Yahoo Finance European Equities: With the Majors Closed there is Plenty to Consider in the Week Ahead
Economic Calendar:
Wednesday, 15th April
French CPI (MoM) (Mar) Final
French HICP (MoM) (Mar) Final
Spanish CPI (YoY) (Mar) Final
Spanish HICP (YoY) (Mar) Final
Italian CPI (MoM) (Mar) Final
Thursday, 16th April
German CPI (MoM) (Mar) Final
Eurozone Industrial Production (MoM) (Feb)
Friday, 17th April
Eurozone Core CPI (YoY) (Mar)
Eurozone CPI (MoM) (Mar) Final
Eurozone CPI (YoY) (Mar) Final
The Majors
It was a bullish end to a shortened week for the European majors last Thursday. The DAX30 led the way, rallying by 2.24%, with the CAC40 and EuroStoxx600 rising by 1.44% and by 1.57% respectively.
For the CAC40 and EuroStoxx600, it was a 4th consecutive daily gain, while the DAX30 saw green on 3 of the 4-days.
There were no material stats on the day to provide the majors with direction, with the markets looking beyond economic data on the day.
EU Finance Ministers were locked in an extended virtual summit in search of an EU wide agreement on a COVID-19 stimulus package.
On the oil front, OPEC and the world’s oil producers were also meeting to form an agreement to scale back oil production to deliver price stability.
Neither were market positive, however. EU Ministers remained locked in a battle to deliver much-need support to member states most adversely affected by the virus. The failure of less affected member states to support a bazooka package once more raised questions over the viability of the EU project.
The meeting amongst the world’s oil producers ended in a Mexican stand-off, with Mexico staging a walk-out in response to demands to cut output.
With both considered market negatives, it was the FED that delivered a much-needed boost for the global equity markets.
A 2.3 trillion Dollar program to support local governments, counties and small to medium-sized businesses impressed. The program delivers a more forward-looking support mechanism to revive the economy and activity once containment measures ease. As part of the program, the FED will buy municipal bonds and offer 4-year loans to companies with no more than 10,000 employees.
Coronavirus numbers had failed to support on the day, in spite of the downward trend of new cases in the week, with the European majors seeing red ahead of the FED’s announcement.
The Stats
It was a quiet day on the Eurozone economic calendar on Thursday, with no material stats from the Eurozone to provide direction.
From the U.S, another 6.606m jump in initial jobless claims certainly didn’t help the cause ahead of the FED’s announcement. Consumer sentiment and expectations also hit a wall, reflecting the impact of the coronavirus.
On the monetary policy front, the ECB monetary policy meeting minutes revealed division in the ranks. This was nothing new, however, with Lagarde’s predecessor also facing plenty of resistance late into his term. When considering the lack of progress by EU Finance Ministers, however, the minutes were negative.
The Market Movers
For the DAX: It was another bullish day for the auto sector. Continental, Daimler, and Volkswagen led the way, with gains of 4.85%, 5.29%, and 4.77% respectively. BMW saw a more modest rise of 3.36%.
It was also a bullish day for the banks, with Commerzbank and Deutsche Bank rising by 1.19% and by 1.98% respectively.
Deutsche Lufthansa gained just 0.20% on the day, with the airline industry now in search of government funding…
From the CAC, it was a bullish day for the banks. BNP Paribas rallied by 5.38%, with Credit Agricole and Soc Gen rising by 3.84% and 2.99% respectively.
The auto sector saw more modest gains on the day, however, with Peugeot and Renault gaining 0.64% and 0.82% respectively.
Air France-KLM saw red once more, falling by 0.30%, while Airbus SE continued its recovery with a 1.99% gain on the day.
On the VIX Index
The VIX saw red for a 3rd day in 4 on Thursday. Following on from a 7.17% decline on Wednesday, the VIX fell by 3.88% to end the day at 41.7.
The downside came off the back of the FED’s move on Thursday that supported the U.S equity markets. On the day, the VIX fell back from a day high 45.7 to end the day in the red.
The S&P500 closed out the day with a 1.45% gain, with the Dow and NASDAQ rising by 1.22% and 0.77% respectively.
The Week Ahead
It’s a relatively quiet week ahead on the Eurozone economic calendar.
The Stats
Key stats from the Eurozone include finalized March inflation figures out of France, Germany, Italy, Spain, and the Eurozone.
With deflationary pressures expected, any downward revision to prelim numbers should have a muted impact this week.
Eurozone industrial production figures for February, due out on Thursday, should also have a limited impact on the day.
The market focus remains on March and April figures that will give a better indication of the economic fallout from COVID-19.
We can then begin to assess the effects of fiscal and monetary policy support once containment measures have been eased.
With the stats on the lighter side, we can expect economic data from China to influence risk appetite in the week ahead.
On Tuesday, March trade data is due out ahead of 1st quarter GDP and March industrial production and retail sales figures on Friday.
At the start of the month, we saw the private sector PMIs reflect a bounce-back in activity in March. The March industrial production and retail sales figures will need to indicate a similar trend to ease the pain. 1st quarter GDP numbers are likely to be alarming and will test market resilience.
From the U.S, expect April manufacturing numbers out of NY State and Philly and the weekly jobless claims to also draw attention.
Corporate Earnings
If the stats are not enough to keep the markets busy, earnings season kicks off this week and it’s not going to be pretty. While there are no marquee names out of Germany, there are a number of names that will draw attention from the CAC40… L’Oréal and Louis Vuitton are scheduled to release in the week ahead.
From the U.S, JPMorgan Chase, Johnson & Johnson, and Wells Fargo are big names to release on Tuesday. Bank of America, Goldman Sachs, and Morgan Stanley follow on Wednesday. Late in the week, Blackrock will also be in focus on Thursday.
COVID-19
With economic data and corporate earnings in focus, expect the markets to also monitor the coronavirus numbers.
On Sunday, the total number of coronavirus cases across France, Germany, Italy, and Spain rose by 13,235 to 583,639. In the U.S, the total number of cases increased by 27,554 to 560,433. That took the total number of cases globally to 1,853,357.
While the EU reported a downward trend, Italy saw a pickup in the number of new cases, leading to an extension of the lockdown.
Weekend numbers tend to be on the lower side, however, so expect plenty of influence from the numbers in the week ahead.
The markets are hoping for an end to the lockdown going into May. Any suggestions that a lengthier lockdown is needed will weigh on the majors.
Fiscal Policy and Crude Oil
A late agreement amongst EU Finance Ministers to deliver €500bn to combat the effects of COVID-19 on the economy will also come into question. When considering moves by the U.S Administration and the FED, more is going to be needed…
From a crude oil perspective, however, an agreement to cut production by 10m bpd will be one positive for the markets to consider.
The Futures
In the futures markets, at the time of writing, the Dow was down by 339 points.
With the European majors closed until tomorrow, expect China’s stats tomorrow morning and moves across the U.S later today to set the tone ahead of the open.
This article was originally posted on FX Empire
