Thursday, 16th January 2020
German CPI (MoM) (Dec) Final
ECB Monetary Policy Meeting Minutes
Friday, 17th January 2020
Italian CPI (MoM) (Dec) Final
Eurozone Core CPI (YoY) (Dec) Final
Eurozone CPI (YoY) (Dec) Final
It was a mixed day for the European majors on Wednesday, with the DAX30 and CAC40 falling by 0.18% and 0.14% respectively. The EuroStoxx600 bucked the trend, eking out a 0.01% gain.
Market caution ahead of the signing of the phase 1 trade agreement weighed on the majors through the European session. While the phase 1 trade agreement is a step in the right direction, the reality is that existing tariffs will continue to impact global trade.
Accompanied by disappointing economic data, there was little chance of any major gains on the day.
It was a relatively busy day on the Eurozone economic calendar on Wednesday. Key stats included Eurozone industrial production and trade data. Both sets of numbers were market negative. GDP numbers out of Germany came in ahead of forecast, however.
According to Eurostat,
- Industrial production increased by just 0.2%, month-on-month, in November, partially reversing a 0.9% slide in October. Economists had forecast a 0.3% rise.
- The production of capital goods rose by 1.2% and energy by 0.8%. By contrast, the production of intermediate goods fell by 0.5%, non-durable consumer goods by 0.7% and durable consumer goods by 0.8%.
- Lithuania (+3.0%) and Malta (+2.6%) record the largest increase in production.
- Year-on-year, production fell by 1.5%.
The Eurozone’s trade surplus narrowed from €28.0bn to €20.7bn. Economists had forecast a surplus of €23.3bn.
According to Eurostat,
- Exports of goods to the rest of the world fell by 2.9% to €197.7bn.
- Imports from the rest of the world slid by 4.6% to €177.0bn, year-on-year.
- Intra-euro trade fell by 3.8% to €166.0bn.
From Germany, the economy grew by 0.6% in 2019, which was slower than the 1.5% growth in 2018. Economists had forecast a GDP of 0.5%.
According to Destatis,
- Contributions mainly came from consumption expenditure, with household consumption expenditure rising by 1.6%.
- Government final consumption expenditure rose by 2.5%.
- There was also support from gross fixed capital formation, which jumped by 3.8%.
- In production, the service sector and construction industry delivered higher growth rates. By contrast, industry production (excl. construction) slumped, with output falling by 3.6%.
From the U.S, stats failed to influence in spite of a rise in the NY Empire State Manufacturing Index from 3.5 to 4.8.
The Market Movers
For the DAX: It was a bearish day for the auto sector. BMW, Daimler, and Volkswagen fell by 1.52%, 2.48% and by 1.51% respectively. Continental saw a more modest 0.37% loss on the day.
It was also a bearish day for the banks, with Commerzbank and Deutsche Bank sliding by 3.94% and by 2.04% respectively.
From the CAC, it was also a bearish day for the banks. BNP Paribas slid by 2.32%, with Credit Agricole and Soc Gen falling by 1.2% and 1.54% respectively.
Things were not much better for the French auto sector. Peugeot and Renault fell by 2.63% and by 1.23% respectively.
On the VIX Index
It was a 2nd consecutive day in the green for the VIX, which rose by 0.24% on Wednesday. Following on from a 0.57% gain from Tuesday, the VIX ended the day at 12.4.
The upside came in spite of the U.S majors closing out the day in positive territory. Market sentiment towards the U.S – China phase 1 trade deal provided the VIX with support.
The Day Ahead
It’s a particularly quiet day on the Eurozone economic calendar, with finalized German inflation figures due out of the Eurozone.
Minor stats including car registration figures for France, Germany, and Italy could draw some attention later this morning, however.
While the ECB is also due to release its meeting minutes later today, few surprises are expected.
The lack of major stats will leave the majors in the hands of geopolitics and economic data from the U.S.
On the data front, the Philly FED Manufacturing Index and U.S retail sales numbers will provide direction later in the day.
Sentiment towards the U.S – China trade deal will continue to influence after Wednesday’s signing. Tariffs that will remain throughout the year will continue to impact trade and the Chinese economy. The one-sided agreement that forces China to crank up U.S agri imports could ultimately lead to noncompliance… For now, however, the good news is that both sides found common ground to close out phase 1.
In the futures markets, at the time of writing, the DAX30 was up by 9 points, with the Dow up by 22 points.
This article was originally posted on FX Empire
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