European Equities: Can the ECB Deliver Further Support or Will GDP Numbers Rock the Boat?

The Majors

It was a 3^rd consecutive day in the green for the European majors on Wednesday. Positive updates on the antiviral drug remdesivir delivered the majors with a boost mid-week.

The DAX30 rallied by 2.89% to lead the way on the day, with the CAC40 and EuroStoxx600 gaining 2.22% and 1.75% respectively.

Once more, there were no material stats from the Eurozone to influence, leaving the majors in the hands of the news wires.

From the EU and the U.S, while new coronavirus numbers were down from earlier in the month, we saw an uptick from the weekend. The numbers were not bad enough to halt government plans to ease lockdown measures, however, which also provided support.

The Stats

It was a quiet day on the Eurozone economic calendar on Wednesday. Key stats were limited to prelim April inflation figures out of Germany, which had a muted impact on the majors.

In April, consumer prices rose by 0.3% in Germany, following a 0.1% rise in March.

From the U.S, it was another set of disappointing numbers. The U.S economy contracted by 4.8% in the 1^st quarter, which was worse than a forecasted 4.0% contraction. Housing sector figures also raised more red flags, with pending home sales tumbling by 20.8% in March.

The Market Movers

For the DAX: It was a particularly bullish day for the auto sector. Continental surged by 9.46% to lead the way, with Daimler rallying by 7.04%, BMW and Volkswagen weren’t far behind with gains of 6.08% and 6.18% respectively.

It was also another bullish day for the banks. Deutsche Bank jumped by 11.13%, with Commerzbank rallying by 6.20% on the day.

Deutsche Lufthansa found further support, rising by 3.65%, while Wirecard continued to face the wrath of investors, with an 8.77% slide.

From the CAC, the banking sector continued to make progress on Wednesday. BNP Paribas rose by 3.72%, with Credit Agricole and Soc Gen rallying by 6.72% and 5.47% respectively.

The auto sector was also on the move, with Peugeot and Renault rallying by 5.23% and by 7.89% respectively.

Air France-KLM recovered from Tuesday’s 2.89% fall, with a 3.38% gain, while Airbus SE surged by 10.42%.

On the VIX Index

It was back into the red for the VIX, which fell by 6.97% on Wednesday. Reversing a 0.84% gain from Tuesday, the VIX ended the day at 31.2.

Positive news on the treatment drug remdesivir delivered the upside for the majors. Adding support was an assurance by the FED that rates would remain at close to zero until the U.S economy recovers.

The S&P500 rose by 2.66%, with the Dow and NASDAQ gaining 2.21% and 3.57% respectively.

The Day Ahead

It’s a particularly busy day ahead on the Eurozone economic calendar. Key stats include 1^st quarter GDP numbers for France, Spain, and the Eurozone and March unemployment figures for Germany.

March retail sales and consumer spending figures from Germany and France will also be in focus.

Prelim April inflation figures from Spain, Italy, and the Eurozone will likely have a muted impact on the majors.

Later in the day, the ECB is in action and will likely be the main driver on the day. The markets will be looking for the assurance of more support to deliver a 4^th consecutive day in the green.

The Latest Coronavirus Figures

On Wednesday, the number of new coronavirus cases rose by 75,118 to 3,134,199. On Tuesday, the number of new cases had risen by 75,118. While up from Tuesday, this was down marginally from a 78,442 increase on the previous Wednesday.

France, Germany, Italy, and Spain reported 8,651 new cases on Wednesday, which was up from 6,020 new cases on Tuesday. France reported just 509 new cases, while Spain reported a 4,771 jump on the day.

From the U.S, the total number of cases rose by 27,752 to 1,063,517 on Wednesday. On Tuesday, the total number of cases had risen by 25,258. Last Wednesday, the total number of new cases had risen by 25,985.

In the futures markets, at the time of writing, the DAX was up by 31.5 points, while the Dow was down by 36 points.