European Equities: A Busy Economic Calendar and COVID-19 to Test the Majors

The Majors

It was a bullish day for the European majors on Tuesday. The DAX30 and the CAC40 rallied by 1.29% and by 1.21% respectively, with the EuroStoxx600 rising by 0.71%.

A pickup in inflationary pressures and an upward trend on consumer confidence supported an optimistic outlook on the economic recovery.

The optimism came in spite of low vaccination rates across the Eurozone as a result of a limited of supply.

A pickup in consumer confidence in the U.S and EU member states including France that has reintroduced lockdown measures supported the upside on the day.

The Stats

It was a relatively quiet day on the economic calendar on Tuesday. Prelim inflation figures from Germany and Spain were in focus on the day.

German Inflation

In March, consumer prices rose by 0.5%, month-on-month, following a 0.7% increase in February. Economists had forecast a 0.5% rise.

According to Destatis,

• Consumer prices were up by 1.7% on the same month a year earlier.
• Prices for goods rose by 1.9%, with prices for energy increasing by 4.8%, and prices for food up by 1.6%.
• According to prelim figures, prices for services increased by 1.6%.

Spain

Of less influence on the day were inflation figures from Spain.

In March, inflationary pressures returned, with consumer prices rising by 1.3%, year-on-year. In February, consumer prices had stalled.

The harmonized index for consumer prices increased by 1.2%, year-on-year. In February, the index had fallen by 0.1%. Economists had forecast a 0.9% rise.

From the U.S

Consumer confidence was in focus late in the European session.

In March, the CB Consumer Confidence Index jumped from a revised 90.4 to 109.7. Economists had forecast a rise to 96.9.

According to the March survey,

• The Present Situation Index rose from 89.6 to 110.0, with the Expectations Index increasing from 90.9 to 109.6.
• Consumer confidence increased to its highest level since the onset of the pandemic in March 2020.
• Consumers’ assessment of current conditions and their short-term outlook improved significantly. This was an indication that economic growth is likely to strengthen further in the coming months.

The Market Movers

For the DAX: It was a bullish day for the auto sector on Tuesday. BMW and Volkswagen rallied by 3.07% and by 3.81% respectively. Continental and Daimler saw more modest gains of 0.27% and 1.91% respectively.

It was also a bullish day for the banks. Deutsche Bank rose by 1.08%, with Commerzbank rallying by 3.27%.

From the CAC, it was a bullish day for the banks. BNP Paribas and Soc Gen rallied by 3.85% and by 3.96% respectively. Credit Agricole ended the day up by 2.72%.

It was also a bullish day for the French auto sector. Stellantis NV and Renault ended the day with gains of 2.99% and 3.32% respective.

Air France-KLM also found strong support, rallying by 3.75%, while Airbus SE eked out an 0.31% gain on the day.

On the VIX Index

It was back into the red for the VIX on Tuesday, marking a 3^rd day in the red from 4 sessions.

Partially reversing a 9.97% gain from Monday, the VIX fell by 5.45% to end the day at 19.61.

The Dow and the S&P500 fell by 0.31% and by 0.32% respectively, with the NASDAQ declining by 0.11%.

The Day Ahead

It’s a relatively busy day ahead on the European economic calendar. French consumer spending and German unemployment figures are due out early in the day.

With France reintroducing lockdown measures any marked pickup in spending will likely have a muted impact on the majors.

Germany’s unemployment figures should therefore have the greatest impact on the majors.

Other stats from the Eurozone include French, Italian, and Eurozone inflation figures. Eurozone figures will garner the greatest interest..

From the U.S, ADP nonfarm employment change and Chicago PMI figures for March will also draw attention.

Ahead of the European open, NBS private sector PMI numbers from China will set the tone.

Away from the economic calendar, COVID-19 and geopolitics will also need considering.

The Futures

In the futures markets, at the time of writing, the Dow Mini was down by 15 points.

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