Cac 40 indice in downtrend mode indicates global economy enter recession

European Equities: It’s a Busy Day Ahead with President Biden, Stats, and Earnings in Focus

Economic Calendar:

Thursday, 29th April 2021

Spanish HICP (YoY) (Apr) Prelim

German Unemployment Change and Rate (Apr)

German CPI (MoM) (Apr) Prelim

Friday, 30th April 2021

French GDP (QoQ) (Q1)

German GDP (QoQ) (Q1)

German GDP (YoY) (Q1)

Spanish GDP (QoQ) (Q1)

Italian CPI (MoM) (Apr) Prelim

Eurozone CPI (YoY) (Apr) Prelim

Eurozone Unemployment Rate (Mar)

Eurozone GDP (QoQ) (Q1)

Eurozone GDP (YoY) (Q1)

The Majors

It was a relatively bullish day for the European majors on Wednesday. The CAC40 and the DAX30 rose by 0.53% and by 0.28% respectively, with the EuroStoxx600 eking out a 0.02% gain.

Market caution ahead of the FOMC monetary policy decision and all-important press conference limited the upside on the day.

Impressive corporate earnings from Deutsche Bank supported the banking sector amidst continued hope of a strong economic rebound in the 2nd half of the year.

The Stats

It was a relatively quiet day on the economic calendar on Wednesday. German consumer confidence was in focus ahead of the European open.

German GfK Consumer Climate

While the propensity to buy increased once more, albeit modestly, there were marked declines in economic and income expectations.

According to the GfK,

The income indicator slid by 13 points to 9.3 points, with the economic expectation indicator tumbling by 10.4 points to 7.3 points.

As a result, GfK is forecasting a decrease of 8.8 points in consumer confidence in May 2021. This was down by 2.7 points from a revised -6.1 points from April.

Hopes for further easing of restrictions and a revival of consumption have been noticeably dampened.

Leading economic research institutes significantly scaled back their consumption forecasts for this year. According to forecasts, real private consumption spending will hardly increase at all, rising by just 0.2% compared with 2020.

Researchers had previously forecasted consumption growth of as much as 4.9% for this year. The ECB had also relied on consumer spending to fuel the economic recovery before the third wave of the pandemic hit the EU.

Economic research institutes have also downgraded the economic growth outlook for 2021 from 4.7% to 3.7% as a result of weaker consumption forecasts.

From the U.S

Trade data was in focus later in the European session.

In March, the U.S goods trade deficit widened from $87.07bn to $90.59bn.

The stats had a muted impact on the European majors, however, with the markets focused on the FED policy decision and press conference.

The Market Movers

For the DAX: It was another mixed day for the auto sector on Wednesday. Volkswagen and BMW fell by 1.15% and by 0.75% respectively, with Continental ending the day down by 0.02%. Daimler bucked the trend once more, rising by 0.80%.

It was another bullish day for the banks. Deutsche Bank surged by 11.17%, supported by better than expected earnings, with Commerzbank rallying by 3.11%.

From the CAC, it was a bullish day for the banks. Credit Agricole rose by 1.30%, with BNP Paribas and Soc Gen rallying by 3.12% and by 3.60% respectively.

It was also a bullish day for the French auto sector. Stellantis NV rose by 0.59%, with Renault ending the day up by 1.81%.

Air France-KLM rose by 0.38%, while Airbus SE slipped by 0.49%.

On the VIX Index

It was a 2nd consecutive day the red for the VIX on Wednesday.

Following a 0.45% decline from Tuesday, the VIX fell by 1.59% to end the day at 17.28.

The Dow and the NASDAQ fell by 0.48% and by 0.28% respectively, with the S&P500 ending the day down by 0.08%.

VIX 290421 Daily Chart

The Day Ahead

It’s a relatively busy day ahead on the European economic data front. German unemployment and prelim inflation figures are in focus later today.

Prelim April inflation figures from Spain are also due out but should have a muted impact on the majors.

From the U.S, 1st quarter GDP and weekly jobless claims figures will also provide direction.

Going into the European open, market reaction to the FOMC press conference and Joe Biden’s speech this morning will also influence.

On the corporate earnings front, Amazon.com Inc and Total SE are scheduled to release earnings today…

The Futures

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

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