It was a mixed start to the week for the European majors, with the DAC30 rising by 0.17% to buck the trend on the day. The CAC40 and EuroStoxx600 fell by 0.36% and by 0.14% respectively.
A lack of economic data to influence left the markets cautious on the day, with the World Economic Forum in focus this week.
While there was no negative chatter from the forum on Monday, geopolitical risk will likely be the main area of focus in the week ahead.
The IMF downgraded its growth forecasts on Monday in time for world and business leaders to come up with a plan.
According to the latest forecasts, the IMF projects a growth of 2.9% in 2020, down from 3%. In 2021, the global growth forecast was revised down from 3.4% to 3.3%.
The downward revision to growth and less optimistic outlook weighed on the European majors on the day. This came in spite of the IMF noting that some of the key uncertainties from October had abated.
It was a quiet day on the Eurozone economic calendar on Monday, with stats limited to wholesale inflation figures out of Germany.
In December, the Producer Price Index rose by just 0.1%, coming up short of a forecasted 0.2% rise. In November, the index had fallen by 0.2%.
The figures had a muted impact on the majors, however.
Earlier in the day, the PBoC held the 1-year and 5-year Loan Prime Rates unchanged that had provided support to risk appetite ahead of the European open.
The PBoC’s hold back from delivering further support was attributed to the signing of the phase 1 trade agreement last week.
Beijing and the PBoC will likely be in a wait-and-see mode near-term to see what impact the agreement will have on trade terms.
There were no stats out of the U.S to consider, with the U.S markets closed.
The Market Movers
For the DAX: It was yet another mixed day for the auto sector. Continental bucked the trend on the day, falling by 0.85%. BMW, Daimler, and Volkswagen saw green, however, with gains of 0.76%, 0.17%, and 0.72% respectively.
It was a bearish day for the banks, with Commerzbank and Deutsche Bank both sliding by 2.31%.
From the CAC, it was also a bearish day for the banks. BNP Paribas fell by 0.51%, with Credit Agricole and Soc Gen down by 0.47% and by 0.21% respectively.
For the French auto sector, it was a mixed day, however, with Peugeot falling by 0.18%, while Renault gained 0.85% on the day.
On the VIX Index
The U.S markets were closed on Monday.
The Day Ahead
It’s a relatively busy day on the Eurozone economic calendar. Economic data includes Germany and the Eurozone’s ZEW economic sentiment figures for January.
We can expect the numbers to provide direction at the time of release, with little else for the markets to consider on the day.
Any chatter from Davos will also influence as world leaders meet.
A pullback in the Asian majors weighed on the DAX futures ahead of the European session. We’ve yet to see a market panic over the Coronavirus, but news of another death and medical workers getting ill won’t help.
In the futures markets, at the time of writing, the DAX was down by 25.5 points, with the Dow down by 80 points.