European Equities: A Quiet Economic Calendar to Leave Earnings and China and U.S Stats in Focus

There was nothing positive for the markets to consider on the day, weighing on market risk sentiment.

Spain’s services PMI slid from 23.0 to 7.1 in April, which was worse than a forecast of 10.0.

Things were marginally better from Italy, with the services PMI falling from 17.4 to 10.8. Economists had forecast a fall to 9.0.

From France and Germany, the April PMIs came in at 10.02 and 16.2, leading to an upward revision to the Eurozone’s services and composite PMIs.

In April, the Eurozone’s finalized services PMI came in at 12.0, which was up from a prelim 11.7. In March, the PMI had stood at 26.4.

The Eurozone’s Composite PMI fell from 29.7 to 13.6, revised upwards from a prelim 13.5.

According to the Eurozone’s finalized Markit Survey,

• The Composite Output Index fell from March’s record low 29.7 to a new record low 13.6 in April.
• Both manufacturing and services economies recorded record falls in output, with service economies seeing a more sizeable fall.
• Incoming new business slumped, leading to an accelerated slide in backlogs of work.
• Job losses surged, with the reduction in staffing levels the sharpest on record.
• Unsurprisingly, Spain and Italy suffered the most in April, while Germany and Ireland recorded the highest composites.

Adding to the market angst on the day was an 11.2% tumble in retail sales across the Eurozone and a 15.6% slump in German factory orders.

From the U.S, things were not much better, with ADP nonfarm employment tumbling by a whopping 20.236m in April.

The Market Movers

For the DAX: It was a bearish day for the auto sector. BMW slid by 4.90% to lead the way down. Continental and Daimler weren’t far behind, with losses of 2.04% and 1.88% respectively. Volkswagen saw a more modest loss of 0.32%.

It was also a bearish day for the banks. Deutsche Bank fell by 1.56%, while Commerzbank slipped by just 0.18% on the day.

Deutsche Lufthansa slid by 3.30%.

From the CAC, the banking sector also returned to the red. BNP Paribas fell by 0.74%, while Credit Agricole saw and Soc Gen slid by 2.32% and by 3.93% respectively.

It was a mixed day for the auto sector, in spite of the losses across the DAX30. Peugeot eked out a 0.42% gain, while Renault fell by 1.24%.

Air France-KLM and Airbus SE returned to the red, with losses of 3.95% and 4.85% respectively.

On the VIX Index

It was back into the green for the VIX on Wednesday, which rose by 1.52%. Partially reversing a 6.56% fall from Tuesday, the VIX ended the day at 34.1.

A pullback in crude oil prices, stemming from a jump in inventories, and a fall in the S&P500 and Dow contributed to the upside.

Through the 1^st half of the week, the markets have been grappling with a number of key drivers.

Trump’s statement of intent on reopening the U.S economy at all costs weighed as did the latest ADP nonfarm employment figures.

On Wednesday, the S&P500 and Dow fell by 0.70% and by 0.91% respectively, while the NASDAQ rose by 0.51%.

The Day Ahead

It’s a relatively quiet day ahead on the Eurozone economic calendar. Key stats are limited to 1^st quarter nonfarm payroll numbers out of France.

We’re not expecting too much support from the figures, which will leave the majors in the hands of economic data from China and the U.S.

Ahead of the European open, trade April figures from China will set the tone.

From the U.S, expect the weekly initial jobless claims to have plenty of influence.

On the geopolitical risk front, the threat of sanctions and tariffs on China continues to linger, with Iran also simmering in the background.

The Latest Coronavirus Figures

On Wednesday, the number of new coronavirus cases rose by 87,960 to 3,808,833. On Tuesday, the number of new cases had risen by 81,537. The daily increase was higher than Tuesday’s rise and a 77,918 increase on the previous Wednesday.

France, Germany, Italy, and Spain reported 9,651 new cases on Wednesday, which was up from 4,993 new cases on Tuesday. On the previous Wednesday, 8,651 new cases had been reported. All 4 member states saw a rise in new cases, with France and Spain reporting the highest increases on the day.

Looking at the jump in number across the 4 most adversely affected EU member states, a continued uptrend could bring into question government reopening plans…

From the U.S, the total number of cases rose by 20,715 to 1,256,171 on Wednesday. On Tuesday, the total number of cases had risen by 25,189. On Wednesday, 29^th April, the total new number of cases had risen by 27,752.

In the futures markets, at the time of writing, the DAX was down by 27 points, while the Dow was up by 72 points.