Friday, 29th May
German Retail Sales (MoM) (Apr)
French Consumer Spending (MoM) (Apr)
French GDP (QoQ) (Q1) 2nd Estimate
Italian CPI (MoM) (May) Prelim
Eurozone CPI (YoY) (May) Prelim
It was a 5th consecutive day in the green for the DAX30, as the European majors continued to eat into the current year losses.
The CAC40 led the way once more rallying by 1.76%, with the DAX30 and EuroStoxx600 rising by 1.06% and 1.64% respectively.
Economic data from the Eurozone had a muted impact on the majors as the markets continued to respond to the EU recovery plan as lockdown measures ease.
From the U.S, the markets found solace in the U.S weekly jobless claims in spite of another 2m jump in initial jobless claims. While coming in at 2.123m for the week ending 22nd May, it was lower than in recent weeks.
Ultimately, however, the upbeat reaction to the recovery plan muted market jitters over rising tensions between the U.S and China.
It was a quiet day on the Eurozone economic calendar on Thursday. Key stats included May’s prelim inflation figures for Germany and Spain.
For Spain, consumer prices fell by 1.0%, year-on-year, following a 0.7% decline in April. The Harmonised Consumer Price Index fell by 0.9%, year-on-year, also following a 0.7% fall in April.
Things were not much better out of Germany, with consumer prices falling by 0.1%, month-on-month. In April, consumer prices had risen by 0.4%.
From the U.S, it was a busy day on the economic calendar.
According to 2nd estimate GDP figures, the economy contracted by 5.0% in the 1st quarter, revised down from a 1st estimate 4.8%.
Core durables goods orders slid by 7.4%, with durable goods orders tumbling by 17.2%. While dire, both sets of figures came in ahead of forecasts.
Pending home sales figures were also disappointing. In the month of April, sales tumbled by 21.8% versus a forecasted 15% slide. In March, pending home sales had slumped by 20.8%. Since late April, however, housing sector activity has rebounded, limiting the impact of the numbers.
The markets have moved on from the 1st quarter and April figures, considered to have been the economic bottom.
For the markets, the weekly jobless claims figures garnered greater interest on the day.
The Market Movers
For the DAX: It was a bearish day for the auto sector on Thursday. Volkswagen and Daimler slid by 3.72% and by 3.19% respectively to lead the way down. BMW and Continental saw more modest losses of 2.29% and 1.17% respectively.
It was a mixed day for the banks, however. Deutsche Bank declined by 2.13%, while Commerzbank closed out the day with a 0.70% gain.
Deutsche Lufthansa continued to find support from the easing of lockdown measures and bailout. Following on from a 1.74% gain on Wednesday, a 2.86% rally delivered a 4th consecutive day in the green for the week.
From the CAC, it was also a mixed day for the banking sector on Thursday. BNP Paribas and Soc Gen fell by 0.12% and by 2.71% respectively, while Credit Agricole eked out a 0.03% gain.
The auto sector returned to the red, however, with Peugeot and Renault falling by 1.10% and by 2.67% respectively.
Air France-KLM rose by a further 0.61% following Wednesday’s 2.81% gain, while Airbus SE fell by a further 1.65%.
On the VIX Index
It was a 1st day in the green from 4 on Thursday. Reversing a 1.39% fall from Wednesday, the VIX rose by 3.51% to end the day at 28.6.
The upside on the day came in response to the rising tensions between the U.S and China. On Thursday, the U.S President announced that he would unveil measures against China at Friday’s news conference.
This announcement came in the wake of China approving the security bill for Hong Kong. On Wednesday, Secretary of State Pompeo had stated that HK was no longer autonomous with China.
The U.S majors had been in positive territory before Trump’s announcement that led to a pullback late in the session.
The Day Ahead
It’s a busy day ahead on the Eurozone economic calendar. Key stats include April retail sales figures from France and Germany and May’s prelim inflation figures for the Eurozone.
2nd estimate GDP numbers are also due out of France along with May’s prelim inflation figures from France, Italy, and Spain.
With the markets looking beyond the 1st quarter and April, the stats should have a muted impact on the majors today.
From the U.S, it’s also a relatively busy day ahead on the economic calendar. Once again, the lion’s share of the stats is for April that should have a limited impact later in the day.
Any downward revisions to finalized consumer sentiment figures could draw some attention.
FED Chair Powell will also have some influence late in the session. Expect the Trump news conference to be the main event of the day…
Ahead of the European open, the majors were under pressure in anticipation of sanctions and more on China…
The Latest Coronavirus Figures
On Thursday, the number of new coronavirus cases rose by 112,124 to 5,900,627. On Wednesday, the number of new cases had risen by 110,221. The daily increase was higher than both Wednesday’s rise and 106,139 new cases from the previous Thursday.
France, Germany, Italy, and Spain reported 5,612 new cases on Thursday, which was up from 1,892 new cases on Wednesday. On the previous Thursday, 1,976 new cases had been reported.
From the U.S, the total number of cases rose by 22,413 to 1,768,216 on Thursday. On Wednesday, the total number of cases had risen by 20,392. On Thursday 21st May, a total of 28,089 new cases had been reported.
In the futures markets, at the time of writing, the DAX was down by 151.5 points, with the Dow down by 111 points.
For a look at all of today’s economic events, check out our economic calendar.