European Equities: A Quiet Economic Calendar Puts U.S Jobless Claims in Focus

There were no major stats for the markets to consider throughout the European session. That left market angst to pin back the majors as investors waited on the FED’s monetary policy decision and economic projections.

With the FED delivering after the European close, there was plenty of uncertainty over the first set of economic projections of the year.

How the FED sees the economic recovery and outlook for interest rates were amongst key concerns on the day.

Following some quite dire economic projections from the World Bank earlier in the week, the FED may have a similar view. Ahead of the FED, OPEC also delivered a gloomy outlook, with a projected 6% contraction in 2020.

Last month, ECB President Lagarde had also given the markets a reality check, vis-à-vis the economic outlook.

The Stats

It was a particularly quiet day on the Eurozone economic calendar on Wednesday. There were no material stats to distract the markets ahead of the FOMC interest rate decision and roll out of economic forecasts post the European close.

From the U.S

Inflation figures for May were disappointing, with the core annual rate of inflation easing from 1.4% to 1.2%. Economists had forecast a core annual rate of inflation of 1.3%. Month-on-month, core consumer prices fell by 0.1%, following a 0.4% slide in April. Consumer prices also fell by 0.1%, following a 0.8% slide in April.

With the markets anxious ahead of the FOMC, there was little influence from the figures, however.

The Market Movers

For the DAX: It was a mixed day for the auto sector on Wednesday. Daimler rose by 0.03% to buck the trend on the day. BMW, Continental, and Volkswagen saw red, however, with losses of 0.63%, 3.32, and 1.76% respectively.

It was another bearish day for the banks, with Deutsche Bank and Commerzbank falling by 0.83% and by 0.48% respectively.

Things were not much better for Deutsche Lufthansa which slid by 5.79% off the back of a 4.44% fall on Tuesday.

From the CAC, it was another day in the deep red for the banks. Soc Gen slid by 4.18%. Credit Agricole and BNP Paribas saw more modest losses of 1.31% and 2.12% respectively.

Across the auto sector, there were also more losses, with Peugeot and Renault falling by 2.61% and by 2.55% respectively.

Air France-KLM slumped by 7.55, while Airbus SE slipped by just 0.94% following a 7.62% slide on Tuesday. The downside for Airbus SE came in spite of the French government announcing a €15bn rescue package.

On the VIX Index

A run of 2 consecutive days in the green came to an end on Wednesday, with the VIX ending the day flat. Following on from a 6.82% gain on Tuesday, the VIX ended the day at 27.57.

Disappointing inflation figures from the U.S preceded the heavily anticipated FOMC economic projections and press conference.

During the press conference, the FED Chair poured cold water over the May nonfarm payrolls, stating that it is too early to say if the labor market had hit the bottom in May.

Powell also stated that interest rates will remain near to zero for 2-years and that caution is going to be needed over good and bad data.

On the day, the S&P500 and Dow fell by 0.53% and by 1.04% respectively, while the NASDAQ rose by 0.67%.

The Day Ahead

It’s another quiet day ahead on the Eurozone economic calendar. French nonfarm payroll figures for the 1^st quarter are due out of France.

With the French economy in tatters in the 1^st quarter and worse to come in the 2^nd, there’s unlikely to be too much influence on the majors.

From the U.S, we will expect the weekly jobless claims to have an impact later in the European session. The majors got a boost from last week’s nonfarm payrolls. We could see this reverse should today’s numbers hover at recent levels.

On the geopolitical front, the markets will also need to monitor chatter from Capitol Hill, Beijing, and Brussels.

Going into the European session, market reaction to the FOMC economic forecasts and press conference set the tone.

The Latest Coronavirus Figures

On Wednesday, the number of new coronavirus cases rose by 128,469 to 7,445,289. On Tuesday, the number of new cases had risen by 128,377. The daily increase was higher than Tuesday’s rise and 121,534 new cases from the previous Wednesday.

Germany, Italy, and Spain reported 866 new cases on Wednesday, which was up from 843 new cases on Tuesday. On the previous Wednesday, 1,049 new cases had been reported.

From the U.S, the total number of cases rose by 20,674 to 2,066,223 on Wednesday. On Tuesday, the total number of cases had risen by 19,894. On Wednesday, 3^rd June, a total of 21,763 new cases had been reported.

In the futures markets, at the time of writing, the DAX was down by 102.5 points, with the Dow down by 154 points.

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