European Equities: Geopolitics and the Economic Calendar in Focus

Economic Calendar:

Monday, 25th May

German GDP (Q1) 2nd Estimate

German IFO Business Climate Index (May)

Tuesday, 26th May

GfK German Consumer Climate (Jun)

Thursday, 28th May

Spanish HICP (YoY) (May) Prelim

German CPI (MoM) (May) Prelim

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

The Majors

It was a mixed end to the week for the European majors on Friday.

The DAX30 eked out a 0.07% gain, while the CAC40 and EuroStoxx600 slipped by 0.02% and by 0.03% respectively.

Through the early part of the day, the European majors had been in the deep red before a recovery in the late part of the session.

Rising tensions between the U.S and China and news of China’s proposal for a Security Law for HK weighed on risk appetite.

Chinese move to impose greater control over HK came as the U.S looked to ban Chinese companies from U.S exchanges. A new security law would flout agreements to allow HK to remain independent of Beijing.

Unsurprisingly, Trump responded to the move by China, stating that the U.S would react strongly to such a move.

While the rise in tension between the U.S and China was certainly negative, a late recovery transpired nonetheless.

Market sentiment towards the continued easing of lockdown measures and the downward trend in new COVID-19 cases provided support.

The Stats

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

A lack of stats left the majors firmly in the hands of geopolitical risk on the day.

The Market Movers

For the DAX: It was a relatively bullish day for the auto sector on Friday. Continental rallied by 2.28% to lead the way, with BMW rising by 0.34%. Daimler and Volkswagen saw more modest gains of 0.03% and 0.14% respectively.

It was a mixed day for the banks, however. Deutsche Bank fell by 0.49%, while Commerzbank rose by 0.36%.

Deutsche Lufthansa fell by a further 2.96% following Thursday’s 3.76% slide to pin back the DAX30.

From the CAC, it was a relatively bullish day for the banking sector on Friday, following Thursday’s losses. Credit Agricole rose by 0.58% to lead the way, with BNP Paribas and Soc Gen gaining 0.32% and 0.29% respectively.

It was a mixed day for the auto sector, however, with Peugeot rising by 1.19%, while Renault slid by 2.86%.

Air France-KLM saw yet more red, with a 2.62% decline. Airbus SE ended the day down by 1.12%.

On the VIX Index

It was 3rd day in the red for the week on Friday. Partially reversing a 5.50% gain from Thursday, the VIX fell by 4.64% to end the day at 28.2.

The mixed sentiment at the end of the week left the U.S majors relatively flat on the day.

Negative sentiment towards China’s plans for an HK Security Law and rising tensions between the U.S and China pinned back the majors.

With the U.S planning to pass a bill to make it challenging for Chinese companies to list on U.S exchanges, there is plenty of uncertainty ahead.

Optimism over the continued easing of lockdown measures provided support on the day, though not enough to deliver another breakout.

On Friday, the S&P500 and NASDAQ rose by 0.24% and by 0.43% respectively, while the Dow slipped by 0.04%.

VIX 25/05/20 Daily Chart

The Day Ahead

It’s a relatively busy day ahead on the Eurozone economic calendar. Key stats include 2nd estimate GDP numbers for the 1st quarter and May’s IFO Business Expectations figures from Germany.

Barring a marked downward revision from 1st estimate, the IFO numbers will likely have a greater influence on the day.

The markets are now looking for consumers and businesses to turn the corner from April. May’s stats will need to reflect a pickup in both consumer and business confidence to support a pickup in economic activity.

Outside of the numbers, expect any chatter from Beijing and Washington to also influence, though the U.S markets are closed for the day.

The continued downward trend in new coronavirus cases across France, Germany, Italy, and Spain is positive, however. Europe’s easing of lockdown measures is supported by the COVID-19 numbers that should deliver a pickup in economic activity.

The Latest Coronavirus Figures

On Sunday, the number of new coronavirus cases rose by 100,455 to 5,497,427. On Saturday, the number of new cases had risen by 99,013. The daily increase was higher than both Saturday’s rise and 83,321 new cases from the previous Sunday.

France, Germany, Italy, and Spain reported 1,470 new cases on Sunday, which was down from 1,658 new cases on Wednesday. On the previous Sunday, 2,500 new cases had been reported.

From the U.S, the total number of cases rose by 20,190 to 1,686,436 on Sunday. On Saturday, the total number of cases had risen by 21,152. On Sunday 17th May, a total of 19,891 new cases had been reported.

In the futures markets, at the time of writing, the DAX was up by 84.5 points, with the Dow up by 69 points.

European Equities: A Week in Review – 23/05/20

The Majors

It was a bullish week for the European majors in the week ending 22nd May. The DAX30 rallied by 5.82% to lead the way, with the CAC30 and EuroStoxx600 gaining 3.90% and 3.63% respectively.

Economic data took a back seat once again, as the markets continued to focus on the ongoing easing of lockdown measures.

Across the most affected EU member states, the downward trend in new cases continued, in spite of the easing of confinement measures.

It wasn’t plane sailing, however, with rising tensions between the U.S and China weighing on risk appetite in the week.

Ultimately, however, the markets have lived through Trump’s negotiation styles before. Actually ousting Chinese companies from U.S exchanges would have significant implications… Let’s not forget the Investment Dollars that the likes of Apple have plowed into China over the years…

Trump will also need to be cognizant of the fact that the U.S Presidential Election is not too far off.

On the Fiscal policy front, progress towards an EU COVID-19 recovery fund also supported the demand for the majors in the week.

The Stats

It was a relatively busy week on the Eurozone economic calendar. It was a week of 2-halves on the economic data front.

In the 1st half of the week, May’s ZEW economic sentiment figures for the Eurozone and Germany and Eurozone consumer confidence figures were in focus.

Both sets of numbers provided support, with the economic sentiment in Germany seeing a marked pickup.

The upside came as the downward trend in new coronavirus cases continued and lockdown measures eased.

In the 2nd half of the week, the focus shifted to May’s prelim private sector PMIs for France, Germany, and the Eurozone.

While we didn’t see a rebound similar to that seen in China, the survey did suggest that the worst may have passed.

This may have been good enough in the week but what the market expects, in terms of the pace of the economic recovery, remains to be seen.

FED Chair Powell spoke early in the week of the U.S economic recovery, delivering a reality check for the markets. Powell forecasted a recovery by the end of 2021. That’s some way off and the forecast assumes no hiccups along the way…

From the U.S, while it was a relatively busy week on the calendar, it was the weekly jobless claims figures that tested the majors.

Another 2.438m jump in initial jobless claims in the week ending 15th May was certainly not needed.

On the positive, however, the FED reassured the markets that there was plenty of ammo left to lead the U.S economy back to growth.

The Market Movers

From the DAX, it was a bullish week for the auto sector. Continental and Daimler surged by 10.42% and 11.11% respectively to lead the way. BMW and Volkswagen weren’t far behind, with gains of 7.71% and 9.10% respectively.

It was a particularly bullish week for the banking sector. Commerzbank jumped by 14.88%, with Deutsche Bank rallying by 12.25%.

Lufthansa also found support, rallying by 7.53% to reverse a 5.10% loss from the previous week.

From the CAC, it was a relatively bullish week for the banks. BNP Paribas and Soc Gen rallied by 7.69% and by 6.03% respectively, while Credit Agricole saw a more modest 1.17% gain.

It was a mixed week for the French auto sector, however. Peugeot rose by 0.61%, while Renault fell by 1.37%.

Air France-KLM saw more losses, with an 8.06% slide following on from a 6.91% fall from the previous week. Airbus recovered most of the previous week’s 12.06% tumble, with a 10.06% gain.

On the VIX Index

It was back into the red for the VIX in the week ending 22nd May, with the VIX falling by 11.70%. Partially reversing a 13.97% gain from the previous week, the VIX ended the week at 28.2.

A continued easing of lockdown measures and assurances by the FED of continued support overshadowed rising tensions between the U.S and China.

In the early part of the week, news of positive results from early trials for a COVID-19 vaccine also supported riskier assets.

The S&P500 ended the week up by 3.20%, with the Dow and NASDAQ gaining by 3.29% and by 3.44% respectively.

VIX 23/05/20 Weekly Chart

The Week Ahead

It’s a busy week ahead on the Eurozone economic calendar.

Expect market focus to remain on business and consumer confidence and then post-April consumption figures.

A continued pickup in both consumer and business confidence in Germany would certainly be a boost. What impact the rise in tension between the U.S and China will have remains to be seen, however, and could be a curveball in the week ahead.

Other stats include 2nd estimate GDP figures for the 1st quarter and prelim inflation figures for May. These should have limited influence.

From elsewhere, we will expect the weekly jobless claims figures from the U.S to continue to be a market area of focus. In the week ahead, however, we will also be eyeing the May consumer confidence figures from the U.S.

With the U.S economy fueled by consumption, are consumers buying into the Trump gamble of opening up the economy?

The markets will also need to monitor the daily COVID-19 numbers.

European Equities: Geopolitics and the ECB’s Monetary Policy Meeting Minutes in Focus

The Majors

The risk pendulum swung against the European majors on Thursday, with the DAX falling by 1.41% to lead the way.

Things were not much better for the CAC40 and EuroStoxx600, which ended the day with losses of 1.15% and 0.75% respectively.

While economic data came in better than had been forecast, rising tension between the U.S and China was back in focus.

News of the House of Representatives passing a Bill to oust Chinese companies from U.S exchanges weighed on risk sentiment on Thursday.

Things are unlikely to get better anytime soon and the latest move brings into doubt the viability of the phase 1 trade agreement.

The Stats

It was a busy day on the Eurozone economic calendar on Thursday. May’s prelim private sector PMIs for France, Germany, and the Eurozone was in focus early in the European session.

France’s Manufacturing PMI increased from 31.5 to 40.3, with the Services PMI rising from 10.2 to 29.4. Economists had forecast a Manufacturing PMI of 36.1 and Services PMI of 27.8.

Germany’s Manufacturing PMI rose from 34.5 to 36.8, with the Services PMI increasing from 16.2 to 31.4. Economists had forecast a Manufacturing PMI of 39.2 and Services PMI of 26.6.

For the Eurozone, the Manufacturing PMI rose from 33.4 to 39.5, with the Services PMI increasing from 12.0 to 28.7.

The Eurozone’s Composite PMI came in at 30.5, which was up from an April 13.6 and ahead of a forecasted 25.0.

According to the prelim May survey:

  • The Composite Output Index rose from 13.6 to a 3-month high 30.5.
  • Service and manufacturing sector activity hit 3-month and 2-month highs respectively.
  • While service sector activity contracted at a slower pace, it was still the 3rd steepest decline on record. Social distancing and lockdown measures continued to weigh on businesses including hotels, restaurants, and travel tourism.
  • Jobs continued to be cut at an unprecedented rate, with both sectors contributing.
  • Inflows of new business fell by the 3rd greatest extent ever recorded. In spite of this, the smallest decline in new business in 3 months suggested that the downturn had bottomed out.

From the U.S

Prelim private sector PMIs and the weekly jobless claims were also in focus later in the day.

In the week ending 15th May, U.S initial jobless claims rose by 2.438m, following on from a 2.687m jump in the week prior. Economists had forecast 2.4m claims for the week.

Philly FED numbers also failed to impress, with the Philly FED’s Manufacturing Index rising from -46.7 to -43.1 in May. Economists had forecast a rise to -41.5.

In May, the Services PMI rose from 26.7 to 36.9, with the Manufacturing PMI increasing from 36.1 to 39.8.

The markets had hoped for a marked improvement in service sector activity. With job losses continuing to rise in May, an easing in lockdown measures failed to spur the services sector into action…

The Market Movers

For the DAX: It was a mixed day for the auto sector on Thursday. Daimler fell by 1.18% to lead the way down. BMW and Continental and weren’t far behind, with losses of 0.60% and 0.62% respectively. Volkswagen bucked the trend, with a 0.15% gain.

It was a bearish day for the banks, however. Deutsche Bank fell by 1.23%, with Commerzbank sliding by 2.55%.

Deutsche Lufthansa slid by 3.76%, following Wednesday’s 7.74% rally.

From the CAC, it was a bearish day for the banking sector on Thursday. Credit Agricole slid by 3.03% to lead the way down. BNP Paribas and Soc Gen ended the day with losses of 1.86% and 2.53% respectively.

It was also a bearish day for the auto sector, after Wednesday’s partial recovery. Peugeot fell by 1.94%, with Renault falling by 1.52%.

Air France-KLM continued to see red, with a 1.25% decline, with Airbus SE ending the day with a 0.73% loss.

On the VIX Index

It was only a 2nd day in the green out of 6 on Thursday. Partially reversing an 8.32% fall from Wednesday, the VIX rose by 5.50% to end the day at 29.5.

Market jitters over rising tension between the U.S and China returned as the U.S government looked to push Chinese companies out of the international market.

Economic data added to the market angst, with the initial jobless claims seeing another sizeable jump in the week ending 15th May.

On Thursday, the S&P500 fell by 0.78%, with the Dow and NASDAQ seeing losses of 0.41% and 0.97% respectively.

VIX 22/05/20 Daily Chart

The Day Ahead

It’s a quiet day ahead on the Eurozone economic calendar. There are no material stats due out to provide the majors with direction.

Through the early part of the day, chatter from Beijing and Washington and COVID-19 news updates will remain the key drivers.

Later in the day, with no material stats due out of the U.S, expect the markets to be wary of any Trump Twitter account. The U.S markets are closed on Monday, so the majors could come under pressure later in the session…

On the monetary policy front, the ECB monetary policy meeting minutes are due out and will need to assure continued support. There is also the issue of an EU COVID-19 aid package…

The Latest Coronavirus Figures

On Thursday, the number of new coronavirus cases rose by 106,139 to 5,188,800. On Wednesday, the number of new cases had risen by 99,724. The daily increase was higher than both Wednesday’s rise and 93,671 new cases from the previous Thursday.

France, Germany, Italy, and Spain reported 1,976 new cases on Thursday, which was down from 2,856 new cases on Wednesday. On the previous Thursday, 4,230 new cases had been reported.

From the U.S, the total number of cases rose by 28,089 to 1,620,080 on Thursday. On Wednesday, the total number of cases had risen by 21,408. On Thursday, 14th May, a total of 26,397 new cases had been reported.

In the futures markets, at the time of writing, the DAX was up by 58.5 points, with the Dow up by 96 points.

European Equities: Futures See Red as COVID-19 News and a Murky Outlook Weigh

Economic Calendar:

Wednesday, 20th May

German PPI (MoM) (Apr)

Eurozone Core CPI (YoY) (Apr) Final

Eurozone CPI (MoM) (Apr) Final

Eurozone CPI (YoY) (Apr) Final

Eurozone Consumer Confidence Flash

Friday, 22nd May

French Manufacturing PMI (May) Prelim

French Services PMI (May) Prelim

German Manufacturing PMI (May) Prelim

German Services PMI (May) Prelim

Eurozone Manufacturing PMI (May) Prelim

Eurozone Markit Composite PMI (May) Prelim

Eurozone Services PMI (May) Prelim

The Majors

It was a mixed day for the European majors on Tuesday. The DAX30 rose by 0.15% to buck the trend, while the CAC40 and EuroStoxx600 fell by 0.89% and 0.61% respectively.

Sentiment towards the economy amidst the continued deluge of weak economic data weighed on the majors.

The downside came in spite of progress towards an EU recovery fund and the ongoing easing of lockdown measures.

While optimism continues to support the European majors, a likely slow economic recovery pinned the majors back. There were no catalysts to distract the markets from the harsh realities during the session.

Late in the European session, FED Chair Powell also delivered another reality check, stating that the U.S economy would unlikely recover until the end of 2021.

The Stats

It was a busier day on the Eurozone economic calendar on Tuesday. Key stats included May’s ZEW Economic Sentiment figures for Germany and the Eurozone.

Germany’s Economic Sentiment Index rose from 28.2 to 51.0 in May. In April, the Index had risen from -49.5 to 28.2. The ZEW Current Conditions Index fell from -91.5 to -93.5. In April, the index had fallen from -43.1 to -91.5.

For the Eurozone, the Economic Sentiment Index rose from 25.2 to 46.0 in May. In April, the Index had risen from -49.5 to 25.2.

An improved sentiment towards the economic outlook across economists and analysts provided little support early in the day, however.

From the U.S, economic data included April building permits and housing starts. The stats had a muted impact on the majors, however, with the focus being on FED Chair Powell’s testimony.

The Market Movers

For the DAX: It was a bearish day for the auto sector on Tuesday. Daimler and Volkswagen slid by 1.89% and by 1.43% to lead the way. BMW and Continental weren’t far behind, with losses of 1.08% and 0.97% respectively.

It was a mixed day for the banks, however. While Deutsche Bank fell by 0.37%, Commerzbank rose by a further 5.17% following Monday’s breakout.

Deutsche Lufthansa struggled on the day, with a 1.17% loss.

From the CAC, it was a bearish day for the banking sector on Tuesday. Soc Gen slid by 4.76%, with BNP Paribas and Credit Agricole ending the day with losses of 0.93% and 2.77% respectively.

It was a particularly bearish day for the auto sector, however. Peugeot fell by 5.62, with Renault tumbling by 10.85%.

A slump in EU car registrations in April weighed heavily on the auto sector.

Air France-KLM slid by 8.97% to reverse Monday’s 5.48% gain, while Airbus SE fell by just 2.01% following Monday’s 12.23% surge.

On the VIX Index

A run of 3rd consecutive days in the red came to an end on Tuesday, with the VIX rising by 4.20%. Partially reversing an 8.12% slide on Monday, the VIX ended the day at 30.5.

Following Monday’s COVID-19 vaccine breakout, there were a number of negatives for the U.S majors on Tuesday.

From Capitol Hill, Republicans in Congress stated that they were in no hurry to deliver another relief package. There was also some negative chatter on the COVID-19 vaccine Moderna. The news hit the wires that there was no way of knowing the effectiveness of the drug in its early trial stags. Coupled with some dire economic data and doom and gloom from the FED Chair, the U.S Indexes hit reverse late in the session.

On Tuesday, the S&P500 fell by 1.05%, with the Dow and NASDAQ seeing losses of 1.59% and 0.54% respectively.

VIX 20/05/20 Daily Chart

The Day Ahead

It’s a busier day ahead on the Eurozone economic calendar. Key stats include finalized April inflation figures for the Eurozone and wholesale inflation figures for Germany.

Later in the session, the Eurozone’s flash consumer confidence figures will also garner some attention.

From the U.S, there are no material stats to consider ahead of the FOMC meeting minutes that are due for release after the European close.

On the geopolitical risk front, further updates from the EU on fiscal stimulus will provide direction along with the latest COVID-19 news and numbers.

The Latest Coronavirus Figures

On Tuesday, the number of new coronavirus cases rose by 94,819 to 4,982,937. On Monday, the number of new cases had risen by 82,564. The daily increase was higher than both Monday’s rise and 81,022 new cases from the previous Tuesday.

France, Germany, Italy, and Spain reported 2,848 new cases on Tuesday, which was up from 1,916 new cases on Monday. On the previous Tuesday, 4,176 new cases had been reported.

From the U.S, the total number of cases rose by 20,688 to 1,570,583 on Tuesday. On Monday, the total number of cases had risen by 22,231 On Tuesday, 12th May, a total of 22,740 new cases had been reported.

In the futures markets, at the time of writing, the DAX was down by 22 points, while the Dow was up by 165 points.

European Equities: EU Fiscal Stimulus News and Economic Data in Focus

Economic Calendar:

Tuesday, 19th May

German ZEW Current Conditions (May)

German ZEW Economic Sentiment (May)

Eurozone ZEW Economic Sentiment (May)

Wednesday, 20th May

German PPI (MoM) (Apr)

Eurozone Core CPI (YoY) (Apr) Final

Eurozone CPI (MoM) (Apr) Final

Eurozone CPI (YoY) (Apr) Final

Eurozone Consumer Confidence Flash

Friday, 22nd May

French Manufacturing PMI (May) Prelim

French Services PMI (May) Prelim

German Manufacturing PMI (May) Prelim

German Services PMI (May) Prelim

Eurozone Manufacturing PMI (May) Prelim

Eurozone Markit Composite PMI (May) Prelim

Eurozone Services PMI (May) Prelim

The Majors

It was a bullish start to the week for the European majors. The DAX30 rallied by 5.67% to lead the way, with the CAC40 and EuroStoxx600 seeing gains of 5.16% and 5.10% respectively.

There were no material stats from the Eurozone to rock the boat. Positive sentiment towards the ongoing easing of lockdown measures drove demand for the majors.

Crude oil prices were also on the rise, as optimism towards a pickup in economic activity overshadowed an expected long road to economic recovery.

Adding to the upside on the day was positive news on the effectiveness of a COVID-19 vaccination. This would allow governments to ease lockdown measures at a more aggressive pace.

On the monetary policy front, comments from FED Chair Powell also eased concerns that the FED has little left to offer. Powell assured the markets that the FED still has plenty in the tank to support the economy.

The Stats

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

There were also no stats from the U.S to influence later in the day.

The Market Movers

For the DAX: It was a particularly bullish day for the auto sector on Monday. Daimler and Volkswagen rallied by 10.26% and by 8.31% to lead the way. BMW and Continental weren’t far behind, with gains of 7.77% and 8.05% respectively.

Hopes of a pickup in economic activity also delivered support to the beleaguered banks. Deutsche Bank rallied by 9.34%, with Commerzbank gaining 8.12%.

Deutsche Lufthansa found strong support. An effective COVID-19 vaccination would allow governments to open borders and lead to a marked increase in air passenger volumes. Deutsche Lufthansa rallied by 8.11%.

From the CAC, it was a bullish day for the banking sector on Monday. Soc Gen rallied by 10.27%, with BNP Paribas and Credit Agricole ending the day with gains of 7.82% and 6.11% respectively.

It was also a bullish day for the auto sector. Peugeot and Renault rallied by 6.56% and 8.70% respectively. French autos found support on Monday, with French finance minister Bruno Le Maire speaking of government plans to support the sector.

Air France-KLM saw a relatively modest 5.48% gain, while Airbus SE surged by 12.23% only to be outdone by TechnipFMC (+13.88%) on the day.

On the VIX Index

It was a 3rd consecutive day in the red for the VIX on Monday. Following on from a 2.21% fall on Friday, the VIX slid by 8.12% to end the day at 29.3.

The markets put concerns over U.S and China tensions aside on the day, with the focus primarily on COVID-19 news updates.

A continued easing of lockdown measures, the downward trend in new cases, and news of promising early results for a vaccination delivered a boost. Surging crude oil prices on a shift in sentiment towards demand had set up the major indexes in the early part of the day.

On Monday, the S&P500 rose by 3.15%, with the Dow and NASDAQ seeing gains of 3.85% and 2.44% respectively.

VIX 19/05/20 Daily Chart

The Day Ahead

It’s a busier day ahead on the Eurozone economic calendar. May’s ZEW Economic Sentiment figures for Germany and the Eurozone are due out later today.

Expect any pickup in sentiment towards the economy to provide support.

From the U.S, stats are limited to April housing sector numbers that will likely have a muted impact on the majors.

On the geopolitical risk front, updates from the EU Finance Ministers’ virtual meeting will provide direction. Any talk of a sizeable stimulus package would be positive for the majors.

Downside risks remain, however, with any chatter from Beijing or Washington on trade likely to be test support.

The Latest Coronavirus Figures

On Monday, the number of new coronavirus cases rose by 82,564 to 4,888,188. On Sunday, the number of new cases had risen by 83,321. The daily increase was lower than Sunday’s rise, while higher than 76,701 new cases on the previous Monday.

France, Germany, Italy, and Spain reported 1,916 new cases on Monday, which was down from 2,500 new cases on Sunday. On the previous Monday, 5,374 new cases had been reported.

From the U.S, the total number of cases rose by 22,231 to 1,549,895 on Monday. On Sunday, the total number of cases had risen by 19,891 On Monday, 11th May, a total of 18,196 new cases had been reported.

In the futures markets, at the time of writing, the DAX was up by 20 points, with the Dow up by 11 points.

European Equities: COVID-19 Updates Deliver Support, with Geopolitics also in Focus

Economic Calendar:

Tuesday, 19th May

German ZEW Current Conditions (May)

German ZEW Economic Sentiment (May)

Eurozone ZEW Economic Sentiment (May)

Wednesday, 20th May

German PPI (MoM) (Apr)

Eurozone Core CPI (YoY) (Apr) Final

Eurozone CPI (MoM) (Apr) Final

Eurozone CPI (YoY) (Apr) Final

Eurozone Consumer Confidence Flash

Friday, 22nd May

French Manufacturing PMI (May) Prelim

French Services PMI (May) Prelim

German Manufacturing PMI (May) Prelim

German Services PMI (May) Prelim

Eurozone Manufacturing PMI (May) Prelim

Eurozone Markit Composite PMI (May) Prelim

Eurozone Services PMI (May) Prelim

The Majors

It was a bullish end to a bearish week for the European majors. The DAX30 rose by 1.24% to lead the way, while the CAC40 and EuroStoxx600 saw more modest gains of 0.11% and 0.47% respectively.

Economic data out of China on Friday provided the European majors with much-needed support. Figures released ahead of the European open showed that industrial production rose by 3.5% in April, year-on-year. Economists had forecast a 1.5% rise. This was the only positive, however, with fixed-asset investment and retail sales continuing to slide.

On the geopolitical front, rising tensions between the U.S and China did limit the upside for the majors on the day.

The news of the U.S government implementing steps to prevent the shipment of chips to Huawei pinned back the majors late in the day.

In response, China threatened to target U.S companies with bans should the U.S government proceed with the blocking of chip supply.

The rise in escalation came after a lull mid-week that had allowed the markets to focus on economic data and central bank chatter.

While chatter from Beijing and Washington weighed, hopes of a pickup in economic activity provide support as lockdown measures eased further.

A slight uptick in new coronavirus cases over the week was not enough to force governments to reverse the easing of measures.

The Stats

It was a busy day on the Eurozone economic calendar on Friday. Key stats included 1st quarter GDP numbers for Germany and the Eurozone.

For Germany, the economy contracted by 2.2% in the 1st quarter, according to 1st estimate figures, which was in line with forecasts.

According to 2nd estimate figures, the Eurozone’s economy contracted by 3.8% in the 1st quarter, which was in line with 1st estimates.

It was a different story for the year-on-year figures, however. Germany’s economy contracted by 1.9%, which was worse than a forecasted contraction of 1.6%. In contrast, the Eurozone’s economy contracted by 3.2%, coming in ahead of a 1st estimate 3.3%.

Finalized French and Italian April inflation figures and Eurozone trade data for March had a muted impact on the day.

The Market Movers

For the DAX: It was a mixed day for the auto sector on Friday. Continental rallied by 3.49% to lead the way, with Volkswagen gaining 2.87%. While Daimler also saw green, with a 1.05% rise, BMW slid by 2.63% to buck the trend on the day.

It was also a bearish day for the banks, however. Deutsche Bank slid by 3.18%, with Commerzbank falling by 2.44%.

Deutsche Lufthansa slid by 4.56%, reversing a 4.84% rally from Thursday.

From the CAC, it was a mixed day for the banking sector following Thursday’s losses. BNP Paribas and Credit Agricole rose by 1.18% and 1.67% respectively, while Soc Gen fell by 0.66%.

It was a bullish day for the auto sector, however, with Peugeot and Renault seeing gains of 2.90% and 0.83% respectively.

Air France-KLM rose by 1.71%, while Airbus SE fell by 1.14 at the end of the week.

On the VIX Index

It was a 2nd consecutive day in the red for the VIX on Friday. Following on from a 7.57% fall on Thursday, the VIX fell by 2.21% to end the day at 31.9.

Rising tension between the U.S and China and some particularly dire economic data had given the VIX a boost early in the day.

A rebound across the U.S equity markets, however, led to a reversal through the 2nd half of the day.

While economic data was particularly disappointing, hopes of a pickup in economic activity supported the U.S majors on Friday.

On Friday, the S&P500 rose by 0.39%, with the Dow and NASDAQ seeing gains of 0.25% and 0.79% respectively.

VIX 18/05/20 Daily Chart

The Day Ahead

It’s a quiet start to the week on the Eurozone economic calendar. There are no material stats from the Eurozone or the U.S to provide the majors with direction.

A lack of stats will leave the European majors in hands of COVID-19 news, geopolitics, and any chatter from EU member states on fiscal support.

A downward trend in new coronavirus cases and a continued easing of lockdown measures supported in the futures early on.

The Latest Coronavirus Figures

On Sunday, the number of new coronavirus cases rose by 75,594 to 4,797,827. On Saturday, the number of new cases had risen by 104,393. The daily increase was lower than Saturday’s rise and 78,198 new cases on the previous Sunday.

France, Germany, Italy, and Spain reported 2.500 new cases on Sunday, which was down from 3,490 new cases on Saturday. On the previous Sunday, 3,549 new cases had been reported.

From the U.S, the total number of cases rose by 18,838 to 1,526,611 on Sunday. On Saturday, the total number of cases had risen by 25,939. On Sunday, 10th May, a total of 20,329 new cases had been reported.

In the futures markets, at the time of writing, the DAX was up by 146.5 points, with the Dow up by 197 points.

European Equities: A Week in Review – 16/05/20

The Majors

It was a bearish week for the European majors in the week ending 15th May. The CAC30 slid by 5.98% to lead the way down, with the DAX30 and EuroStoxx600 falling by 4.03% and by 3.76 respectively.

For the CAC40 and DAX30, it had been 4 consecutive days in the red before support kicked in on Friday.

Market concerns over a possible 2nd wave of the coronavirus, dovish chatter from FED Chair Powell, and rising tensions between the U.S and China delivered the losses.

Economic data from the Eurozone and the U.S certainly did not help in the week, however, with more records broken.

At the end of the week, the majors did find support. The upside came in spite of some dire stats and the U.S threat to cut the supply of chips to Huawei. In response, China announced that it would ban doing business with U.S marquee companies should the U.S go through with its threat.

Better than expected industrial production figures out of China contributed to the upside on Friday. It wasn’t enough to prevent the worst weekly decline since March, however.

The Stats

It was a relatively busy week on the Eurozone economic calendar. Through the 1st half of the week, economic data was limited to April industrial production figures for the Eurozone. While better than forecasts, an 11.30% slide certainly didn’t help the mood.

The markets then had to wait until Friday for 1st estimate GDP numbers for Germany and 2nd estimate figures for the Eurozone.

In the 1st quarter, the German economy contracted by 2.2%, which was in line with forecasts. Year-on-year, however, the economy contracted by 1.9%, which was worse than a forecasted 1.6% contraction.

For the Eurozone, an upward revision to the year-on-year contraction to 3.2% was the only positive stat of the week.

From the ECB, the Economic Bulletin on Thursday reminded the markets of the ECB’s view on the economy and outlook. There was nothing positive for the more optimistic market participants to cling onto…

Out of the U.S, another 2.9m surge in initial jobless claims and a record 16.4% month-on-month fall in retail sales added to the doom and gloom.

On Friday, China reported a 3.5% rise in industrial production, which provided much-needed support at the end of the week.

The Market Movers

From the DAX, it was a bearish week for the auto sector. BMW and Daimler tumbled by 8.96% and 10.37% respectively to lead the way down. Continental and Volkswagen saw more modest losses of 6.16% and 5.57% respectively.

It was a particularly bearish week for the banking sector. Commerzbank tumbled by 11.13%, with Deutsche Bank sliding by 9.42%.

Lufthansa also struggled, with a 4.62% slide on Friday, leading to a 5.10% loss for the week.

From the CAC, it was also a bearish week for the banks. Soc Gen tumbled by 11.30%, with BNP Paribas and Credit Agricole sliding by 7.91% and by 6.20% respectively.

Things were not much better for the French auto sector, with Peugeot tumbling by 14.22%. Renault saw a more modest 0.29% loss for the week.

Air France-KLM and Airbus saw another week of heavy losses, with the pair sliding by 6.91% and by 12.06% respectively.

On the VIX Index

It was back into the green for the VIX in the week ending 15th May. Partially reversing a 24.76% slide from the previous week, the VIX rose by 13.97% to end the week at 31.9.

Economic data and rising tension between the U.S and China coupled with negative central bank chatter delivered the upside.

For the U.S equity markets, 3 consecutive days in the red did the damage before support kicked in on Thursday.

In spite of particularly dire stats and a U.S – China exchange of threats, hopes of a marked pickup in economic activity limited the upside for the VIX.

Lockdown measures continued to ease, which led to a marginal increase in the number of new coronavirus cases in the week.

The S&P500 ended the week down by 2.26%, with the Dow and NASDAQ falling by 2.65% and by 1.17% respectively.

VIX 16/05/20 Weekly Chart

The Week Ahead

It’s a busy week ahead on the Eurozone economic calendar.

Through the 1st half of the week, key stats include May ZEW Economic sentiment figures for Germany and the Eurozone and Eurozone consumer confidence figures.

For the majors to respond, there will need to be a marked pickup in consumer confidence.

The markets will then need to look ahead to prelim May private sector PMIs due out on Friday. These numbers will be particularly influential on risk sentiment at the end of the week.

Through May, governments eased lockdown measures that should provide the private sector with much-needed support.

While a slower pace of contraction across the manufacturing sector is likely, expect the services PMIs to garner plenty of attention…

From elsewhere, we will expect the weekly jobless claims figures from the U.S to continue to be a market area of focus.

Ahead of the numbers, the FOMC minutes on Wednesday will also influence, as will prelim May private sector PMIs and  May’s Philly FED Manufacturing Index numbers on Thursday.

On the geopolitical risk front, there’s the U.S and China to consider, while the markets will also need to monitor the daily COVID-19 numbers.

From the EU, Finance Ministers are scheduled to have a virtual meeting at the start of the week. Talks of a more sizeable stimulus package will be a must for the majors to avoid another weekly spill.

European Equities: The Futures Point Northwards ahead of German GDP Numbers

Economic Calendar:

Friday, 15th May

German GDP (QoQ) (Q1) 1st Estimate

German GDP (YoY) (Q1) 1st Estimate

French CPI (MoM) (Apr) Final

French HICP (MoM) (Apr) Final

Italian CPI (MoM) (Apr) Final

Eurozone GDP (QoQ) (Q1) 2nd Estimate

Eurozone GDP (YoY) (Q1) 2nd Estimate

Eurozone Trade Balance (Mar)

The Majors

The recession sirens have been ringing this week and not the ones warning of a short-lived slump.

It was a 4th consecutive day in the red for the European majors, with the EuroStoxx600 sliding by 2.17% to lead the way.

The CAC40 and DAX30 weren’t far behind, with losses of 1.95% and 1.65% respectively.

Negative sentiment towards the economic outlook dawned on the global financial markets this week. Disappointing numbers, dovish central bank chatter, and stark warnings by disease experts sent the majors into a spin.

The downside came in spite of a lack of a material surge in new coronavirus cases across the EU. As we saw back in the 1st quarter, the East to West migration of the virus could deliver a 2nd wave across the EU should member states loosen containment measures too quickly.

FED Chair Powell’s comments didn’t help and continued to weigh on risk sentiment on Thursday, as did rising tensions between the U.S and China.

The Stats

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

There were no major adjustments from prelim to influence the majors on the day, however.

The ECB Economic Bulletin also delivered few surprises on Thursday. A warning of a sharp economic contraction was delivered after 1st quarter GDP numbers for the Eurozone. The ECB did warn of an EU contraction to a degree never seen since the post-war era, however.

Commentary from the bulletin was largely aligned with ECB comments from the last press conference that limited market reaction.

From the U.S, the weekly jobless claims did little to limit the downside, with initial jobless claims surging by 2.981m in the week ending 8th May.

The markets had hoped for a marked pullback in claims, which failed to materialize. As labor market conditions deteriorate further, economic recovery would also become a lengthier process…

The Market Movers

For the DAX: It was a mixed day for the auto sector on Thursday. Continental rose by 0.65% to buck the trend on the day. Daimler and BMW slid by 2.76% and by 1.77% respectively, while Volkswagen fell by a more modest 0.65%.

It was also a mixed day for the banks. Deutsche Bank rose by 0.64%, while Commerzbank fell by 1.04%.

Deutsche Lufthansa rallied by 4.84% to reverse Wednesday’s 1.20% loss.

From the CAC, the banking sector continued to see red on Thursday. BNP Paribas fell by 1.02%, with Credit Agricole and Soc Gen seeing losses of 1.36% and 2.03% respectively.

It was also another bearish day for the auto sector. Peugeot slid by 5.23%, while Renault slipped by 0.47%.

Air France-KLM fell deeper into the red, with a 2.31% loss, while Airbus SE eked out a 0.56% gain.

On the VIX Index

It was back into the red for the VIX, which fell by 7.57% on Thursday. Reversing a 6.78% gain from Wednesday, the VIX ended the day at 32.6.

Bearish sentiment across the majors had seen the VIX spike at an early afternoon intraday high 39.3 before hitting reverse.

A rebound across the U.S majors late in the day came in spite of another dire jobless claims figures from the U.S.

Some positive updates on Thursday delivered the upside, which included news of rising demand for homes and a jump in crude oil prices.

The IEA’s monthly report delivered the boost for crude oil, with the IEA forecasting a 12m bpd fall in output to an almost decade low. The output forecast was accompanied by a positive outlook on demand that delivered the upside for crude on the day.

Across the U.S major indexes, the S&P500 rose by 1.15%, with the Dow and NASDAQ gaining 1.62% and 0.91% respectively.

VIX 15/05/20 Daily Chart

The Day Ahead

It’s a busier busy day ahead on the Eurozone economic calendar. Key stats due out of the Eurozone include 1st quarter GDP numbers out of Germany.

We’ve seen the GDP numbers out of the Eurozone, France, and Spain. Germany’s figures are unlikely to give too much comfort as 2nd quarter indicators continue to paint a bleak picture.

March trade data and 2nd estimate GDP figures for the Eurozone, also due out, will likely have a muted impact on the day.

From the U.S, it’s also a busy day ahead and the numbers will garner some interest.

April retail sales and May’s NY Empire State Manufacturing and consumer sentiment figures are in focus.

Coupled with chatter from the Oval Office and Beijing, expect plenty of market reaction to the numbers.

The Latest Coronavirus Figures

On Thursday, the number of new coronavirus cases rose by 93,671 to 4,521,174. On Wednesday, the number of new cases had risen by 88,941. While the daily increase was higher than Wednesday’s rise, it was down from a 191,233 spike on the previous Thursday.

France, Germany, Italy, and Spain reported 4,230 new cases on Thursday, which was up from 3,225 new cases on Wednesday. On the previous Thursday, 16,103 new cases had been reported.

From the U.S, the total number of cases rose by 26,397 to 1,456,745 on Thursday. On Wednesday, the total number of cases had risen by 21,774. On Thursday, 7th May, the total new number of cases had risen by 56,348.

In the futures markets, at the time of writing, the DAX was up by 130 points, with the Dow up by 19 points.

European Equities: Will U.S Jobless Claims Figures Deliver a 4th Consecutive Day in the Red?

Economic Calendar:

Thursday, 14th May

German CPI (MoM) (Apr) Final

Spanish CPI (YoY) (Apr) Final

Spanish HICP (YoY) (Apr) Final

Friday, 15th May

German GDP (QoQ) (Q1) 1st Estimate

German GDP (YoY) (Q1) 1st Estimate

French CPI (MoM) (Apr) Final

French HICP (MoM) (Apr) Final

Italian CPI (MoM) (Apr) Final

Eurozone GDP (QoQ) (Q1) 2nd Estimate

Eurozone GDP (YoY) (Q1) 2nd Estimate

Eurozone Trade Balance (Mar)

The Majors

It was another bearish day for the European majors on Wednesday, with the CAC40 sliding by 2.85% to lead the way down. The DAX30 and EuroStoxx600 weren’t far behind, with losses of 2.56% and 1.94% respectively.

There was plenty for the markets to consider mid-week, all of which contributed to the downside on the day.

Economic data was on the lighter side, however, leaving the majors in the hands of Powell, corporate earnings, COVID-19, and China.

A reported rise in cases in both China and South Korea led to a shift in sentiment towards government plans to ease lockdown measures this week.

On the corporate earnings front, banks were in focus as Commerzbank and ANB AMRO disappointed on Wednesday.

Tensions between China and the U.S didn’t help. On Tuesday, news had hit the wires of proposed legislation to roll out sanctions on China. The U.S is requesting China to deliver a summary of events that led to the COVID-19 outbreak….

Later in the European session on Wednesday, Fed Chair Powell’s scheduled speech also garnered plenty of attention. The FED Chair’s Powell added to the market angst on the day, by talking of a possibly prolonged recession.

The Stats

It was another quiet day on the Eurozone economic calendar on Wednesday. Eurozone industrial production figures for March failed to move the dial, in spite of better than forecasted figures.

In March, industrial production tumbled 11.30%, following a 0.1% decline in February. Economists had forecast a 12.0% decline.

According to Eurostat,

  • The production of durable consumer goods slumped by 26.3%, capital goods by 15.9%, and intermediate goods by 11.0%.
  • There were also declines in the production of energy (-4.0%)) and non-durable consumer goods (-1.6%).
  • By member state, Italy (-28.4%), Slovakia (-20.3%), and France (-16.4%) reported the heaviest declines.
  • Ireland (+15.5%) and Greece and Finland (both +0.9%) reported rises in industrial production.
  • Year-on-year, industrial production fell by 12.9% across the Eurozone in March.

From the U.S, April wholesale inflation figures had a muted impact on the majors later in the day, with the markets focused on Powell.

The Market Movers

For the DAX: It was a particularly bearish day for the auto sector on Wednesday. Continental led the way, tumbling by 6.86%. Daimler and Volkswagen weren’t far behind, with losses of 4.91% and 4.85% respectively. BMW saw a more modest 3.28% loss on the day.

It was also a bearish day for the banks. Deutsche Bank slid by 4.45%, while Commerzbank tumbled by 7.09%. 1st quarter earnings sank Commerzbank on the day.

Deutsche Lufthansa fell by a modest 1.20%.

From the CAC, the banking sector saw more red on Wednesday. BNP Paribas fell by 4.74%, with Credit Agricole and Soc Gen seeing losses of 2.56% and 4.76% respectively.

It was also a bearish day for the auto sector. Peugeot slid by 5.97%, while Renault slipped by 0.51%.

The prospects of a deep recession added further pressure on travel stocks. Air France-KLM and Airbus SE fell by 2.57% and by 3.16% respectively.

On the VIX Index

It was a 2nd consecutive day in the green for the VIX, which rose by 6.78% on Wednesday. Following on from a 19.84% surge on Tuesday, the VIX ended the day at 35.3.

Concerns over the U.S government reopening the economy too early and dovish chatter from FED Chair Powell weighed on the U.S equity markets mid-week.

There was also the rise in tension between the U.S and China to add to the market angst on the day.

On Wednesday, the S&P500 fell by 1.75%, with the Dow and NASDAQ declining by 2.17% and by 1.55% respectively.

VIX 14/05/20 Daily Chart

The Day Ahead

It’s a relatively busy day ahead on the Eurozone economic calendar. Finalized April inflation figures are due out of Germany and Spain along with the ECB’s Economic Bulletin.

With the markets expecting inflationary pressures to vanish, expect the ECB Economic Bulletin to garner greater interest on the day.

From the U.S, the weekly jobless claims figures will also have a material impact on the majors.

Expect another surge in jobless claims to weigh heavily on risk appetite.

Outside of the numbers, COVID-19 updates and chatter from Beijing and Washington will also need monitoring.

The Latest Coronavirus Figures

On Wednesday, the number of new coronavirus cases rose by 79,361 to 4,416,823. On Tuesday, the number of new cases had risen by 81,022. Last Wednesday, there had been an 87,960 increase in new cases.

France, Germany, Italy, and Spain reported 3,225 new cases on Wednesday, which was down from 4,176 new cases on Tuesday. On the previous Wednesday, 9,651 new cases had been reported.

From the U.S, the total number of cases rose by 18,315 to 1,426,889 on Wednesday. On Tuesday, the total number of cases had risen by 22,740. On Wednesday, 6th May, the total new number of cases had risen by 20,715.

In the futures markets, at the time of writing, the Dow was up by 50 points.

European Equities: Futures Point to the Red as COVID-19 Jitters Linger

Economic Calendar:

Wednesday, 13th May

Eurozone Industrial Production (MoM) (Mar)

Thursday, 14th May

German CPI (MoM) (Apr) Final

Spanish CPI (YoY) (Apr) Final

Spanish HICP (YoY) (Apr) Final

Friday, 15th May

German GDP (QoQ) (Q1) 1st Estimate

German GDP (YoY) (Q1) 1st Estimate

French CPI (MoM) (Apr) Final

French HICP (MoM) (Apr) Final

Italian CPI (MoM) (Apr) Final

Eurozone GDP (QoQ) (Q1) 2nd Estimate

Eurozone GDP (YoY) (Q1) 2nd Estimate

Eurozone Trade Balance (Mar)

The Majors

It was a mixed day for the European majors on Tuesday, with the EuroStoxx600 rising by 0.26% to lead the way. The CAC40 and DAX40 struggled, however, with losses of 0.39% and 0.05% respectively.

There were no stats from the Eurozone to provide direction, leaving the majors in the hands of market sentiment towards COVID-19.

Concerns over a 2nd wave of the pandemic delivered a 2nd consecutive day in the red for the CAC40 and DAX30.

Reports of a rise in new cases from China, South Korea, and Germany spooked the markets. The upward trend in new COVID-19 cases was as a result of an easing in lockdown measures.

The Stats

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

From the U.S, April inflation figures added to the negative sentiment later in the day. The markets had anticipated softer inflation and they got it.

The annual core rate of inflation eased from 2.10% to 1.60%. Economists had forecast an annual core rate of inflation of 1.70%. Fears over deflation added to the market angst on Tuesday.

The Market Movers

For the DAX: It was a bearish day for the auto sector on Tuesday. BMW, Continental, and Daimler slid by 2.82%, by 2.87%, and by 2.81% respectively to lead the way down. Volkswagen wasn’t far behind, with a 2.23% loss on the day.

It was a mixed day for the banks. Deutsche Bank fell by 0.64%, while Commerzbank rose by 0.34%.

Deutsche Lufthansa declined by 1.26% to reverse a 0.62% gain from Monday.

From the CAC, the banking sector struggled on Tuesday. BNP Paribas fell by 1.00%, with Credit Agricole and Soc Gen seeing losses of 0.83% and 1.67% respectively.

It was also a bearish day for the auto sector. Peugeot and Renault slid by 2.47% and by 2.88% respectively.

Air France-KLM slipped by 0.54%, partially reversing a 2.83% gain from Monday, while Airbus SE slid by 6.02%.

On the VIX Index

A run of 3 consecutive days came to an abrupt end for the VIX, which surged by 19.84% on Tuesday. Reversing a 1.47% decline from Monday, the VIX ended the day at 33.0.

The VIX had been on the way to a 4th consecutive day in the red before an afternoon surge from sub-27 levels.

Dovish chatter from FOMC members coupled with a warning from infectious disease official Anthony Fauci delivered the pickup in fear.

Anthony Fauci warned of the possible repercussions of reopening the economy too quickly, while central bankers talked of massive bankruptcies as a result of the lockdown.

The combination of the two, together with the dire inflation figures left the U.S major indexes in the red.

On Tuesday, the S&P500 slid by 2.05%, with the Dow and NASDAQ declining by 1.89% and by 2.06% respectively.

The Day Ahead

It’s a relatively quiet day ahead on the Eurozone economic calendar. March industrial production figures for the Eurozone are due out later today.

Following some particular dire production figures from member states last week and the April PMI numbers, however, there should be little reaction to today’s figures.

From the U.S, April’s wholesale inflation figures should also have a muted impact later in the day.

The lack of influence from the data will leave the majors in the hands of geopolitics and COVID-19 updates.

We would expect concerns over the rise in the new of new coronavirus cases in South Korea and China to continue to test market resilience.

A similar trend could transpire across the EU and the U.S, as lockdown measures ease. Such an outcome would be catastrophic…

The Latest Coronavirus Figures

On Tuesday, the number of new coronavirus cases rose by 71,802 to 4,328,342. On Monday, the number of new cases had risen by 76,701. The daily increase was lower than Monday’s rise and lower than an 81,537 increase on the previous Tuesday.

France, Germany, Italy, and Spain reported 4,176 new cases on Tuesday, which was down from 5.374 new cases on Monday. On the previous Tuesday, 4,993 new cases had been reported.

From the U.S, the total number of cases rose by 21,450 to 1,407,284 on Tuesday. On Monday, the total number of cases had risen by 18.196. On Tuesday, 5th May, the total new number of cases had risen by 25,189.

In the futures markets, at the time of writing, the DAX was down by 238.5 points, with the Dow down by 82 points.

European Equities: COVID-19 Jitters Return as Wave 2 Hits Asia…

Economic Calendar:

Wednesday, 13th May

Eurozone Industrial Production (MoM) (Mar)

Thursday, 14th May

German CPI (MoM) (Apr) Final

Spanish CPI (YoY) (Apr) Final

Spanish HICP (YoY) (Apr) Final

Friday, 15th May

German GDP (QoQ) (Q1) 1st Estimate

German GDP (YoY) (Q1) 1st Estimate

French CPI (MoM) (Apr) Final

French HICP (MoM) (Apr) Final

Italian CPI (MoM) (Apr) Final

Eurozone GDP (QoQ) (Q1) 2nd Estimate

Eurozone GDP (YoY) (Q1) 2nd Estimate

Eurozone Trade Balance (Mar)

The Majors

It was a bearish start to the week for the European majors, with the CAC40 falling by 1.31% to lead the way down. The DAX30 and EuroStoxx600 saw more modest losses of 0.73% and 0.40% respectively.

There were no stats to spook the markets on the day, leaving the markets to consider the latest rise in new COVID-19 cases in Asia.

Both China and South Korea reported new clusters, raising concerns over the easing of lockdown measures in Europe. A 2nd wave of infections across the EU would certainly raise the prospects of a more extended lockdown period…

The Stats

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

There were also no material stats from the U.S to provide direction later in the day.

The Market Movers

For the DAX: It was a mixed bag for the auto sector on Monday. Continental, Daimler, and Volkswagen fell by 0.41%, 1.28%, and 0.67% respectively. BMW bucked the trend, with a 1.25% gain.

It was a bearish day for the banks. Deutsche Bank slid by 2.08%, with Commerzbank falling by 1.26%.

Deutsche Lufthansa slid by 2.70%, with COVID-19 jitters and the UK’s lockdown easing plans bringing airlines back into focus.

From the CAC, the banking sector also struggled at the start of the week. BNP Paribas fell by 2.48%, with Credit Agricole and Soc Gen seeing losses of 3.25% and 2.70% respectively.

It was a mixed day for the auto sector. Peugeot fell by 2.12%, while Renault rose by 0.78%.

Air France-KLM and. Airbus SE saw relatively heavy losses of 3.32% and 2.80% respectively.

On the VIX Index

It was a 3rd consecutive day in the red for the VIX, which fell by 1.47% on Monday. Following on from an 11.01% slide on Friday, the VIX ended the day at 27.6

There were no stats to provide direction on the day. A lack of stats left market sentiment towards COVID-19 and lockdown measures to influence risk appetite.

Falling crude oil prices and fears of a 2nd wave of coronavirus infections as a result of an easing in lockdown measures limited the downside for the VIX.

The S&P500 rose by 0.02%, with the NASDAQ gaining 0.78%, while the Dow slipped by 0.45% on the day.

VIX 12/05/20 Daily Chart

The Day Ahead

It’s another quiet day ahead on the Eurozone economic calendar. There are no material stats to provide the European majors with direction.

A lack of stats leaves the majors in the hands of geopolitics and COVID-19 numbers once more.

Reports of new COVID-19 clusters in South Korea and China will raise concerns over the possible impact of easing lockdown measures.

It will likely mean that borders will likely remain closed for an extended period of time, which would be a market negative.

Any chatter from EU member states over the renewed spread of the virus in Asia will influence.

The markets will also need to monitor any chatter from Beijing and Washington on trade talks.

The Latest Coronavirus Figures

On Monday, the number of new coronavirus cases rose by 63,120 to 4,242,959. On Sunday, the number of new cases had risen by 78,198. The daily increase was far lower than Sunday’s rise and lower than a 74,217 increase on the previous Monday.

France, Germany, Italy, and Spain reported 5,315 new cases on Monday, which was up from 3.549 new cases on Sunday. On the previous Monday, 3,642 new cases had been reported. A rise in the number of cases in Spain led to the uptick.

From the U.S, the total number of cases rose by 13,704 to 1,381,342 on Monday. On Sunday, the total number of cases had risen by 20,329. On Monday, 4th May, the total new number of cases had risen by 22,145.

In the futures markets, at the time of writing, the DAX was down by 61.5 points, with the Dow down by 153 points.

Dollar Short Reduced; Swiss Franc Long Raches 2016 High

The risk-on seen during the previous weeks paused with the S&P 500, U.S. 10-year Notes and the dollar all trading softer. The dollar was nevertheless in demand against most of the ten IMM currency futures tracked in this, not least against the euro and Japanese yen. Exceptions being the Aussie dollar and the Swiss franc which reached a level of longs last seen in 2016.

Saxo Bank publishes two weekly Commitment of Traders reports (COT) covering leveraged fund positions in bonds and stock index futures. For IMM currency futures and the VIX, we use the broader measure called non-commercial.

Hedge funds and other large speculators bought U.S. dollar for a second week to May 5. Buying against ten IMM currency futures were broad based resulting in the gross dollar short being reduced by 17% to $6.7 billion. The two exceptions being the Aussie dollar and the Swiss franc, with the long on the latter rising to the highest since 2016.

Biggest changes weighing the most on the sell side was the euro, which was sold for a second week, and the Japanese yen long which retraced after reaching a 13 months high a week earlier. Selling of the Mexican peso resumed despite rising 1.7% against the dollar.

Leveraged fund positions in bonds, stocks and VIX

The speculative short position in the C’Boe VIX futures was cut by 41% to 19k lots, an almost 15 month low. The reduction occurred despite a 4.6% rally in the S&P 500 Index driving a 12% drop in volatility. Interestingly the reduction was almost entirely driven by short positions being closed, potentially a sign of fading optimism that the stock market rally can continue.

What is the Commitments of Traders report?

The Commitments of Traders (COT) report is issued by the US Commodity Futures Trading Commission (CFTC) every Friday at 15:30 EST with data from the week ending the previous Tuesday. The report breaks down the open interest across major futures markets from bonds, stock index, currencies and commodities. The ICE Futures Europe Exchange issues a similar report, also on Fridays, covering Brent crude oil and gas oil.

In commodities, the open interest is broken into the following categories: Producer/Merchant/Processor/User; Swap Dealers; Managed Money and other.

In financials the categories are Dealer/Intermediary; Asset Manager/Institutional; Managed Money and other.

Our focus is primarily on the behaviour of Managed Money traders such as commodity trading advisors (CTA), commodity pool operators (CPO), and unregistered funds.

They are likely to have tight stops and no underlying exposure that is being hedged. This makes them most reactive to changes in fundamental or technical price developments. It provides views about major trends but also helps to decipher when a reversal is looming.

Ole Hansen, Head of Commodity Strategy at Saxo Bank.
This article is provided by Saxo Capital Markets (Australia) Pty. Ltd, part of Saxo Bank Group through RSS feeds on FX Empire

European Equities: Geopolitics and COVID-19 in Focus, with no Major Stats to Rock the Boat

Economic Calendar:

Wednesday, 13th May

Eurozone Industrial Production (MoM) (Mar)

Thursday, 14th May

German CPI (MoM) (Apr) Final

Spanish CPI (YoY) (Apr) Final

Spanish HICP (YoY) (Apr) Final

Friday, 15th May

German GDP (QoQ) (Q1) 1st Estimate

German GDP (YoY) (Q1) 1st Estimate

French CPI (MoM) (Apr) Final

French HICP (MoM) (Apr) Final

Italian CPI (MoM) (Apr) Final

Eurozone GDP (QoQ) (Q1) 2nd Estimate

Eurozone GDP (YoY) (Q1) 2nd Estimate

Eurozone Trade Balance (Mar)

The Majors

It was a bullish end to the week for the European majors, with the DAX30 rallying by 1.35% to lead the way. The CAC40 and EuroStoxx600 weren’t far behind, with gains of 1.07% and 0.91% respectively.

Economic data had a limited impact on the day, in spite of some quite dire numbers from the Eurozone and the U.S.

Updates from Beijing and Washington on trade talks and the phase 1 trade agreement supported the majors on the day.

Plans to continue easing lockdown measures and corporate earnings also played supporting roles on the day.

The Stats

It was a quiet day on the Eurozone economic calendar on Friday. Key stats were limited German trade data for March that barely moved the dial.

Germany’s trade surplus narrowed from €21.6bn to €12.8bn in March. Economists had forecast a surplus of €17.5bn.

According to Destatis,

  • Exports slid by 11.8% from the previous month and by 7.9% from the same month a year earlier. This was the largest monthly decline in exports since records began back in 1990.
  • Imports fell by 5.1% from the previous month and by 4.5% from the same month a year earlier. This was the largest monthly decline since 2009.
    • Germany exported goods to the value of €55.6bn to EU member states, while importing €48.7bn.
    • Compared with March 2019, exports to EU countries fell by 11.0%, while imports fell by 8.0%.
    • Germany exported goods to the value of €38.3bn (-14%) to Euro area countries, while importing goods to the value of €34.0bn (-7.8%).
    • To EU countries not belonging to the Euro area, Germany exported goods to the value of €17.3bn (-3.8%), while importing €14.8bn (-8.6%) worth of goods.
    • Compared with March 2019, exports to countries outside of the EU fell by 4.3%, while imports fell by 0.1%.

From the U.S, April nonfarm payroll and unemployment figures failed to spook the markets, with economists having forecasted more dire numbers.

Nonfarm payrolls slumped by a post-war record of 20.5m in April, leading to an unemployment rate of 14.7%. Economists had, however, forecasted a fall of 22m in nonfarm payrolls and an unemployment rate of 16.0%.

Hopes were that this is as bad as it gets, which limited the damage. The markets had expected far worst on Friday.

The Market Movers

For the DAX: It was a bullish end to the week for the auto sector. Continental and Daimler rallied by 5.87% and 4.82% respectively to lead the way. BMW wasn’t far behind, gaining 3.42%, while Volkswagen trailed with a more modest 1.93% rise.

It was a mixed day for the banks. Deutsche Bank rose by 1.61%, while Commerzbank slipped by 0.09%.

Deutsche Lufthansa eked out a 0.62% gain on the day.

From the CAC, the banking sector also found support following on from Thursday’s gain. BNP Paribas rose by 1.12%, with Credit Agricole and Soc Gen seeing gains of 1.14% and 1.55% respectively.

It was a bullish day for the auto sector. Peugeot and Renault rallied by 3.75% and by 2.54% respectively.

Air France-KLM managed to bounce back from Thursday’s 2.52% slide, with a 2.83% gain. Airbus SE avoided the red once more, rising by 0.57% on the day.

On the VIX Index

It was a 2nd consecutive day in the red for the VIX, which fell by 11.01% on Friday. Following on from a 7.85% decline on Thursday, the VIX ended the day at 28.0.

U.S nonfarm payroll and unemployment figures were better than forecasted, providing support to the U.S equity markets.

The general consensus from the numbers was that it was the bottom and that should be the end of the slide in payrolls.

A continued easing of lockdown measures coupled with trade talks between the U.S and China added to the upside on the day.

The S&P500 rose by 1.69%, with the Dow and NASDAQ rallying by 1.91% and by 1.58% respectively.

The Day Ahead

It’s a relatively quiet day ahead on the Eurozone economic calendar. There are no material stats to provide the European majors with direction.

With a lack of stats from the U.S later in the day, the majors will be in the hands of market risk sentiment on the day.

Key drivers include updates from any further U.S – China discussions from the weekend and chatter from Brussels on fiscal support.

In spite of a spike in the number of new cases on Thursday of last week, the trend in COVID-19 numbers continued to support the easing of lockdown measures across the EU and the U.S…

A combination of the three would support a 3rd consecutive day in the green.

The Latest Coronavirus Figures

On Sunday, the number of new coronavirus cases rose by 78,198 to 4,179,839. On Saturday, the number of new cases had risen by 100,666. The daily increase was far lower than Saturday’s rise and lower than an 80,636 increase on the previous Sunday.

France, Germany, Italy, and Spain reported just 3,549 new cases on Sunday, which was down from 5,163 new cases on Saturday. On the previous Sunday, 3,938 new cases had been reported.

From the U.S, the total number of cases rose by 20,329 to 1,367,638 on Sunday. On Saturday, the total number of cases had risen by 28,805. On Sunday, 3rd May, the total new number of cases had risen by 27,348.

In the futures markets, at the time of writing, the DAX was up by 80.5 points, with the Dow up by 126 points.

European Equities: A Week in Review – 09/05/20

The Majors

It was a mixed week for the European majors in the week ending 8th May. The DAX30 and EuroStoxx600 rose by 0.39% and by 1.08% respectively, while the CAC40 slipped by 0.49%.

Economic data from the Eurozone did limit the upside in the week. Corporate earnings and market sentiment towards the easing in lockdown measures ultimately delivered the upside in the week.

It did take a bullish end to the week to deliver the gains for the DAX30 and EuroStoxx600, however, and limit the downside for the CAC40.

The markets had hit deep red at the start of the week in response to rising tensions between the U.S and China. News of China looking to calm the situation late in the week and of Washington and Beijing looking to reach an agreement on the phase 1 trade deal were certainly positives.

From the previous weekend, the U.S President had threatened China with tariffs and sanctions that had led to the Monday tumble. It does remain to be seen, however, whether Trump will continue to blame China for the COVID-19 woes in the U.S…

Adding to the upside in the week, was another jump in crude oil prices, driven by a pullback in production and positive stats out of China.

The Stats

It was a busy week on the Eurozone economic calendar. Key stats included April private sector PMIs, Eurozone retail sales figures, and employment numbers from France and Spain.

From Germany, March factory orders, industrial production, and trade figures were also in focus.

From Italy and Spain, the Manufacturing and Service sectors saw activity take a dive in April. While aligned with the prelim numbers from France, Germany, and the Eurozone, Spain’s service sector PMI was particularly alarming.

The Eurozone’s composite PMI came in at 13.6, revised up from a prelim 13.5, while down from 29.7 in March.

In spite of the dire numbers, the downside for majors could have been far more significant.

Stats from Germany and factory orders, in particular, did cause some harm, however, with orders slumping by a record of 15.6%.

We’ve seen plenty of records broken for the wrong reasons of late and this was one that pointed to a more deep-rooted recession.

By Thursday, however, market resilience was evident, with a 9.2% slide in German industrial production having little impact.

On the day, better than expected trade date from China and corporate earnings muted the impact of the stats. Even another 3m jump in U.S jobless claims failed to sink the majors ahead of Friday’s nonfarm payrolls…

At the end of the week, a narrowing of Germany’s trade surplus to just €12.8bn also had little impact, with trade news delivering on Friday…

U.S nonfarm payrolls came in better than forecast, as did the unemployment rate. A 20.5m fall in payrolls and an unemployment rate of 14.7% was not enough to spook the markets.

Having used threats against China to distract the markets the previous weekend, it was pushing trade talks on Friday that distracted the markets from quite dire numbers.

The Market Movers

From the DAX, it was a mixed week for the auto sector, in spite of a bullish end to the week, driven by trade talks. Continental and Volkswagen rose by 1.96% and by 0.78%, while BMW and Daimler fell by 5.31% and by 0.47% respectively.

It was a bearish week for the banking sector, however. Commerzbank and Deutsche Bank slid by 3.85% and by 2.66% respectively.

Lufthansa joined the banks in the red, with a 4.16% slide, which partially reversed a 13.41% breakout from the week prior.

From the CAC, it was also a mixed week for the banks. BNP Paribas eked out a 0.52% gain, while Credit Agricole and Soc Gen fell by 0.27% and by 6.94% respectively.

It was also a mixed bag for the French auto sector, with Renault sliding by 3.20%, while Peugeot ending the week up by 2.75%.

Air France-KLM and Airbus struggled in the week, with the pair sliding by 9.34% and 3.13% respectively.

On the VIX Index

It was back into the red for the VIX that had broken a run of 5 consecutive weekly losses in the week prior. In the week ending 8th May, the VIX slid by 24.76%. Reversing a 3.51% gain from the previous week, the VIX ended the week at 28.0.

Economic data from the U.S failed to raise the fear level in the week, despite the continued surge in jobless claims.

Rising crude oil prices, the easing of lockdown measures, and trade talks between the U.S and China supported the U.S equity markets.

Corporate earnings added to the upside and the NASDAQ in particular.

The S&P500 ended the week up by 3.50%, with the Dow and NASDAQ gaining 2.56% and 6.00% respectively.

VIX 09/05/20 Weekly Chart

The Week Ahead

It’s a relatively busy week ahead on the Eurozone economic calendar. Key stats include March industrial production and trade data for the Eurozone and, more importantly, 1st quarter GDP numbers.

On Friday, Germany’s 1st estimate GDP figures are due out ahead of 2nd estimate figures for the Eurozone.

Expect market sensitivity to the numbers. Germany’s contraction is unlikely to be as dire as those seen in France, Italy, and Spain, however.

Finalized April inflation figures are also due out of Member states and the Eurozone throughout the week. These will have a muted impact on the majors.

From elsewhere, expect industrial production and fixed asset investment numbers from China will influence on Friday.

With U.S stats on the heavier side, the weekly jobless claims on Thursday and April retail sales figures on Friday will need attention.

Outside of the numbers, the markets will be looking for positive updates on trade talks between the U.S and China.

There is also COVID-19 news to monitor throughout the week. Any hint of a pause in easing lockdown measures would be negative for the majors.

European Equities: U.S Nonfarm Payrolls Could Be Too Dire to Ignore…

Economic Calendar:

Friday, 8th May

German Trade Balance (Mar)

The Majors

It was back into the green for the European majors on Wednesday, with the CAC40 rising by 1.54% to lead the way. The DAX30 and EuroStoxx600 weren’t far behind, with gains of 1.44% and 1.09% respectively.

Economic data from China coupled with corporate earnings delivered the upside on the day.

In spite of a 2nd day in the green for the week, the majors remain in negative territory going into today.

On Thursday, the markets managed to brush aside yet another dire set of weekly jobless claims figure from the U.S and disappointing stats from the Eurozone.

An upward trend in new coronavirus cases also had a muted impact as governments push forward on plans to ease lockdown measures.

The Stats

It was a quiet day on the Eurozone economic calendar on Thursday. Key stats were limited to french nonfarm payroll figures for the 1st quarter and German industrial production figures for March.

Following the market reaction to some quite dire April figures in the week, 1st quarter numbers had a relatively muted impact on the majors.

In the 1st quarter, nonfarm payrolls slid by 2.30%, following a 0.4% rise in the 4th quarter.

German industrial production figures also disappointed but failed to weigh on the majors. Production tumbled by 9.2% in March, month-on-month, which was the largest decline on record. Economists had forecast a 7.5% slide.

According to Destatis,

  • Production in industry excluding industry and construction was down 11.6%.
  • Within industry, production of intermediate goods declined by 7.4%, with the production of consumer goods sliding by 7.5%.
  • The production of capital goods tumbled by 16.5%. The automobile industry recorded a 31.1% jump in production…
  • Outside industry, energy production was down by 6.4%, while the production in construction rose by 1.8%.
  • Year-on-year, industrial production fell by 11.6%.

From the U.S, the weekly jobless claims figures for the week ending 1st May provided little support ahead of tomorrow’s NFP numbers.

Initial jobless claims rose by 3.169m, following a 3.846m rise in the week prior. Economists had forecast a 3m increase.

Ahead of the European open on Thursday, trade data out of China set the tone, with exports unexpectedly rising by 3.5%. Economists had forecast a 15.7% slide.

The Market Movers

For the DAX: It was a mixed day for the auto sector. BMW and Continental fell by 2.10% and 0.59% respectively, while Daimler and Volkswagen rose by 0.37% and 0.40% respectively. German auto production figures weighed on the sector on Thursday.

It was a bullish day for the banks, however, with Deutsche Bank and Commerzbank rising by 2.43% and by 1.09% respectively.

Deutsche Lufthansa saw red once more, with a 0.74% decline following Wednesday’s 3.30% slide.

From the CAC, the banking sector also found support following Wednesday’s pullback. BNP Paribas rose by 1.77%, with Credit Agricole and Soc Gen rallying by 2.54% and by 2.08% respectively.

It was a bearish day for the auto sector, however. Peugeot and Renault fell by 0.99% and by 0.05% respectively.

Air France-KLM saw red, with a 2.52% fall. The decline came off the back of a dire earnings forecast for the June quarter. Airbus SE avoided being dragged into the red, however, rallying by 3.82% on the day.

On the VIX Index

The choppy week continued for the VIX, which returned to the red on Thursday. Following a 1.52% gain on Wednesday, the VIX slid by 7.85% on Thursday to end the day at 31.4.

Corporate earnings and China stats delivered the upside on the day as the markets brushed aside another jump in initial jobless claims.

On Thursday, the S&P500 rose by 1.15%, with the Dow and NASDAQ closing out the day with gains of 0.89% and 1.41% respectively.

The Day Ahead

It’s a relatively quiet day ahead on the Eurozone economic calendar. Key stats are limited to Germany’s April trade figures.

While we do anticipate some market reaction to today’s numbers, expect U.S nonfarm payroll and unemployment figures to be the key driver.

On the geopolitical risk front, the threat of sanctions and tariffs on China continued to linger, with Iran also simmering in the background.

Friday has traditionally been Trump’s preferred day to send threats via Twitter… He will certainly want to distract the markets from today’s nonfarm payroll figures. It may not be enough, however, to divert the market attention from what is likely to be some shocking numbers later today.

We’ve also yet to see the markets react to the latest upward trend in new coronavirus cases…

The Latest Coronavirus Figures

On Thursday, the number of new coronavirus cases rose by 191,233 to 3,912106. On Wednesday, the number of new cases had risen by 87,960. The daily increase was far higher than Wednesday’s rise and 75,118 increase on the previous Thursday.

France, Germany, Italy, and Spain reported 16,103 new cases on Thursday, which was up from 9,651 new cases on Wednesday. On the previous Thursday, 7,182 new cases had been reported. All 4 member states saw a rise in new cases, with France and Spain reporting the highest increases on the day.

From the U.S, the total number of cases rose by 56,348 to 1,291,804 on Thursday. On Wednesday, the total number of cases had risen by 20,715. On Thursday, 30th April, the total new number of cases had risen by 30,883.

In the futures markets, at the time of writing, the DAX was up by 82.5 points, with the Dow up by 123 points.

S&P 500 Price Forecast – Stock Markets Hit The Same Resistance Level Again

The S&P 500 has rallied towards the 2880 level again during the trading session on Thursday but has struggled at the same area midday as there is a gap that we still have not been able to break through. The 200 day EMA above has offered a significant amount of resistance recently, just as it sits not only at a gap, but also the 200 day EMA. If the market were to show signs of exhaustion again, I would be a seller. That being the case, I think what we are going to see by the end of the day on Friday is the market continuing to grind back and forth. Quite frankly, Wall Street already knows that there are going to be more than 20 million unemployed Americans. That announcement will not be much of a shock to anybody who has been paying attention.

S&P 500 Video 08.05.20

To the downside, if we were to break down below the 2800 level, it could set up a move down to the 2640 handle. To the upside, we need to clear the 200 day EMA in order to get overly bullish, but even then, I would anticipate that the 3000 level could cause some issues. Above there, then this pair almost certainly will try to go to the upside. The VIX is still elevated, so this means that there are still a lot of concerns out there when it comes to stocks. That does not mean we have to break down, just that eventually we probably will.

European Equities: A Quiet Economic Calendar to Leave Earnings and China and U.S Stats in Focus

Economic Calendar:

Thursday, 7th May

French Non-Farm Payrolls (QoQ) (Q1)

Friday, 8th May

German Trade Balance (Mar)

The Majors

It was back into the red for the European majors on Wednesday. The DAX30 fell by 1.15% to lead the way down, with the CAC40 and EuroStoxx600 declining by 1.11% and by 0.35% respectively.

A 2nd day in the red out of 3 came off the back of a string of particularly disappointing stats from the Eurozone.

Quarterly earnings also added to the market angst in the session, with the BMW the latest to deliver negative news for investors.

From the U.S, economic data certainly didn’t help. Trump’s announcement that the U.S would need to accelerate the pace of reopening irrespective of any pickup in the mortality rate was also a market shock mid-week.

The Stats

It was a busy day on the Eurozone economic calendar on Wednesday. Key stats included April services PMIs for Italy and Spain, and Germany factory orders and Eurozone retail sales figures for March.

Finalized services and composite PMIs for France, Germany, and the Eurozone were also in focus on the day.

There was nothing positive for the markets to consider on the day, weighing on market risk sentiment.

Spain’s services PMI slid from 23.0 to 7.1 in April, which was worse than a forecast of 10.0.

Things were marginally better from Italy, with the services PMI falling from 17.4 to 10.8. Economists had forecast a fall to 9.0.

From France and Germany, the April PMIs came in at 10.02 and 16.2, leading to an upward revision to the Eurozone’s services and composite PMIs.

In April, the Eurozone’s finalized services PMI came in at 12.0, which was up from a prelim 11.7. In March, the PMI had stood at 26.4.

The Eurozone’s Composite PMI fell from 29.7 to 13.6, revised upwards from a prelim 13.5.

According to the Eurozone’s finalized Markit Survey,

  • The Composite Output Index fell from March’s record low 29.7 to a new record low 13.6 in April.
  • Both manufacturing and services economies recorded record falls in output, with service economies seeing a more sizeable fall.
  • Incoming new business slumped, leading to an accelerated slide in backlogs of work.
  • Job losses surged, with the reduction in staffing levels the sharpest on record.
  • Unsurprisingly, Spain and Italy suffered the most in April, while Germany and Ireland recorded the highest composites.

Adding to the market angst on the day was an 11.2% tumble in retail sales across the Eurozone and a 15.6% slump in German factory orders.

From the U.S, things were not much better, with ADP nonfarm employment tumbling by a whopping 20.236m in April.

The Market Movers

For the DAX: It was a bearish day for the auto sector. BMW slid by 4.90% to lead the way down. Continental and Daimler weren’t far behind, with losses of 2.04% and 1.88% respectively. Volkswagen saw a more modest loss of 0.32%.

It was also a bearish day for the banks. Deutsche Bank fell by 1.56%, while Commerzbank slipped by just 0.18% on the day.

Deutsche Lufthansa slid by 3.30%.

From the CAC, the banking sector also returned to the red. BNP Paribas fell by 0.74%, while Credit Agricole saw and Soc Gen slid by 2.32% and by 3.93% respectively.

It was a mixed day for the auto sector, in spite of the losses across the DAX30. Peugeot eked out a 0.42% gain, while Renault fell by 1.24%.

Air France-KLM and Airbus SE returned to the red, with losses of 3.95% and 4.85% respectively.

On the VIX Index

It was back into the green for the VIX on Wednesday, which rose by 1.52%. Partially reversing a 6.56% fall from Tuesday, the VIX ended the day at 34.1.

A pullback in crude oil prices, stemming from a jump in inventories, and a fall in the S&P500 and Dow contributed to the upside.

Through the 1st half of the week, the markets have been grappling with a number of key drivers.

Trump’s statement of intent on reopening the U.S economy at all costs weighed as did the latest ADP nonfarm employment figures.

On Wednesday, the S&P500 and Dow fell by 0.70% and by 0.91% respectively, while the NASDAQ rose by 0.51%.

The Day Ahead

It’s a relatively quiet day ahead on the Eurozone economic calendar. Key stats are limited to 1st quarter nonfarm payroll numbers out of France.

We’re not expecting too much support from the figures, which will leave the majors in the hands of economic data from China and the U.S.

Ahead of the European open, trade April figures from China will set the tone.

From the U.S, expect the weekly initial jobless claims to have plenty of influence.

On the geopolitical risk front, the threat of sanctions and tariffs on China continues to linger, with Iran also simmering in the background.

The Latest Coronavirus Figures

On Wednesday, the number of new coronavirus cases rose by 87,960 to 3,808,833. On Tuesday, the number of new cases had risen by 81,537. The daily increase was higher than Tuesday’s rise and a 77,918 increase on the previous Wednesday.

France, Germany, Italy, and Spain reported 9,651 new cases on Wednesday, which was up from 4,993 new cases on Tuesday. On the previous Wednesday, 8,651 new cases had been reported. All 4 member states saw a rise in new cases, with France and Spain reporting the highest increases on the day.

Looking at the jump in number across the 4 most adversely affected EU member states, a continued uptrend could bring into question government reopening plans…

From the U.S, the total number of cases rose by 20,715 to 1,256,171 on Wednesday. On Tuesday, the total number of cases had risen by 25,189. On Wednesday, 29th April, the total new number of cases had risen by 27,752.

In the futures markets, at the time of writing, the DAX was down by 27 points, while the Dow was up by 72 points.

European Equities: Futures Point to the Red, with Economic Data in Focus Today

Economic Calendar:

Wednesday, 6th May

German Factory Orders (MoM) (Mar)

Spanish Services PMI (Apr)

Italian Services PMI (Apr)

French Services PMI (Apr) Final

German Services PMI (Apr) Final

Eurozone Markit Composite PMI (Apr) Final

Eurozone Services PMI (Apr) Final

Eurozone Retail Sales (MoM) (Mar)

Thursday, 7th May

French Non-Farm Payrolls (QoQ) (Q1)

Friday, 8th May

German Trade Balance (Mar)

The Majors

It was a bullish day for the European majors on Tuesday, with the DAX30 rallying by 2.51% to lead the way.

The CAC40 and EuroStoxx600 weren’t far behind, with the gains 2.40% and 2.15% respectively.

Market sentiment towards the downward trend in new COVID-19 cases and ongoing easing in lockdown measures delivered support.

The European majors were able to move past the rising tension between the U.S and China. A jump in crude oil prices supported the bullish sentiment on the day.

The Stats

It was a relatively quiet day on the Eurozone economic calendar on Tuesday. Key stats were limited to unemployment figures out of Spain that had a muted impact on the majors.

Spain reported a 282.9k increase in unemployment, following a 302.3k jump in the previous month. Figures for May and June will have far greater significance.

From the U.S, the market’s preferred April’s ISM Non-Manufacturing PMI drew interest, with the PMI falling from 52.5 to 41.8. Economists had forecast a slide to 36.8.

The Market Movers

For the DAX: It was a bullish day for the auto sector. Continental and Volkswagen rallied by 2.74% and by 3.01% to lead the way. BMW and Daimler saw more modest gains of 1.53% and 1.71% respectively.

It was a mixed day for the banks, however. While Deutsche Bank slipped by 0.62%, Commerzbank rallied by 3.02% on the day.

Deutsche Lufthansa slipped by just 0.02%, following a 0.73% fall on Monday.

From the CAC, the banking sector found much-needed support. BNP Paribas and Credit Agricole saw gains of 4.06% and 3.82% respectively, while Soc Gen rose by just 1.32%. The upside for BNP Paribas came in spite of net income sliding by 33% in the 1st quarter, year-on-year.

The auto sector also ended the day in the green, with Peugeot and Renault rising by 3.54% and by 1.42% respectively.

Air France-KLM saw a 1.79% gain, partially reversing Monday’s 7.49% tumble, with Airbus SE ending the day with a 2.62% gain.

On the VIX Index

The VIX fell by 6.56% on Tuesday. Following on from a 3.28% decline on Monday, the VIX ended the day at 33.6.

A pickup in crude oil prices, driven by hopes that production cuts and increased demand would rebalance the scales, provided the majors with support. This was coupled with plans to further ease lockdown measures that continued to fuel demand for riskier assets.

U.S President Trump managed to change the narrative following a weekend of blame games with China. The focus returned to the U.S economy and plans to reopen the U.S economy.

The S&P500 rose by 0.90%, with the NASDAQ and Dow gaining 1.13% and 0.56% respectively on the day.

VIX 06/05/20 Daily Chart

The Day Ahead

It’s a busy day ahead on the Eurozone economic calendar. Key stats include April services PMI for Italy and Spain and March retail sales figures for the Eurozone.

Finalized April services and composite PMIs for France, Germany, and the Eurozone will also be in focus.

German factory order numbers for March, also due out in the early part of the day, will likely be brushed aside.

From the U.S, April ADP numbers could spook the markets, following what will likely be some quite dire service PMIs from the Eurozone.

Outside of the numbers, the markets will need to continue monitoring chatter from Beijing and Washington. Any renewed threat of tariffs or sanctions could test market risk sentiment after Tuesday’s gains.

The Latest Coronavirus Figures

On Tuesday, the number of new coronavirus cases rose by 81,537 to 3,720,873. On Monday, the number of new cases had risen by 74,217. The daily increase was higher than Monday’s rise and a 75,118 increase on the previous Tuesday.

France, Germany, Italy, and Spain reported 4,993 new cases on Tuesday, which was up from 3,642 new cases on Monday. On the previous Tuesday, 6,060 new cases had been reported. Germany reported just 569 news cases on Tuesday, marking a 4th consecutive day of sub-1,000 rises.

From the U.S, the total number of cases rose by 25,189 to 1,235,456 on Tuesday. On Monday, the total number of cases had risen by 22,145. On Tuesday, 28th April, the total new number of cases had risen by 25,258.

In the futures markets, at the time of writing, the DAX was down by 112 points, with the Dow down up 11 points.

European Equities: COVID-19 Figures and Easing Lockdown Measures Provide Support Ahead of the Open

Economic Calendar:

Tuesday, 5th May

Spanish Unemployment Change

Wednesday, 6th May

German Factory Orders (MoM) (Mar)

Spanish Services PMI (Apr)

Italian Services PMI (Apr)

French Services PMI (Apr) Final

German Services PMI (Apr) Final

Eurozone Markit Composite PMI (Apr) Final

Eurozone Services PMI (Apr) Final

Eurozone Retail Sales (MoM) (Mar)

Thursday, 7th May

French Non-Farm Payrolls (QoQ) (Q1)

Friday, 8th May

German Trade Balance (Mar)

The Majors

It was a bearish start to the week for the European majors, with the CAC40 sliding by 4.24% to lead the way down.

The DAX300 and EuroStoxx600 weren’t far behind, with the pair falling by 3.64% and 2.65% respectively.

A 2nd consecutive day in the red came as the markets responded to chatter from Beijing and Washington from the weekend.

Trump and the U.S administration has accused Beijing of the coronavirus pandemic, bringing forward Trump’s goal to end China’s control over the global supply chain.

The threat of fresh tariffs, sanctions, or both weighed on market risk appetite at the start of the week.

For a U.S President seeing his lead evaporate as a result of the COVID-19 pandemic, the move makes perfect sense. Diverting attention away from the U.S government’s failings in such an aggressive manner may just work.

The global economy may have wished for the focus to remain on restoring the supply chain to prevent a lengthier economic meltdown, however.

The Stats

It was a busy day on the Eurozone economic calendar on Monday.

Key stats included April manufacturing PMI numbers from Italy and Spain. Finalized manufacturing PMIs from France, Germany, and the Eurozone were also in focus.

There was nothing in the numbers, however, to limit the downside for the European majors on the day.

Spain’s manufacturing PMI slid from 45.7 to 30.8, with Italy’s manufacturing PMI falling from 40.3 to 31.1.

France’s finalized manufacturing PMI came in at 31.5, which was in line with prelim but down from 43.2 in March.

Germany’s finalized manufacturing PMI came in at 34.5, which was up from a prelim 34.4. In March, the PMI had stood at 45.4.

The Eurozone’s finalized April Manufacturing PMI came in at a record low 33.4, which was revised down from 33.6. In March, the PMI had stood at 44.5.

According to the Markit Survey,

  • Output, new orders, export sales, and purchasing activity all fell at record rates.
  • Supply-side constraints continued to intensify, while confidence about the future sank to a fresh series low.
  • At the country level, Greece recorded a record low 29.5 to sit in the last place, with Spain’s 136-month low 30.8 leaving it just above Greece.
  • The Netherlands topped the table with a 131-month low 41.3.
  • Ireland and Germany came in 2nd and 3rd, both with 133-month lows.
  • Austria, France, and Italy took the middle spots with record lows.

From the U.S, things were no better. Factory orders tumbled by 10.3% in March, which was worse than a forecasted 9.7% slide.

The Market Movers

For the DAX: It was another bearish day for the auto sector. Daimler and Volkswagen tumbled by 5.22% and by 4.09% to lead the way down. BMW and Continental saw more modest losses of 3.15% and 3.75% respectively.

It was also another bearish day for the banks. Deutsche Bank and Commerzbank slid by 4.41 and 4.95% respectively.

Deutsche Lufthansa saw a more modest 0.73% decline, following a 2.80% fall on Thursday.

From the CAC, the banking sector continued to slide on Monday. Soc Gen tumbled by 7.78% to lead the way down, with BNP Paribas and Credit Agricole sliding by 5.46% and 4.24% respectively.

The auto sector also continued to struggle, with Peugeot and Renault falling by 3.86% and by 5.71% respectively.

Air France-KLM tumbled by 7.49%, with Airbus SE ending the day with a 4.98% loss.

On the VIX Index

It was back into the red for the VIX, which fell by 3.28% on Monday. Partially reversing an 8.90% gain from Friday, the VIX ended the day at 36.0.

A bounce back from heavy losses from the start of the day delivered minor gains for the U.S equity markets, which left the VIX in the red. Earlier in the day, the VIX had hit an intraday high 40.3 before hitting reverse.

Rising crude oil prices and a tech stock rally delivered the upside for the U.S equity markets.

On Monday, the S&P500 rose by 0.42%, with the Dow and NASDAQ gaining 0.11% and 1.23% respectively. The S&P500 had been down by as much as 1.16% before the late recovery.

The Day Ahead

It’s a relatively quiet day ahead on the Eurozone economic calendar. Key stats are limited to Spanish unemployment figures.

Expect the markets to react to any jump in unemployment by the levels seen from the previous month, when unemployment had surged by 302.3k.

From the U.S, the markets’ preferred ISM Non-Manufacturing PMI for April will garner plenty of attention.

The markets are expecting the headline figure to avoid sub-30. Anything worse and expect riskier assets to come under pressure.

On the geopolitical risk front, the markets will also need to consider rising tensions between the U.S and China and the U.S and Iran.

For the EU, the downward trend in the new number of new coronavirus cases continued to support the lockdown in easing measures. The easing in lockdown measures remains market positive for the European majors.

The Latest Coronavirus Figures

On Monday, the number of new coronavirus cases rose by 74,217 to 3,639,336. On Sunday, the number of new cases had risen by 80,636. While down from Sunday, this was up marginally from a 66,953 increase on the previous Monday.

France, Germany, Italy, and Spain reported 3,642 new cases on Monday, which was down from 3,938 new cases on Sunday. France and Germany reported just 769 and 473 news cases respectively.

From the U.S, the total number of cases rose by 22,145 to 1,210,267 on Monday. On Sunday, the total number of cases had risen by 27,348. On Monday, 27th April, the total new number of cases had risen by 23,699.

In the futures markets, at the time of writing, the DAX was up by 141.5 points, with the Dow down up 144 points.

European Equities: Geopolitical Risk and More PMIs to Test the Majors

Economic Calendar:

Monday, 4th May

Spanish Manufacturing PMI (Apr)

Italian Manufacturing PMI (Apr)

French Manufacturing PMI (Apr) Final

German Manufacturing PMI (Apr) Final

Eurozone Manufacturing PMI (Apr) Final

Tuesday, 5th May

Spanish Unemployment Change

Wednesday, 6th May

German Factory Orders (MoM) (Mar)

Spanish Services PMI (Apr)

Italian Services PMI (Apr)

French Services PMI (Apr) Final

German Services PMI (Apr) Final

Eurozone Markit Composite PMI (Apr) Final

Eurozone Services PMI (Apr) Final

Eurozone Retail Sales (MoM) (Mar)

Thursday, 7th May

French Non-Farm Payrolls (QoQ) (Q1)

Friday, 8th May

German Trade Balance (Mar)

The Majors

A run of 3 consecutive daily gains came to an end on Thursday, with the DAX30 sliding by 2.22% to lead the way down. The CAC40 and EuroStoxx600 weren’t far behind, however, with losses of 2.12% and 2.03% respectively.

Negative sentiment towards the economic outlook, following a string of dire stats on the day, left the majors in the deep red. The ECB’s decision to stand pat on monetary policy, while delivering a forecasted economic contraction of between 5% and 12% didn’t help…

It was a shortened week, with the European markets closed on Friday.

The Stats

It was a particularly busy day on the Eurozone economic calendar on Thursday.

Key stats included 1st quarter GDP numbers for France, Spain, and the Eurozone and German unemployment numbers.

April prelim inflation figures and unemployment numbers for the Eurozone had a muted impact. Dire consumer spending figures out of France and Germany for March didn’t help with worse to come in April…

Looking at the GDP numbers,

France’s economy contracted by 5.8%, which was the largest contraction on records that began in the 1940s…

In Spain, the economy contracted by 5.2%, with the Eurozone’s economy contracting by 3.8% that was also the worst on record.

On the unemployment front, Germany reported a 373k increase in unemployed, leading to an unemployment rate of 5.8%. In March, the unemployment rate had stood at 5.0%. The pickup in unemployment since the spread of the coronavirus led the Eurozone’s unemployment rate from 7.3% to 7.4% in March. April’s numbers are likely to be quite dire…

On the consumption front, retail sales in Germany fell by 5.6% in March, while consumer spending slumped by 17.9% in France…

From the U.S, things were no better. Initial jobless claims jumped by another 3.839m in the week ending 24th April. The markets had hoped for a marked decline in new claims following the surge in the previous weeks.

Personal spending figures for March slid by 7.5%.

The Market Movers

For the DAX: It was a particularly bearish day for the auto sector. Volkswagen tumbled by 4.22% to lead the way down, with Continental sliding by 3.27%. BMW and Daimler saw more modest losses of 2.70% and 1.48% respectively.

It was also a bearish day for the banks. Deutsche Bank slid by 4.07%, with Commerzbank tumbling by 7.46% on the day.

Deutsche Lufthansa also saw red, with a 2.80% fall at the end of the month.

From the CAC, the banking sector hit reverse on Thursday. Soc Gen tumbled by 8.62% to lead the way down. BNP Paribas and Credit Agricole slid by 6.60% and 5.99% respectively.

The auto sector saw deep red, with Peugeot and Renault sliding by 4.42% and by 7.62% respectively.

Air France-KLM bucked the trend on the day, with a 1.24% gain, while Airbus SE slipped by 0.87%.

On the VIX Index

It was back into the green for the VIX, which rose by 9.35% on Thursday. Reversing a 6.97% fall from Wednesday, the VIX ended the day at 34.2.

Dire economic data from the U.S and corporate earnings weighed on the U.S majors on Thursday, supporting the VIX.

Following the 1st quarter GDP numbers on Wednesday, the weekly jobless claims figures also weighed on risk appetite.

On Thursday, the S&P500 fell by 0.92%, with the Dow and NASDAQ declining 1.17% and 0.28% respectively.

VIX 04/05/20 Daily Chart

The Day Ahead

It’s a busy day ahead on the Eurozone economic calendar. Key stats include April manufacturing PMI numbers out of Italy and Spain. Finalized April PMIs from France, Germany, and the Eurozone are also due out.

Following prelim numbers, the markets are expecting some quite dire numbers from the 2 most adversely affected member states.

Expect any downward revisions to PMIs from France, Germany, and the Eurozone to also test the majors…

From the U.S, March factory orders will likely deliver more bad news, with economists forecasting a 9.8% tumble…

While the numbers will certainly influence, expect news updates on COVID-19 and lockdown easing measures to also be in focus.

On the geopolitical risk front, the markets will also need to consider rising tensions between the U.S and China and the U.S and Iran. The last thing the global economy needs is more tariffs and sanctions on China…

The Latest Coronavirus Figures

On Sunday, the number of new coronavirus cases rose by 80,636 to 3,565,119. On Saturday, the number of new cases had risen by 91,765. While down from Saturday, this was up from a 71,251 increase on the previous Sunday.

France, Germany, Italy, and Spain reported 3,938 new cases on Sunday, which was down from 6,419 new cases on Saturday. France and Germany reported just 297 and 697 news cases respectively.

From the U.S, the total number of cases rose by 27,348 to 1,188,122 on Sunday. On Saturday, the total number of cases had risen by 31,714. On Sunday, 26th April, the total new number of cases had risen by 26,157.

In the futures markets, at the time of writing, the DAX was down by 395 points, with the Dow down by 242 points.