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Bob Mason
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The Majors

It was a relatively bullish day for the European majors on Thursday, which steadied after Wednesday’s sell-off.

The CAC40 rose by 0.97% to lead the way, with the DAX30 and EuroStoxx600 gaining 0.69% and 0.71% respectively.

It wasn’t plane sailing, however, with the majors recovering from early losses and a late dip back into the red.

Concerns over the continued rise in new COVID-19 cases weighed on the majors on the day, while central bank action eased the pain. There was also the fresh threat of a U.S – EU trade war for the markets to fret about.

On Thursday, it was the ECB that came to the rescue. The ECB announced a new repo program, whereby it would offer collateralized EUR loans to central banks outside of the Eurozone.

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The Stats

It was a relatively quiet day on the Eurozone economic calendar on Thursday. Germany’s GfK Consumer Climate figures for July were in focus ahead of the European session.

According to the GfK Consumer Survey,

  • The GfK has a forecast of -9.6 for July 2020, up by 9 points from June’s revised 18.6 points.
  • Both economic and income expectations, as well as propensity to buy, are on the rise.
  • While sentiment improved, the July figure was still the 3rd weakest value on record.

Looking at the components:

  • Consumer income expectations jumped by 18.9 points to 8.5 points to sit above its long-term average of zero points.
  • Income expectations improved, with the indicator rising by 12.3 points to 6.6 points. In spite of the rise, the indicator was still 39 points below its value this time last year.
  • The improved income expectations led to a 13.9 point rise in the propensity to buy indicator to 19.4. Compared with this time last year, the indicator was down by more than 34 points, however.

From the U.S

It was a busier day on the economic calendar. Key stats included the weekly jobless claims figures and core durable goods orders.

In May, core durable goods increased by 4%, partially reversing an 8.2% decline from April. Economists had forecast a 2.5% increase.

The weekly jobless claims were more disappointing, however. In the week ending 19th June, initial jobless claims rose by 1.48m, following a 1.508m increase in the week prior. Economists had forecast a 1.3m increase.

The Market Movers

For the DAX: It was a particularly bullish day for the auto sector on Thursday, recovering most of Wednesday’s losses. Continental and Daimler led the way, with rallying by 3.45% and 3.61% respectively. BMW and Volkswagen were close behind, with gains of 3.04% and 3.02% respectively.

It was also a bullish day for the banks, with Deutsche Bank and Commerzbank rallying by 5.03% and by 3.70% respectively.

WIRECARD AG slumped by a whopping 74.9% on the day…

From the CAC, the banks found much-needed support on Thursday. Soc Gen led the way, rallying by 3.46%. BNP Paribas and Credit Agricole rose by 1.93% and 3.01% respectively.

The French auto sector also saw green, with Peugeot and Renault ending the day with gains of 1.43% and 2.27% respectively.

It was less impressive for Air France-KLM and Airbus SE, however, which rose by 0.75% and by 1.51% respectively.

On the VIX Index

It was back into the red for the VIX. Partially reversing a 7.87% gain from Wednesday, the VIX fell by 4.79% on Thursday to end the day at 32.22.

The U.S major indexes bounced back from losses earlier in the day, with banks amongst the front runners. News of regulators easing post-global financial crisis restrictions delivered the upside on the day.

The S&P500 and Dow rose by 1.10% and by 1.18% respectively, with the NASDAQ gaining 1.09%.

The Day Ahead

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

A lack of stats will leave the majors in the hands of COVID-19 news and any further chatter from the U.S on trade tariffs…

From the U.S

It’s a busier day ahead. May’s inflation and personal spending figures are due out along with finalized consumer sentiment numbers for June.

Barring particularly dire numbers, however, COVID-19 and geopolitics will likely remain key drivers on the day.

The Latest Coronavirus Figures

On Thursday, the number of new coronavirus cases rose by 193,646 to 9,697,910. On Wednesday, the number of new cases had risen by 174,860. The daily increase was higher than Wednesday’s rise and 169,995 new cases from the previous Wednesday.

Germany, Italy, and Spain reported 1,264 new cases on Thursday, which was down from 1,463 new cases on Wednesday. On the previous Thursday, just 787 new cases had been reported.

From the U.S, the total number of cases rose by 42,480 to 2,501,653 on Thursday. On Wednesday, the total number of cases had risen by 38,253. On Thursday, 18th June, a total of 25,576 new cases had been reported.

The Futures

In the futures markets, at the time of writing, the DAX was up by 61.5 points, while the Dow was down by 140 points.

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

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