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A calm economic calendar keeps the talk of the central bank and COVID-19 in focus

The majors

It was another bullish day for the European majors on Tuesday.

The DAX30 and the EuroStoxx600 gained 2.82% and 2.46% respectively. At the top, however, was the CAC40, which ended the day up 2.91%.

Positive figures on industrial production from Germany and trade data from China provided early support.

News from China about the PBoC’s restrictions on the real estate sector provided additional support. The PBoC also lowered the reserve requirement ratio by 50 basis points, which was positive for the market.

However, optimism that the Omicron tribe would not undo the global economic recovery was crucial. The growth came despite the weakening economic sentiment in Germany in December.

The statistics

The focus was on the figures for German industrial production. In addition to the GDP figures for the euro zone, however, the ZEW economic expectations also met with interest.

German industrial production

Industrial production rose 2.8% in October compared with a forecast increase of 0.8%. Production had decreased by 0.5% in September.

According to Destatis

  • Production in industry excluding energy and construction increased by 3.2%.
  • Within industry, the production of c -ital goods rose by 8.2%.
  • The production of motor vehicles, trailers and semi-trailers increased by 12.6%.
  • The production of intermediate goods fell by 0.4%. The production of consumer goods fell by a modest 0.1%.
  • Outside industry, energy production increased 0.9% and production in construction increased 1.2%.
  • Compared to October 2020, industrial production fell by 0.6%.

Economic sentiment

In December the ZEW economic expectations index for Germany fell from 31.7 to 29.9. Economists had forecast a drop to 25.1. The sentiment index for the euro zone rose from 25.9 to 26.8. Economists had forecast a drop to 23.2.

The Eurozone Economy

In the third quarter, the eurozone economy grew by 2.2%. That was in line with earlier estimates, while it was up 2.1% in the previous quarter. Year-over-year, the economy grew 3.9%, which corresponds to a second estimate of 3.7%. The economy had grown by 14.4% in the previous quarter.

From the USA

Economic data included trade data, as well as unit labor cost and non-agricultural productivity figures. The statistics had a subdued impact on the majors, however.

In October, the US trade deficit narrowed from $ 81.40 billion to $ 67.1 billion. Economists had forecast a decline to $ 66.80 billion.

The market movers

For the DAX: It was a particularly bullish day for the auto sector on Tuesday. Volkswagen with an increase of 8.01% at the top with BMW ended the day up 2.63%. Continental and Daimler recorded more modest gains of 0.81% and 1.12% respectively.

It was a bullish day for banks too. Deutsche Bank and Commerzbank increased by 2.01% and 0.48% respectively.

From the CAC, it was a bullish day for banks. Soc Gen and Credit Agricole recorded increases of 1.22% and 1.12%, respectively BNP Paribas increasing by 1.60%.

The French auto sector also saw a bullish session. Stellantis NV increased by 2.37%, with Renault up 1.60% at the end of the day.

Air France-KLM rose a modest 0.94%, with Airbus SE 2.96% rally.

On the VIX index

It was the second straight day in the red for the VIX on Tuesday.

After falling 11.38% on Monday, the VIX lost 19.46% to end the day at 21.89.

The NASDAQ rose 3.03% and the Dow and S & P500 rose 1.40% and 2.07%, respectively.

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