European Equities: Economic Data in Focus Amidst Inflationary Pressure Fears


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 bearish day for the European majors on Thursday. The CAC40 and EuroStoxx600 fell by 0.24% and by 0.36% respectively, with the DAX30 declining by 0.69%.

Economic data failed to provide the European majors with support in spite of a pickup in consumer confidence in Germany.

Stats from the U.S were also skewed to the positive but were overshadowed by a continued rise in bond yields that weighed on the European majors.

Market concerns over the impact of rising yields has continued to linger in spite of the assurances of the central bankers.

While a pickup in consumer confidence would normally be a boost for the likes of the DAX30, the timing was off. A likely rise in spending added to the fears of a further build of inflationary pressure that may force the hands of the ECB and the FED.

The Stats

It was a relatively quiet day on the economic calendar on Thursday. German consumer sentiment figures for March were in focus early in the European session.

For March, the GfK is forecasting a pickup in consumer sentiment from -15.5 to -12.9. Economists had forecast an increase to -14.3.

While coming in ahead of economists’ forecasts, the improvement was not enough to reverse the deterioration from February.

For February, the GfK had forecasted consumer sentiment to slide from -7.5 to -15.6.

According to the GfK press release:

  • Consumer sentiment began to recover in February after the collapse in confidence in response to the lockdown measures introduced at the start of the year.

  • There were improvements in both economic and income expectations, with propensity to buy also on the rise.

  • The improvement in consumer sentiment was also supported by a decline in propensity to save.

  • After as much as a 37-point slide at the start of the year, the propensity to buy indicator increased by 7.4 points.

  • In spite of the rise, the indicator remained 46 points lower than the same time last year.

  • Income expectations increased by around 9.4 points after 4 consecutive monthly falls.

  • By contrast to the other indicators, the economic outlook indicator was higher than the same time a year ago. In February, the indicator increased by 6.7 points to 8 points.

From the U.S

It was a relatively busy day on the economic data front. Key stats included core durable goods orders for January and the weekly jobless claims figures. Durable goods orders and 2nd estimate GDP numbers for the 4th quarter also drew interest.

In January, core durable goods orders rose by 1.4%, following a 1.7% increase in December. Economists had forecast a 0.5% rise. Durable goods orders increased by 3.4%, following a 1.2% increase in December. Economists had forecast a 1.1% rise.

For the U.S economy, the economy expanded by 4.1% in the 4th quarter, according to 2nd estimate figures. This was a downward revision from a 1st estimate of 4.2%.

In the week ending 19th February, initial jobless claims fell from 841k to 730k. Economists had forecast a decline to 838k.

The Market Movers

For the DAX: It was a mixed day for the auto sector on Thursday. Volkswagen slid by 2.08%, with Continental and Daimler falling by 1.08% and 1.11% respectively. BMW bucked the trend, however, with a 0.90% gain.

It was another bullish day for the banks. Deutsche Bank and Commerzbank rallied by 2.88% and by 2.98% respectively.

From the CAC, it was a bullish day for the banks. BNP Paribas rose by 0.28%, with Credit Agricole and Soc Gen gaining by 1.20% and 2.65% respectively.

It was a mixed day for the French auto sector, however. Stellantis NV slipped by 0.34%, while Renault rose by 1.06%.

Air France-KLM gained a further 1.85%, while Airbus SE slid by 3.69%.

On the VIX Index

It was back into the green for the VIX, delivering a 5th gain in 8 sessions as inflation fears and a tech stock sell-off weighed on the U.S majors.

Reversing a 7.66% fall from Wednesday, the VIX jumped by 35.38% to end the day at 28.89.

The NASDAQ and the S&P500 slid by 3.52% and by 2.45% respectively, with the Dow ending the day down by 1.75%.

The Day Ahead

It’s a relatively quiet day ahead on the European economic calendar. French consumer spending and 2nd estimate GDP numbers for the 4th quarter are due out.

Barring any revision to the GDP numbers, consumer spending figures will likely garner the greatest interest.

Expect any downward revisions from 1st estimate GDP numbers to test support, however.

From the U.S, it’s a busier session ahead. Key stats include January inflation and personal spending figures.

Trade data, Chicago PMI, business inventories, and finalized consumer sentiment figures are also due out. These are unlikely to have a material impact on the European majors, however.

The Futures

In the futures markets, at the time of writing, the Dow Mini was down by 13 points.

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

This article was originally posted on FX Empire