European Equities: Private Sector PMIs and U.S Stimulus Talks in Focus

Economic Calendar:Wednesday, 16th December

French Manufacturing PMI (Dec) Prelim

French Services PMI (Dec) Prelim

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German Manufacturing PMI (Dec) Prelim

German Services PMI (Dec) Prelim

Eurozone Manufacturing PMI (Dec) Prelim

Eurozone Markit Composite PMI (Dec) Prelim

Eurozone Services PMI (Dec) Prelim

Eurozone Wages (YoY) (Q3) Prelim

Eurozone Trade Balance (Oct)

Thursday, 17th December

Eurozone Core CPI (YoY) (Nov) Final

Eurozone CPI (YoY) (Nov) Final

Eurozone CPI (MoM) (Nov) Final

Friday, 18th December

German PPI (MoM) (Nov)

German IFO Business Climate Index (Dec)

[fx-article-ad]The Majors

It was a bullish day for the European majors on Tuesday, with the DAX30 rising by 1.06% to lead the way. The CAC40 and the EuroStoxx600 saw more modest gains of 0.04% and 0.25% respectively.

Progress on the COVID-19 vaccine front offset negative sentiment towards a reintroduction of containment measures.

Following news of Germany set for another lockdown, news hit the wires on Tuesday of a likely partial lockdown in Italy.

Hopes of the EMA approving the BioNTech/Pfizer Inc. and Moderna Inc. vaccines in mid-January muted the impact of the lockdown news.

The Stats

It was a relatively quiet day on the Eurozone economic calendar. Finalized November inflation figures for France and Italy were in focus through the early part of the European session.

The stats had a muted impact on the majors, however, with the finalized numbers in line with prelim figures.

In France, consumer prices rose by 0.2% after having stalled in October. The Harmonized Index for consumer price also rose by 0.2%, after having stalled in October.

In Italy, consumer prices, consumer prices fell by 0.1% in November, partially reversing a 0.2% rise in October.

From the U.S

It was a busier day on the economic calendar. Key stats included NY Empire State Manufacturing figures for December and industrial production figures for November.

In December, the NY Empire State Manufacturing Index fell from 6.3 to 4.9. Economists had forecast a rise to 6.8.

Industrial production rose by 0.4% in November, following a 1.1% jump in October. Economists had forecast a 0.5% rise.

Other stats included import and export price figures for November that had a muted impact on the majors.

The Market Movers

For the DAX:It was a bullish day for the auto sector on Tuesday.Volkswagen surged by 7.43%, with Continentaland Daimlerrallying by 3.83% and by 3.03% respectively. BMWsaw a more modest 2.77% gain on the day.

It was also a bullish day for the banks. Deutsche Bankrose by 2.01%, with Commerzbankending the day up by 3.08%.

From the CAC, it was a bullish day for the banks. BNP Paribasrose by 2.46%, with Credit Agricoleand Soc Gen gaining 1.81% and 1.91% respectively.

It was also a bullish day for the French auto sector. Peugeotand Renaultended the day with gains of 2.42% and 2.97% respectively.

Air France-KLMrose by a modest 0.86%, while Airbus SEslipped by 0.74%.

On the VIX Index

A run of 4 consecutive days in the green came to an end for the VIX on Tuesday. Reversing a 6.05% gain from Monday, the VIX fell by 7.40% to end the day at 22.89.

Hopes of a government stimulus package drove demand for riskier assets on the day, with COVID-19 vaccine news supporting.

The Dow rose by 1.13%, with the NASDAQ and S&P500 gaining 1.25% and 1.29% respectively.

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The Day Ahead

Its a particularly busy day ahead on the economic calendar. Prelim December private sector PMIs are due out of France, Germany, and the Eurozone.

Expect plenty of influence from the numbers, with manufacturing sector activity likely to need to cushion a slump in service sector activity.

From the U.S, November retail sales and prelim private sector PMIs for December will also provide direction late in the session.

Expect the retail sales and service sector PMI to have the greatest impact on the day.

After the European close, the FED will deliver its last policy decision of the year. While the markets expect the FED to leave interest rates unchanged, the promise of lower for longer is likely. There may also be some optimism towards the commencement of vaccinations in the U.S.

Other areas of focus will include the FOMC Economic projections, interest rate projections, and the press conference.

Away from the economic calendar, Brexit and COVID-19 news updates, and any chatter from Capitol Hill will need continued monitoring.

The Futures

In the futures markets, at the time of writing, the Dow Mini was down by 9 points.

For a look at all of todays economic events, check out our economic calendar.