Economic data from China and COVID-19 news to provide direction, with no major stats from the Eurozone or the U.S to influence.
Monday, 18th January
Italian CPI (MoM) (Dec) Final
Tuesday, 19th January
German CPI (MoM) (Dec) FinalAdvertisement
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German ZEW Current Conditions (Jan)
German ZEW Economic Sentiment (Jan)
Eurozone ZEW Economic Sentiment (Jan)
Wednesday, 20th January
German PPI (MoM) (Dec)
Eurozone Core CPI (YoY) (Dec) Final
Eurozone CPI (MoM) (Dec) Final
Eurozone CPI (YoY) (Dec) Final
Thursday, 21st January
ECB Interest Rate Decision (Jan)
ECB Press Conference
Friday, 22nd January
French Manufacturing PMI (Jan) Prelim
French Services PMI (Jan) Prelim
German Manufacturing PMI (Jan) Prelim
German Services PMI (Jan) Prelim
Eurozone Manufacturing PMI (Jan) Prelim
Eurozone Markit Composite PMI (Jan) Prelim
Eurozone Services PMI (Jan) PrelimAdvertisement
It was a bearish end to the week for the European majors on Friday, with the DAX30 sliding by 1.44% to lead the way down. The CAC40 and the EuroStoxx600 weren’t far behind, with losses of 1.22% and 1.01% respectively.
A continued spike in new COVID-19 cases and low vaccination rates across the Eurozone weighed on the European majors.
In the week, there was also a jump in new COVID-19 cases in China that added to the market angst late in the week.
For the EU, fewer doses from Pfizer Inc. and EMA’s pending review of the AstraZeneca vaccine means that vaccination rates will likely remain low in the month.
This is then expected to lead to a delay in the easing of lockdown measures and to any start of any sustainable economic recovery.
It was a quiet day on the economic calendar. Finalized December inflation figures for France and Spain had a muted impact on the majors.
A narrowing of the Eurozone’s trade surplus from €30.0bn to €25.8bn in November reflected the effects of the pandemic on global trade terms.
According to Eurostat,
- Compared with November 2019, exports of goods fell by 1.0% to €196.7bn.
- Imports from the rest of the world slid by 4.2% compared with November 2019.
- This led to a widening of the trade surplus from a November 2019 €20.2bn to a November 2020 surplus of €25.8bn.
- Intra-euro areas trade fell by 1.3% to €165.4bn compared with November 2019.
From the U.S
It was a busy day on the economic calendar. Retail sales and consumer sentiment figures were in focus. Manufacturing, industrial production, and inventory numbers were also in focus but had a muted impact on the markets.
In December, retail sales fell by 0.7%, following a 1.4% slide in November. Economists had forecast a more modest 0.2% decline. Core retail sales fell by a heavier 1.4%, following a 1.3% decline in November. Economists had forecast a 0.1% fall.
Consumer sentiment waned in January, according to prelim figures. The Michigan Consumer Sentiment Index fell from 80.7 to 79.2.
The Market Movers
For the DAX: It was a mixed day for the auto sector on Friday. Volkswagen rose by 0.42% to buck the trend on the day. Continental and Daimler slid by 3.14% and by 3.08% respectively, while BMW saw more modest loss of 0.86%.
It was also a bearish day for the banks. Deutsche Bank slid by 3.35%, with Commerzbank falling by 1.32%.
From the CAC, it was a bearish day for the banks. BNP Paribas fell by 1.54%, with Credit Agricole and Soc Gen sliding by 2.35% and by 2.41% respectively.
It was also a bearish day for the French auto sector. Peugeot and Renault slid by 4.21% and by 3.84% respectively.
Air France-KLM bucked the general trend, rising by 0.32%, while Airbus SE ended the day with a modest 0.75% loss.
On the VIX Index
It was a 2nd consecutive day in the green for the VIX on Friday, marking just the 4th daily gain in 12 sessions. Following a 4.68% gain from Thursday, the VIX rose by 4.69% to end the day at 24.34.
The NASDAQ and the S&P500 fell by 0.87% and by 0.72% respectively, with the Dow declining by 0.57%.
Another set of disappointing economic data and jump in COVID-19 related deaths and low vaccination rates weighed.
The markets also responded to the final details of the next U.S stimulus package, the anticipation of which had driven the majors to fresh record highs.
The Day Ahead
It’s quiet day ahead on the economic calendar. Finalized December inflation figures for Italy are due out early in the session.
The numbers are unlikely to have a material impact on the majors, however.
With the U.S markets closed, the lack of distraction will likely leave the EUR in the hands of COVID-19 news updates.
Ahead of the European session, 4th quarter GDP figures and December industrial production and retail sales figures from China will set the tone.
In the futures markets, at the time of writing, the Dow Mini was down by 25 points, with the DAX down by 20 points.