European Equities: German GDP Numbers and Day 2 of FED Chair Powell Testimony in Focus


Wednesday, 24th February

German GDP (YoY) (Q4) 2nd Estimate

German GDP (QoQ) (Q4) 2nd Estimate

Thursday, 25th February

GfK German Consumer Climate (Mar)

Friday, 26th February

French Consumer Spending (MoM) (Jan)

French GDP (QoQ) (Q4) 2nd Estimate

Spanish HICP (YoY) (Feb) Prelim

Spanish CPI (YoY) (Feb) Prelim

The Majors

It was a mixed day for the European majors on Tuesday. The DAX30 and the EuroStoxx600 fell by 0.61% and by 0.42% respectively, while the CAC40 rose by 0.22%.

Another tech rout on the day weighed on the DAX30.

Despite ECB President Lagarde’s comments from Monday, European bond yields were back on the rise on Wednesday adding further downward pressure on the European majors.

Late in the day, however, FED Chair Powell testimony delivered much-needed support. Powell continued to assure the markets that policy would not shift near-term, while also talking down any inflation concerns.

The CAC40 reversed losses from earlier in the day to end in positive territory, with the DAX30 and EuroStoxx600 managing to reduce their respective deficits.

The Stats

It was a relatively quiet day on the economic calendar on Tuesday. Finalized January inflation figures for the Eurozone were in focus early in the session.

In January, the annual rate of core inflation accelerated to 1.4%, according to finalized figures. This was up sharply from just 0.2% in December, while in line with prelim figures.

The consumer price index was also on the rise after a 0.3% fall in December, year-on-year. In January, consumer prices rose by 0.9%, which was also in line with prelim figures.

Month-on-month, consumer prices rose by 0.2%, following a 0.3% increase in December.

According to Eurostat,

  • A year earlier the rate of annual inflation was 1.4%.

  • Greece (-2.4%), Slovenia (-0.9%), and Cyprus (-0.8%) registered the lowest annual rates of inflation in January.

  • In January, the highest contribution to the annual euro area inflation came from services (+0.65 pp).

  • Non-energy industrial goods (+0.37 pp) and food, alcohol, & tobacco (+0.30 pp) also contributed.

From the U.S

It was a relatively quiet day on the economic data front. Consumer confidence figures were in focus late in the European session.

In February, the CB Consumer Confidence Index rose from 88.9 to 91.3. Economists had forecast an increase to 90.0.

According to the February survey,

  • The Present Situation Index rose from 85.5 to 92.0, while the Expectations Index fell from 91.2 to 90.8.

  • After 3 consecutive monthly declines, the Present Situation Index suggested that economic growth has not slowed further.

The Market Movers

For the DAX: It was another mixed day for the auto sector on Tuesday. BMW slid by 2.37, with Daimler and Volkswagen falling by 1.44% and by 1.26% respectively. Continental bucked the trend, however, rising by 0.59%.

It was a relatively bullish day for the banks, however. Deutsche Bank and Commerzbank ended the day up by 0.73% and by 0.04% respectively.

From the CAC, it was a mixed day for the banks. BNP Paribas rose by 0.30%, while Credit Agricole and Soc Gen fell by 0.83% and by 0.15% respectively.

It was a bullish day for the French auto sector, however. Stellantis NV and Renault rose by 0.30% and by 0.47% respectively.

Air France-KLM and Airbus SE rallied by 2.64% and by 3.29% on the day.

On the VIX Index

It was back into the red for the VIX on Tuesday, marking just the 2nd daily loss in 6 sessions. Partially reversing a 6.35% rise from Tuesday, the VIX fell by 1.45% to end the day at 23.11.

The VIX had hit a day high 23.7 ahead of FED Chair Powell’s assurances that left the VIX in the red for the day.

The NASDAQ slipped by 0.50%, while the Dow the S&P500 rose by 0.05% and by 0.13% respectively on the day.

The Day Ahead

It’s another relatively quiet day ahead on the European economic calendar. 2nd Estimate GDP numbers for the 4th quarter are due out of Germany.

Following upward revisions to the Eurozone numbers, expect any revisions to the stats to influence.

From the U.S, stats are limited to housing sector data that will have a muted impact on the European majors.

Day 2 of FED Chair Powell Testimony will need monitoring, though his stance on policy is unlikely to change.

Away from the economic calendar, chatter from Capitol Hill will also need continued monitoring.

The Futures

In the futures markets, at the time of writing, the Dow Mini was down by 15 points.

For a look at all of today’s economic events, check out our economic calendar.

This article was originally posted on FX Empire