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European Equities: COVID-19 and U.S Stimulus Talks in Focus

Economic Calendar:

Friday, 20th November

German PPI (MoM) (Oct)

Eurozone Consumer Confidence Flash

The Majors

It was a bearish day for the European majors on Thursday. The DAX30 fell by 0.88%, with the CAC40 and the EuroStoxx600 seeing losses of 0.67% and 0.75% respectively.

A continued spike in new COVID-19 cases and a reintroduction of containment measures in the U.S weighed on the majors.

The latest spike in new cases across the U.S has raised concerns that the U.S government may have to bring lockdown measures back into effect.

For the European majors, the downside was limited, however, with support coming from progress towards a COVID-19 vaccine.

The Stats

It was a particularly quiet day on the Eurozone economic calendar. There were no material stats to provide the majors with direction on the day.

From the U.S

It was a busier day on the economic calendar. Key stats included November’s Philly FED Manufacturing and the weekly jobless claims figures.

Disappointing jobless claims figures and a fall in the Philly FED Manufacturing Index left the European majors on the back foot.

In the week ending 13th November, initial jobless claims stood at 742k, rising from the previous week’s 711k.

The Philly FED Manufacturing Index fell from 32.3 to 26.3 in November. While down, it was better than a forecasted 22.0.

The Market Movers

For the DAX: It was another mixed day for the auto sector on Thursday. BMW rose by 1.27% to buck the trend on the day. Continental and Volkswagen fell by 0.45% and by 0.61% respectively, however, with Daimler slipping by 0.02%.

It was a bearish day for the banks. Deutsche Bank fell by 0.43%, with Commerzbank sliding by 4.68%.

From the CAC, it was also a bearish day for the banks. BNP Paribas and Credit Agricole fell 0.79% and by 0.58% respectively. Soc Gen led the way down, however, with a 1.41% loss.

It was a mixed day for the French auto sector. Peugeot rose by 2.35%, while Renault fell by 0.72%.

Air France-KLM slid by 2.60%, with Airbus SE declining by 0.74%.

On the VIX Index

It was back into the red for the VIX on Thursday. Partially reversing a 4.98% gain on Wednesday, the VIX fell by 3.06% to end the day at 23.11.

A late rebound across the U.S equity markets left the VIX in the red on the day.

Market fears of a reintroduction of lockdown measures to contain the COVID-19 pandemic had weighed on the U.S majors.

A late rebound came, however, on news that stimulus talks are to resume on Capitol Hill.

On Thursday, the Dow and S&P500 rose by 0.15% and by 0.39% respectively, with the NASDAQ ending the day up by 0.87%.

VIX 201120 Daily Chart

The Day Ahead

It’s a relatively quiet day ahead on the Eurozone economic calendar. German wholesale inflation figures and Eurozone consumer confidence figures are due out later today.

We would expect the consumer confidence figures to have the greatest impact on the day.

From the U.S, there are no material stats to provide direction late in the session.

Away from the economic calendar, COVID-19 news updates and any chatter from Capitol Hill will provide direction.

With new COVID-19 cases spiking across the U.S and states reintroducing containment measures, a stimulus package is now a must. A lack of progress coupled with further spikes in new cases would weigh on riskier assets.

The Futures

In the futures markets, at the time of writing, the Dow was down by 236 points.

For a look at all of today’s economic events, check out our economic calendar.