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Bob Mason
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The Majors

It was a bearish start to the week for the European majors on Monday. The DAX30 slid by 2.82%, with the CAC40 and EuroStoxx600 falling by 2.43% and by 2.33% respectively.

Market reaction to news of a new coronavirus strain in the UK weighed heavily on the European majors.

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As EU member states banned UK travel, fears of a spread of the new strain and a shutdown of borders sent the majors into the deep red.

A lack of progress towards a Brexit deal added to the market angst on the day, with both sides unwilling to compromise.

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The Stats

It was a relatively quiet day on the economic calendar. Flash consumer confidence figures for the Eurozone were in focus late in the European session.

According to the December report, the Flash Consumer Confidence Indicator rose from -17.6 to -13.9. In spite of the uptick, the indicator remained well below its long-run average of -11.2, however.

From the U.S

It was a particularly quiet day on the economic calendar, with no material stats from the U.S to provide direction late in the session.

The Market Movers

For the DAX: It was a bearish day for the auto sector on Monday. Daimler slid by 2.95%, with BMW and Volkswagen falling by 1.69% and by 1.96% respectively. Continental saw a more modest 0.84% loss on the day.

It was a particularly bearish day for the banks. Deutsche Bank and Commerzbank slid by 3.55% and by 3.90% respectively.

From the CAC, there were heavy losses for the French banks. Soc Gen slid by 5.19%. BNP Paribas and Credit Agricole ended the day down by 4.25% and by 3.38% respectively.

It was also a bearish day for the French auto sector. Peugeot and Renault fell by 1.89% and by 2.88% respectively.

Air France-KLM slid by a further 4.16%, with Airbus SE declining by 2.76%.

On the VIX Index

A run of 4 consecutive days in the red came to an end for the VIX on Monday. Reversing a 1.64% fall from Friday, the VIX rose by 16.64% to end the day at 25.16.

It was a mixed day for the U.S majors, which had followed their European neighbors into the deep red. Market reaction to news of a new coronavirus strain in the UK hit risk appetite early in the U.S session.

Late in the day, support kicked in as the markets responded to news of lawmakers agreeing to a stimulus package on Capitol Hill.

The Dow rose by 0.12, while the NASDAQ and S&P500 saw modest losses of 0.39% and by 0.10% respectively.

The Day Ahead

It’s another quiet day ahead on the economic calendar. Germany’s GFK Consumer Climate figures for January are due out later this morning.

With the markets responding to news of the new strain, the numbers are likely to have a muted impact on the majors.

COVID-19 and Brexit news will continue to be key drivers.

From the U.S, finalized 3rd quarter GDP and existing home sales figures for November are due out later in the session. We expect the numbers to have also a muted impact on the majors, however.

The Futures

In the futures markets, at the time of writing, the DAX was up by 130 points, while the Dow Mini was down by 32 points.

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

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