A Week in Review – 14/01/22

The Stats

Key stats included Eurozone unemployment, industrial production, and trade data for November.

The stats were skewed to the positive. The Eurozone’s unemployment rate fell from 7.3% to 7.2%, with industrial production up 2.3% in the month. Production had fallen by 1.3% in October.

Trade data was market negative, however, while finalized inflation figures for France and Spain had a muted impact on the majors. The Eurozone’s trade balance narrowed from a €3.3bn surplus to a €1.5bn deficit in November. It was the Eurozone’s first goods trade deficit since January 2014.

From the ECB, the Economic Bulletin sent mixed signals, while suggesting that inflation was more than just transitory.

From the U.S

It was a big week for the Dollar. In the first half of the week, FED Chair Powell testimony and December inflation figures were key drivers.

While the FED Chair talked of the need to hike rates, there was no mention of the need for more than 3 this year. This was taken as a positive for the riskier assets and negative for the Dollar.

On Wednesday, another spike in inflation failed to spook the markets. This was in spite of the U.S annual rate of inflation at its highest since 1982. An easing in energy prices for the first time since the uptrend was taken as a sign of a possible topping out.

Jobless claims failed to impress on Thursday, with initial jobless claims increasing from 207k to 230k in the week ending 7^th January.

Retail sales figures for December wrapped things up on Friday. In December, retail sales fell by 1.9% versus a forecasted 0.1% decline. Core retail sales tumbled by 2.3% versus a forecasted 0.2% rise.

The Market Movers

From the DAX, it was a mixed week for the auto sector. BMW and Volkswagen rallied by 3.89% and by 2.86% respectively to lead the way, with Daimler rising by 1.67%. Continental bucked the trend, however, with a 0.04% loss.

It was a bearish week for the banking sector. Deutsche Bank and Commerzbank slid by 3.33% and by 5.47% respectively.

From the CAC, it was a bullish week for the banks. Soc Gen rallied by 3.13%, with BNP Paribas and Credit Agricole ending the week with gains of 2.79% and 2.38% respectively.

The French auto sector also had a bullish week. Stellantis NV and Renault rallied by 5.43% and by 4.03% respectively.

Air France-KLM ended the week down by 1.65%, with Airbus falling by 0.31%.

On the VIX Index

It was a 2^nd consecutive week the green for the VIX in the week ending 14^th January, marking a 6^th rise in 9-weeks.

Following an 8.94% gain from the previous week, the VIX rose by 2.29% to end the week at 19.18.

2-days in the green from 5 sessions, which included a FOMC member driven 15.28% jump on Thursday, delivered the upside.

For the week, the Dow fell by 0.88%, with the NASDAQ and the S&P500 ending the week down by 0.28% and by 0.30% respectively.