European Equities: A Week in Review – 24/12/21

The Majors

It was a bullish week for the majors in the week ending 24^th December.

The EuroStoxx600 and the DAX30 rose by 1.45% and by 1.82% respectively, with the CAC40 ending the week with up by 2.31%.

Consumer sentiment figures for Germany and the Eurozone failed to weigh on the majors early in the week. From the U.S, economic data provided support, however.

A testy start to the week had seen the European majors in the deep red on Monday before a rebound. Market sentiment towards the Omicron strain and government measures to curb the spread of the virus had led to a bearish start to the week.

Positive news updates from AstraZeneca and Novavax were market positive, however. Both firms spoke of their respective vaccines being effective against the new strain. Early evidence that the new strain was a milder form was also market positive late in the week.

The Stats

Consumer confidence figures for Germany and the Eurozone were the key stats of the week. The numbers were market negative, with inflation and COVID-19 containment measures weighing. Impact on the majors was limited, however, with the markets expecting consumer confidence to wane.

Germany’s GfK Consumer Climate Index for January fell from -1.6 to -6.8. The Eurozone’s Flash consumer confidence index fell from -6.8 to -8.3 for December.

From the U.S

Finalized 3^rd quarter GDP and consumer confidence figures for December were upbeat mid-week. The U.S economy grew by 2.3% in the 3^rd quarter, which was up from a prelim 2.1%. In spite of a shift in FED monetary policy, rising consumer prices, and Omicron, consumer confidence improved in December.

The CB Consumer Confidence Index climbed from 111.9 to 115.8.

On Thursday, jobless claims, personal spending, core durable goods orders, and inflation figures were also in focus.

In the week ending 17^th December, initial jobless claims held steady at 205k. Personal spending rose by 0.6%, with core durable goods up 0.8%.

The FED’s preferred inflation measure was also aligned with the FED’s shift in stance on inflation. In November, the core PCE price index rose by 4.7%, which was up from 4.2% in October.

The Market Movers

From the DAX, it was a bullish week for the auto sector. Continental and BMW rallied by 2.46% and by 2.80% respectively to lead the way. Daimler rose by 1.52%, with Volkswagen ending the week up by 0.63%.

It was also a bullish week for the banking sector, however. Deutsche Bank rose by 2.35%, with Commerzbank rallying by 5.34%.

From the CAC, it was a bullish week for the banks. BNP Paribas rallied by 6.37%, with Soc Gen and Credit Agricole ending the week with gain of 4.39% and 4.00% respectively.

The French auto sector also had a bullish week. Stellantis NV and Renault rose by 4.39% and by 2.23% respectively.

Air France-KLM ended the week up by 3.57%, with Airbus rallying by 7.24%.

On the VIX Index

It was back into the red for the VIX in the week ending 24^th December, marking a 2^nd loss in 6-weeks.

Reversing a 15.41% gain from the previous week, the VIX fell by 16.74% to end the week at 17.96.

3-days in the red from 5 sessions, which included an 8.13% fall on Tuesday and an 11.33% slide on Wednesday delivered the downside.

For the week, the NASDAQ rallied by 3.19%, with the Dow and the S&P500 ending the week up by 1.65% and 2.28% respectively.

The Week Ahead

It’s particularly quiet week ahead on the economic calendar, with a number of major markets on a shortened week.

From the Eurozone, prelim December inflation numbers from Spain will be in focus on Thursday. Barring a marked pickup in inflationary pressures, however, the stats should have a muted impact on the European majors.

From Elsewhere

U.S jobless claims on Thursday will be the key stat from the U.S. Private sector PMIs from China on Friday will have a muted impact, with a large number of key markets closed for the day.

Away from the Economic Calendar

News updates on the new Omicron strain will need continued monitoring alongside any central bank chatter.