European Equities: Brexit and COVID-19 News to Direct the Boerses that are Open

The Majors

It was another bullish day for the European majors on Wednesday, which continued to claw back losses from Monday. The DAX30 rose by 1.26%, with the CAC40 and EuroStoxx600 seeing gains of 1.11% and 1.08% respectively.

Progress towards a Brexit deal drove demand for the European majors ahead of the holidays.

The upside came in spite of continued worries over the COVID-19 pandemic and new strains of the coronavirus.

Following the French ban on UK travelers and freight at the start of the week, a lifting of the ban also delivered a boost.

The Stats

It was a quiet day on the economic calendar. Finalized 3^rd quarter GDP numbers for Spain were in focus in the early part of the day.

Spain’s economy expanded by 16.4% in the 3^rd quarter, according to finalized figures, revised down from a prelim 16.7%. In the 2^nd quarter, the economy had contracted by 17.9%, quarter-on-quarter.

From the U.S

It was another busy day on the economic calendar. November core durable goods, inflation, and personal spending figures were in focus later in the session. The weekly jobless claims figures also drew plenty of attention after last week’s spike.

In the week ending 18^th December, initial jobless claims stood at 805k, falling back from an upwardly revised 892k from the previous week.

Durable goods orders were also positive, with orders rising by 0.9% in November, following a 1.8% increase in October. Core durable goods fell short of forecasts, however, rising by 0.4%. In October, core durable goods orders had increased by 1.9%.

Also negative was weaker than expected inflation figures and a fall in personal spending.

In November, the core PCE Price Index rose by 1.4%, following a 1.4% increase in October. Economists had forecasted a 1.5% increase.

Personal spending fell by 0.4%, reversing a 0.3% rise in October. Economists has forecasted a 0.2% decline.

Finalized consumer sentiment figures for December and new home sales for November were also in focus but had a muted impact on the majors. There was a lack of influence in spite of the numbers being skewed to the negative.

The Market Movers

For the DAX: It was a bullish day for the auto sector on Wednesday. Continental and Daimler led the way with gains of 3.05% and 3.07% respectively. BMW and Volkswagen saw more modest gains of 1.58% and 2.03% respectively.

It was also a bullish day for the banks. Deutsche Bank rose by 2.39%, with Commerzbank rallying by 3.27%.

From the CAC, it was a bullish day for the banks. BNP Paribas and Credit Agricole rallied by 3.18% and by 3.05% respectively. Soc Gen led the way, however, with a 4.18% gain.

It was also a bullish day for the French auto sector. Peugeot rose by 0.45%, with Renault gaining 2.47% on the day.

Air France-KLM and Airbus SE rallied by 4.52% and by 4.56% respectively, with Airbus SE the frontrunner on the day.

On the VIX Index

There was more red for the VIX on Wednesday, logging a 6^th day in the red from 7. Following on from a 3.70% fall on Tuesday, the VIX fell by 3.80% to end the day at 23.31.

The Dow and S&P500 rose by 0.38% and by 0.07% respectively, while the NASDAQ fell by 0.29%

U.S President Trump was unable to send the majors into the red despite a refusal to sign the pandemic relief bill.

Hopes of a better stimulus package and the promise of more from the President-Elect supported the majors on the day.

Progress towards a Brexit deal also supported the demand for riskier assets.

The Day Ahead

It’s another quiet day ahead on the economic calendar. There are no material stats due out of the Eurozone to provide direction, with some EU markets closed.

Germany and Italy’s markets are closed for the day, with France on a half-day.

From the U.S, there are also no material stats, with the U.S markets scheduled for an early close.

For the CAC40, a lack of stats will leave Brexit and COVID-19 to provide direction, along with any chatter from Capitol Hill.

News of Britain and the EU nearing a Brexit agreement should continue to support demand for the European majors.

The Futures

In the futures markets, at the time of writing, the Dow Mini was up by 61 points.

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