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European Equities: The Coronavirus, the ECB and Economic Data to Test the Majors

Bob Mason

Economic Calendar:

Thursday, 23rd January 2020

ECB Monetary Policy Decision and ECB Press Conference

Eurozone Consumer Confidence Prelim

Friday, 24th January 2020

French Manufacturing PMI (Jan) Prelim

French Services PMI (Jan) Prelim

German Manufacturing PMI (Jan) Prelim

German Services PMI (Jan) Prelim

German IFO Business Climate Index

Eurozone Manufacturing PMI (Jan) Prelim

Eurozone Markit Composite PMI (Jan) Prelim

Eurozone Services PMI (Jan) Prelim

ECB President Lagarde Speaks

The Majors

It was a bearish day for the European majors on Wednesday, with the CAC40 falling by 0.58% to lead the way down. The DAX30 and EuroStoxx600 saw more modest losses of 0.30% and 0.08% respectively.

Negative sentiment towards the coronavirus left the European majors in the red, as news of the rising death toll hit the wires.

Risk appetite had returned through the Asian session giving the European majors an early boost before they hit reverse.

The Stats

It was a quiet day on the Eurozone economic calendar on Wednesday, with no material stats 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 another bearish day for the auto sector. Daimler tumbled by 2.23% to lead the way, with Volkswagen falling by 1.07%. BMW and Continental saw more modest losses of 0.45% and 0.50% respectively.

It was another mixed day for the banks, however, with Commerzbank falling by 0.16%, while Deutsche Bank gained 1.44% on the day.

From the CAC, it was a bearish day for the banks. BNP Paribas fell by 0.26%, with Credit Agricole and Soc Gen down by 1.06% and by 0.35% respectively.

The French auto sector also saw red, with Peugeot and Renault falling by 0.49% and by 0.84% respectively.

On the VIX Index

Market jitters over the spread of the Coronavirus provided further support to the VIX on Wednesday. Following on from a 6.20% gain on Tuesday, the VIX rose by 0.47% to end the day at 12.9.

When considering the risk of a global pandemic, the upside was relatively modest, however.

Late on Wednesday, the markets responded to plans by the Chinese government to contain the virus, which limited the upside in the VIX on the day.

The Day Ahead

It’s a busy day on the Eurozone economic calendar. While key stats are limited to Eurozone consumer confidence figures due out late in the session, the ECB is in action.

Any revisions to growth forecasts and details on revisions to the ECB’s monetary policy framework will be key drivers.

Through the ECB press conference, ECB President Lagarde could deliver a more optimistic outlook, which would be market positive.

There will be concerns over the coronavirus and possible tariffs on EU cars, however, to test the more optimistic…

In the futures markets, at the time of writing, the DAX was down by 38 points, with the Dow down by 35 points.

This article was originally posted on FX Empire

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