EGB OPTIONS: Large Bund package

GERMANY PREL Q4 GDP SA -0.2% Q/Q (FCST 0.0%); Q3 +0.5%r Q/Q

GERMANY PREL Q4 GDP WDA +1.1% Y/Y (FCST +1.3%); Q3 +1.4%r Y/Y

• German GDP surprised to the downside in the Q4 flash data, contracting by -0.2% q/q against expectations of flat growth and slowing from the upwardly revised +0.5% q/q growth of Q3.
• Surging energy prices generated the bulk of the fall in private consumption which largely accounted for weaker Q4 economic performance. Robust consumption had elevated growth through the first three quarters.
• Despite the surprise to expectations, the contraction was largely in line with contractionary signals from PMI readings throughout the fourth quarter.
• Recent rebounds in optimism and growth outlooks in survey data has largely been regarding future expectations rather than the present economy which continued to face substantial headwinds of muted demand and soaring inflation into year-end.
• This data adds downside pressure to the eurozone aggregate print, which is currently forecasted to dip into a contraction at -0.1% q/q.

EUROSTOXX 50 futures remain above support at 4097.00, Jan 19 low and the contract is trading just ahead of key short-term resistance at 4206.00, Jan 18 high. A break of this level would confirm a resumption of the uptrend and pave the way for a climb towards 4215.00, a Fibonacci projection. Note that the trend remains overbought. A pullback, if seen, would represent a healthy bull trend correction. Support to watch is 4094.60, the 20-day EMA. S&P E-Minis traded higher last week to confirm a resumption of the current uptrend. The breach of resistance has resulted in a print above the 4100.00 handle and an extension higher would open 4180.00, the Dec 13 high and a bull trigger. Initial firm support has been defined at 3954.84, the 50-day EMA. A move below the average would be seen as a bearish development and signal a short-term reversal.

• Japan's NIKKEI closed higher by 50.84 pts or +0.19% at 27433.4 and the TOPIX ended 0.26 pts lower or -0.01% at 1982.4.
• Elsewhere, in China the SHANGHAI closed higher by 4.504 pts or +0.14% at 3269.318 and the HANG SENG ended 619.17 pts lower or -2.73% at 22069.73.
• Across Europe, Germany's DAX trades lower by 58.12 pts or -0.38% at 15090.98, FTSE 100 lower by 16.59 pts or -0.21% at 7749.17, CAC 40 down 29.65 pts or -0.42% at 7067.56 and Euro Stoxx 50 down 28.12 pts or -0.67% at 4150.03.
• Dow Jones mini down 172 pts or -0.51% at 33864, S&P 500 mini down 29.25 pts or -0.72% at 4053, NASDAQ mini down 121.25 pts or -0.99% at 12093.5.