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European Equities: Another Slide on the Cards and the Prospects of a Global Pandemic Intensify

The majors are set for another fall at the open as the markets face the ever-growing prospect of a global pandemic and even greater disruption to trade.
Bob Mason
Stock market down

Economic Calendar:

Thursday, 27th February

Spanish HICP (YoY) (Feb) Prelim

Spanish HICP (YoY) (Feb) Prelim

Eurozone Consumer Confidence (Feb) Final

Friday, 28th February

French Consumer Spending (MoM) (Jan)

French GDP (QoQ) (Q4) 2nd Estimate

German Unemployment Change (Feb)

German Unemployment Rate (Feb)

Italian CPI (MoM) (Feb) Prelim

German CPI (MoM) (Feb) Prelim

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The Majors

It was a mixed day for the European majors on Wednesday, with investors tiptoeing back into riskier assets. Support came in spite of the continued spread of the coronavirus, with a decision by EU member states to leave borders open delivering the support.

The continued concern over the spread of the virus was evidenced in travel and leisure stocks, however, that were the worst performers on the day.

The DAX30 saw its 5th consecutive day in the red, falling by 0.12%. Finding support was the CAC40, which eked out a 0.09% gain, while the EuroStoxx600 ending the day flat.

The Stats

It was a relatively quiet day on the Eurozone economic calendar on Wednesday. Economic data included jobseeker numbers out of France.

The numbers had a muted impact on the majors, however, in spite of total job seekers falling from 3,292.9k to 3,264.8k.

Concerns over the economic outlook continue to mute the effect of historical data that have yet to reflect the impact of the coronavirus.

Out of the U.S, January’s new home sales also had a muted impact on the majors late in the European session.

A bullish start to the day across the U.S majors did provide support, however…

The Market Movers

For the DAX: autos were amongst the top performers on Wednesday as investors went bargain hunting. BMW and Daimler led the way with gains of 1.26% and 1.05% respectively. Continental and Volkswagen saw more modest gains of 0.94% and 0.24% respectively.

It was a mixed day for the banks, however, with Commerzbank falling by 0.35%, while Deutsche Bank rose by 1.38%.

Deutsche Lufthansa was the worst performer on the DAX30, falling by 1.99%.

From the CAC, it was another bearish day for the banks. BNP Paribas fell by 1.00%, with Credit Agricole and Soc Gen declining by 1.14% and by 1.01% respectively.

The auto sector found support, however, with Renault and Peugeot ending the day up by 1.22% and 4.75% respectively.

Air France-KLM continued to struggle, however, with a 0.87% loss on the day.

On the VIX Index

The VIX saw red for the 1st time in 5-days, with a 1.04% loss. Following an 11.27% gain on Tuesday, the VIX ended the day at 27.6.

While the U.S equity markets had found support through the early part of the day, news updates on the coronavirus led to a late reversal, leaving the S&P500 down by 0.38% on the day.

The reversal was not enough to drive the VIX into positive territory, however, though the downside for the VIX may be temporary…

The Day Ahead

It’s a relatively busy day ahead on the Eurozone economic calendar on Thursday. Economic data includes prelim February inflation figures out of Spain and finalized Eurozone consumer confidence numbers.

From the U.S, durable goods orders and 2nd estimate GDP numbers for the 4th quarter also provided direction.

Expect the Eurozone consumer confidence and numbers from the U.S to have the greatest influence from the calendar.

It will ultimately boil down to news updates and the later coronavirus numbers…

In the futures markets, at the time of writing, the DAX was down by 275.5 points, with the Dow down by 218 points.

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