European Equities: The Economic Calendar and COVID-19 Updates to Influence

Economic Calendar:

Friday, 14th February 2020

German GDP (QoQ) (Q4) 1st Estimate

German GDP (YoY) (Q4) 1st Estimate

Spanish CPI (YoY) (Jan) Final

Spanish HICP (YoY) (Jan) Final

Eurozone GDP (QoQ) (Q4) 2nd Estimate

Eurozone GDP (YoY) (Q4) 2nd Estimate

Eurozone Trade Balance (Dec)

The Majors

A 2-day rally came to an end on Thursday as the European majors struggled over updates on new COVID-19 cases and a spike in the death toll.

The CAC40 led the way down, falling by 0.19%, with the DAX30 and EuroStoxx600 falling by just 0.02% and 0.02% respectively. Losses were heavier in the early part of the day, with the DAX30 falling by as much as 1.26% before recovering.

While the number of COVID-19 cases spiked and Wednesday marked the largest number of deaths since the outbreak began, the WHO said that the number of cases outside of China was not rising dramatically.

The WHO may have averted a Thursday meltdown but was not able to avert more bearish forecasts for the Chinese economy. For the markets, the only good news was that the number of recoveries was also on the rise.

The Stats

It was a relatively quiet day on the Eurozone economic calendar on Thursday. Key stats were limited to finalized January inflation figures out of Germany.

According to Destatis, consumer prices fell by 0.6% in January, which was in line with prelim and forecasts. In December, consumer prices had risen by 0.5%.

  • The annual rate of inflation stood at 1.7%.
  • Prices for alcoholic beverages and tobacco were up by 2.8%.
  • Support also came from Transport (+2.7%), Restaurants and hotels (+2.7%), Food and non-alcohol-beverages (+2.4%).
  • Education saw the largest annual rate of decline, however, with prices falling by 2.3%.

From the U.S, economic data included January inflation and the weekly jobless claims figures.

The stats had a muted impact on the European majors, however, as the markets focused on COVID-19 news.

The Market Movers

For the DAX: it was a bearish day for the auto sector on Thursday after having seen particularly strong gains on Wednesday. BMW and Daimler led the way down, with losses of 1.65% and 1.58% respectively. Continental and Volkswagen saw more modest losses of 0.39% and 0.91% respectively.

While the WHO managed to calm the nerves across the global equity markets, China’s Association of Automobile Manufacturers released the latest sales figures and warned that the virus will deliver a huge shock to the car industry.

The latest figures showed an 18% slump in car sales to China in January, year-on-year. It was the 19th consecutive fall in car sales.

It was a bullish day for the banks, however. Commerzbank jumped by 8.94%, with Deutsche Bank rallying by 2.24% on the day.

Commerzbank earnings results led to the Thursday rally. Revenue rose by 6.8% in the 4th quarter, driven by a rise in operating profit. The upside came in spite of a dividend cut as the bank looks to further trim the fat to turn things around.

Deutsche Lufthansa returned to the red, however, falling by 1.27%.

From the CAC, it was a mixed day for the banks. BNP Paribas fell by 0.02%, whilst Credit Agricole and Soc Gen rose by 0.81% and by 0.36% respectively.

The French auto sector also struggled following the latest car sales figures from China. Peugeot slid by 2.09%, while Renault eked out a 0.03% gain.

Air France-KLM found support in spite of the negative updates on COVID-19, rising by 0.61%.

On the VIX Index

The VIX rose by 2.98% on Thursday. Partially reversing a 9.49% slide from Wednesday, the VIX ended the day at 14.2.

Market sentiment towards the latest COVID-19 figures from China pinned back the U.S majors on Thursday.

News had hit the wires on Thursday of 254 additional deaths, which was the largest single-day death toll since the outbreak began. China had also confirmed 15,152 new cases.

On Wednesday, the S&P500 closed out the day with a 0.16% loss, which was minor considering the spike in the death toll.

VIX 14/02/20 Daily Chart

The Day Ahead

It’s a busy day ahead on the Eurozone economic calendar. 1st estimate GDP numbers for the 4th quarter are due out of Germany, along with 2nd estimate numbers for the Eurozone.

Finalized January inflation figures from Spain and the Eurozone’s December trade figures are also due out.

The market focus will likely be on Germany’s GDP numbers. Economists are expecting Germany to avoid a contraction in the 4th quarter…

2nd estimate GDP numbers out of the Eurozone would need to avoid a downward revision.

From the U.S, we can expect January retail sales and February prelim consumer sentiment figures to also influence.

Throughout the day, expect the news wires and updates on the spread of COVID-19 to also garner plenty of attention.

In the futures markets, at the time of writing, the DAX was down by 8.5 points, with the Dow down by 31 points.