains of 1.17% and 1.35% respectively.
It was also a bullish day for the banks. Deutsche Bank rallied by 3.59%, with Commerzbank rising by 1.95%.
From the CAC, it was another mixed day for the banks. BNP Paribas and Soc Gen rose by 0.23% and by 0.63%, while Credit Agricole slid by 1.74%.
It was also a mixed day for the French auto sector. Peugeot rose by 2.42%, while Renault fell by 1.07%.
Air France-KLM rallied by 3.01%, with Airbus SE seeing a 4.65% gain on the day.
On the VIX Index
It was back into the green for the VIX on Thursday, to mark just the 3rd daily gain in 11 sessions. Reversing a 4.80% gain from Wednesday, the VIX rose by 4.68% to end the day at 23.25.
The NASDAQ and the Dow slipped by 0.12% and by 0.22% respectively, with the S&P500 falling by 0.38%.
Disappointing labor market figures pinned the U.S majors back on Thursday. Expectations of a $1.9tn spending package, however, limited the downside on the day.
Also on the day, FED Chair Powell reassured the markets that there would be no rate hike any time soon or any tapering of its bond purchases.
The Day Ahead
It’s relatively busy day ahead on the economic calendar. Key stats include Eurozone trade data and finalized inflation figures from France and Spain.
Expect finalized December inflation figures to have a muted impact on the majors.
From the U.S, retail sales, industrial production, and consumer sentiment figures will influence late in the session.
Away from the economic calendar, COVID-19 news and vaccination rates and Italian politics will remain in focus along with chatter from Capitol Hill.
Corporate earnings will also garner interest later today, with Citigroup, JPMorgan Chase, and Wells Fargo scheduled to release earnings.
In the futures markets, at the time of writing, the Dow Mini was down by 26 points, with the DAX down by 24 points.