With economic data from the Eurozone on the lighter side. 4th quarter GDP and weekly jobless claims from the U.S will be in focus.
Thursday, 28th January
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It was a bearish day for the European majors on Wednesday, in what has become a choppy week for riskier assets. The DAX30 slid by 1.81%, with the CAC40 and the EuroStoxx600 both seeing losses of 1.16%.
Ahead of the European open, German consumer sentiment figures for February set the tone. A more marked decline in sentiment followed weaker than expected business sentiment figures from Monday.
With the ECB seeing consumption as a key element to any economic recovery, the GfK figures from Germany were cause for concern.
Plans for extended lockdown periods, vaccine supply uncertainty, and the lingering threat from strains of the virus remained negative factors.
For the DAX30, news of the German government cutting its growth forecast for 2021 added to the market angst on the day. On Wednesday, the government cuts its growth forecast from 4.4% to just 3%.
It was a relatively quiet day on the economic calendar. German consumer sentiment figures for February were in focus ahead of the European open.
For February 2021, the GfK is forecasting a slide in consumer sentiment from a revised -7.5 to -15.6 points.
There was a sharp fall in the propensity to buy indicator, with income expectations also taking a hit. Consumer sentiment towards the economic outlook, however, saw less of a severe fall in the month.
From the U.S
It was a busier day on the U.S economic calendar.
Durable goods and core durable goods orders for December were out late in the European session.
In December, durable goods orders rose by 0.2%, following a 1.2% increase in November. Economists had forecast a 0.9% rise. Core durable goods orders increased by 0.7%, following a 0.8% rise in November. Economists had forecast a 0.5% rise.
The stats were out ahead of the FOMC monetary policy decision that came after the European close.
The Market Movers
For the DAX: It was a bearish day for the auto sector on Wednesday. Daimler slid by 2.70%, with Continental and Volkswagen falling by 2.27% and 2.43% respectively. BMW saw a more modest 1.31% loss on the day.
It was also a bearish day for the banks. Deutsche Bank slid by 3.04%, with Commerzbank tumbling by 4.14%.
From the CAC, it was a bearish day for the banks. BNP Paribas slid by 3.49%, with Credit Agricole and Soc Gen falling by 2.54% and by 2.64% respectively.
It was a mixed day for the French auto sector, however. Stellantis NV slid by 3.43%, while Renault eked out a 0.57% gain.
Air France-KLM followed Tuesday’s 4.24% rally with a 2.72% gain, while Airbus SE fell by 1.09%.
On the VIX Index
It was back into the green for the VIX on Wednesday. Reversing a 0.73% fall from Tuesday, the VIX surged by 61.64% to end the day at 37.21.
The NASDAQ and the S&P500 slid by 2.61% and by 2.57% respectively, with the Dow falling by 2.05%.
The Day Ahead
It’s a quiet day ahead on the European economic calendar. Prelim German inflation figures for January are due out later today.
We don’t expect too much influence from the numbers, however.
Economic data from the U.S will likely influence on the day, however.
Key stats from the U.S include the weekly jobless claims figures and 4th quarter GDP numbers.
Away from the economic calendar, expect corporate earnings, COVID-19 news, and chatter from Capitol Hill to also continue to provide direction.