In This Article:
The Majors
It was another bullish day for the European majors on Wednesday. The DAX rose by 0.65%, with the CAC40 and the EuroStoxx600 ending the day with gains of 0.30% and 0.48% respectively.
Inflation and FED monetary policy remained key areas of focus for the markets. A sharp acceleration in German wholesale inflation pegged back the DAX on the day. Autos were among the worst performers, while it was a mixed session for the banks.
Ahead of the European open, PBoC monetary policy took centre stage, with China’s central bank cutting the 1-year loan prime rate (LPR) from 3.8% to 3.7%. The PBoC also cut the 5-year LPR from 4.65% to 4.6%.
The ECB’s monetary policy meeting minutes from the 15-16th December meeting had limited influence, however. In contrast to the FED, the ECB continued to view inflation as transitory, with the ECB seeing inflation declining sharply in 2022.
The Stats
It was a busier day on the Eurozone economic calendar. Finalized December inflation figures for Eurozone and German wholesale inflation figures were in focus.
Eurozone Inflation
In December, the Eurozone’s annual rate of inflation picked up from 4.9% to 5.0%, which was in line with prelim figures.
Month-on-month, consumer prices increased by 0.4%, which was also in line with prelim figures. In November, consumer prices had also risen by 0.4%.
According to Eurostat,
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A year earlier the Euro area’s annual rate of inflation was -0.3%.
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The lowest annual rates of inflation were registered in Malta (2.6%) and Portugal (2.8%).
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Estonia (12.0%) registered the highest annual rate of inflation, followed by Lithuania (10.7%).
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The highest contribution to the annual euro area inflation rate came from energy (+2.46 percentage points), followed by services (+1.02 pp), non-energy industrial goods (+0.78 pp), and food, alcohol, & tobacco (+0.71 pp).
German Wholesale Inflation
In December, Germany’s annual wholesale rate of inflation accelerated from 19.2% to 24.2% versus a forecasted 19.4%.
Month-on-month, Germany’s PPI jumped by 5.0% versus a forecasted 0.8%. In November, the PPI rose by 0.8%.
According to Destatis,
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Year-on-year, the increase was the highest ever.
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Compared with December 2020, energy prices were up 69% and up by 15.7% compared with November 2021.
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Strong price increases of natural gas (distribution) and electricity drove energy prices.
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Excluding energy, the overall index was up 10.4% up on December 2020.
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Prices of intermediate goods increased by 19.3%, while prices of non-durable consumer goods rose by 4.7% compared with December 2020.
From the U.S
Weekly jobless claims and manufacturing data were in focus.