This week the macro data calendar has been light and so was news flows on the European corporate front. The European Central Bank blackout period kicks in on Thursday for policymakers to stop commenting on rate hikes before their final meeting for the year on the 15th of December.

With inflation being quite high for a while, the ECB has been hiking rates at its fastest pace on record this year and further increases are on tap as inflation remains around 10% in Europe. After two consecutive 75 basis point hikes markets are now widely anticipating a smaller 50 basis point increase at the ECB’s next week meeting, after recent data showed that Eurozone inflation eased more than expected in November.

In Europe, the onset of winter brings out concerns over energy prices and shortages that has long been warned by officials. Of further economic concern is the possibility for the ECB to close the interest rate gap with the Federal Reserve.

Factory orders in Germany rose more than expected, increasing by 0.8% MoM in October, after a downwardly revised 2.9% fall in September, exceeding market forecasts of a 0.1% rise and expanding for the first time since July.

The S&P Global Construction PMI for Germany fell to 41.5 in November of 2022 from 43.8 in October, pointing to eighth straight months of falling construction. Housing activity led the decline, but civil engineering and commercial activity also went down as demand diminishes amid high prices, rising interest rates and hesitancy among customers.

New orders shrank at the second fastest rate seen in more than two years; employment fell modestly, and buying levels also declined. Lower demand for building materials and products in turn alleviated some of the pressure on construction supply chains. Eurozone GDP was revised slightly higher and German industrial production fell less than expected.

Given the war in Ukraine, it has been a year with heightened recessionary risks for the German economy; however, the DAX 40 index managed to stage a 23% rally from its September lows, whipping year-to-date losses to 10% from around 27% earlier in the year.